The Fiscal Year 2001 Military Budget
The Center for Defense Information website
The Clinton Administration's Fiscal Year 2001 budget request
for the military includes $305.4 billion for the Pentagon and
the defense functions of the Department of Energy. It is $12 billion
higher than the current (FY'00) budget, and represents more than
1% real growth in military spending. And while last year the Administration
proposed adding $112 billion to the Pentagon's multi-year spending
plan, the new request goes last year's plan one better, adding
another $15 billion to the original increase. In all, the Administration's
request calls for over $1.6 trillion in military spending for
Fiscal Years 2001-2005.
... military spending will continue to increase annually over
the next five years. By FY2004, U.S. military spending will have
reached the Cold War average even though the Soviet Union is gone
and the U.S. military itself is a third smaller than it was a
Military Spending Still Getting Lion's Share of Budget
As it has in past years, military spending dwarfs that of
all other discretionary programs. For the first time in recent
history, however, it will account for less 50% of the total discretionary
Or will it? Based on the figures included in the President's
budget request, education and housing assistance programs are
slated to receive major funding increases from this year's levels.
For education, the projected increase represents a 36% growth
in federal funding, while the planned increase for housing calls
for a 59% jump. Simply put, there is no way that the GOP-led Congress
will accept these increases.
Once these unrealistic funding increases are removed from
the FY'01 request, the Pentagon continues to account for over
50% of the discretionary budget.
Spending Priorities: Weapons, not People
As was the case last year, concerns about troop readiness,
spare parts, and attracting and retaining quality people into
the military are being used to fuel support for Pentagon spending
increases. But as was also the case last year, the allocation
of resources within the military budget request paints a different
The request increases funding for personnel by almost 3% and
for operations and maintenance the so-called "readiness"
account by more than 4%. But it also increases funding for
procurement the purchase of new weapons -- by more than
11%. By FY 2005 spending for personnel will have increased by
16% and for readiness by 9%, but funding for the purchase of new
weapons will rise by nearly 31%. .. the Pentagon continues to
invest billions on Cold War weapons systems.
How Much Will Congress Add?
The ink was not yet dry on the President's budget before Congressional
"hawks" were voicing their dissatisfaction with the
Pentagon funding levels, which they considered inadequate. For
example, Representative John Kasich (R-OH), chairman of the House
Budget Committee, said: "We are going to have to put more
money in the militarythere is no question." This sentiment
was echoed by the heads of the four military services. Asked by
Congress to provide information on unfunded programs which they
consider to be high priorities, the Chiefs submitted "wish
lists" that totaled over $15 billion in FY'01 alone.
Despite clear support in Congress for raising military spending,
it appears that the ability of members to give the Pentagon a
significant increase in FY'01 is limited. The Balanced Budget
Act (BBA) of 1997 sets specific spending limits for defense and
all other federal discretionary programs those on which
Congress and the Administration must act to fund each year. However,
the prospect of perceived significant budget surpluses have led
some members of Congress to consider using these funds to pay
for high priority federal programs, including defense. But do
these surpluses really exist? And if so, just how large are they?
According to government accounting methods, when the amount
that the government takes in each year, known as revenues, exceeds
the amount spent, the difference is the budget surplus. The problem
is that much of what the government takes in each year represents
workers' contributions to the Social Security system intended
for future benefit payments. Currently the Social Security system
is bringing in more than it is paying out in benefits, and the
difference is being counted towards the overall federal balance
of payments. This has the effect of making the surplus appear
much larger than it actually is, and permits the government to
spend funds that in future years will be needed to pay Social
Security benefits when the system's income no longer is sufficient
to cover benefit payments.
In recent weeks leading congressional Democrats and Republicans,
along with the Clinton Administration, have decided, at least
for the time being, that surplus Social Security revenues will
NOT be counted towards the general budget surplus nor used to
fund other federal programs. The portion of the surplus not related
to Social Security revenues is known as the "on-budget"
surplus. The Congressional Budget Office estimates that the total
budget surplus for FY'01 will be $166 billion, while the on-budget
surplus will be roughly $21 billion.
In addition to those supporting increases in Pentagon spending,
other members of Congress are trying to fund their priorities
out of the on-budget surplus. Such items as a tax cut and Medicare
coverage of prescription drugs are very popular, particularly
in an election year. Supporters of critical domestic programs
such as education and crime prevention are also are interested
in securing additional funding. Thus the demands on this relatively
small surplus add up quickly. Democratic staffers at the House
Budget Committee estimate that no more than $5 billion will be
available for the military in FY'01, with the likely increase
in Pentagon spending to be in the range of $2-3 billion.
Congress' ability to raise military spending in FY'01 is restricted
only if members continue to take a "hands-off" approach
towards the Social Security surplus and if they are disciplined
enough to avoid the budgetary gimmicks that have become commonplace
in the last few years. For example, last year Congressional appropriators
declared $7.2 billion in Pentagon funding to be "emergency
spending" and thus not subject to the spending caps set by
the BBA. They also agreed to defer $1.2 billion in FY'00 spending
until FY'01 by deferring payments to defense contractors, and
by delaying the last payday for military personnel in FY'00 by
one working day so that it would fall in FY'01. Similar "magic"
occurred elsewhere in last year's budget. Three billion dollars
for veterans' health care and $4.5 billion for the year 2000 census
were declared to be spending emergencies even though the VA health
care program is an annual expenditure and funding for the census
has been included in the normal federal budget for 200 years.
While it is unlikely that Congress will raid the Social Security
accounts in an election year, it is far less certain that members
will be able to restrain themselves from finding other ways around
the BBA's spending limits.
For more details and analysis of the Administration's FY'01
military budget request, contact CDI, or visit our military budget