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10 Apr 13. The United States Department of Defense (DoD) budget for Fiscal Year (FY) 2014 requests $526.6 billion to protect and advance security interests at home and abroad during the coming fiscal year and into the future. This budget reflects the difficult choices involved with protecting America’s security interests and role as a global power at a time of declining budgets and ongoing fiscal uncertainty about the future. This request balances the competing and compelling demands of supporting troops still engaged in Afghanistan, protecting readiness, modernizing the military’s aging weapons inventory, and sustaining the quality and care of the all-volunteer force — all while implementing and deepening our alignment to the Defense Strategic Guidance signed by the President last year. This paper highlights the Department’s ongoing efforts to achieve an agile and ready force while maintaining the right capabilities and capacity to rapidly deal with contingencies across the globe.

The Drawdown Continues

The DoD is experiencing declining budgets that have already led to significant ongoing and planned reductions in military modernization, force structure, personnel costs, and overhead expenditures.

The Department estimates a 20 percent drop in the overall defense budget — including declining war costs — from the post-9/11 peak in 2010 to 2017. The Budget Control Act (BCA) of 2011 required total projected defense spending to decline by $487 billion from FY 2012 through 2021. When measured in real terms against the growing cost of personnel, health care, and weapons, this represents a marked decrease in defense purchasing power compared to the past decade.

Sequestration, if allowed to continue, would represent about an 18 percent decline in the inflation-adjusted defense base budget between 2010 and 2014. Sequestration would further reduce average annual defense spending by more than $50 billion each year through FY 2021. To achieve such rapid savings, the Department would first have to target accounts that yield the most immediate savings — modernization programs, training, and maintenance accounts. Additional savings from overhead efficiencies, reducing personnel costs, and structural reforms are possible, but would take much longer to realize.

Modernization Challenges

The military entered the current drawdown in a substantially different position than was the case at the end of the Cold War. Because the 1980s defense build-up was primarily a procurement build-up — the force did not grow in size nor was it deployed substantially more — the military began the 1990s drawdown with a mostly re-capitalized inventory of weapons and equipment. These Reagan-era platforms, however effective, are reaching the end of their service lives and must be replaced in some form, especially the air-superiority and sea-power capabilities called for by the 2012 strategic guidance. Replacing these aging systems with new platforms will require considerable resources.

Whereas during the 1990s drawdown America’s primary geo-political adversary had just collapsed, today America faces an increasing array of potential challenges to its national security. Despite the substantial savings made possible by the end of major troop deployments in Iraq and Afghanistan, the ongoing challenges to stability posed by North Korea, Iran, international terrorism and other potential adversaries — though not existential threats on a par with the former Soviet Union — suggest that a “peace dividend” created by a more tranquil global environment is unlikely. Even before sequestration the military services struggled to meet regional commanders’ requests for forces, especially carriers, destroyers, and amphibious capabilities for deployment near the Middle East and Asia-Pacific. Consequently, any substantial defense savings in the future must come from the Department’s abili

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