March 1, 2001

MEMORANDUM TO: OPINION LEADERS

FROM: TOM DONNELLY, Deputy Director

SUBJECT: Defense

In the budget outline submitted to Congress yesterday, the Bush Administration is calling for a defense spending increase of $14.2 billion for 2002.  But let’s be clear: that amount may not be buying any new defense capability.  Nearly $10 billion of this “increase” will be eaten up by the costs of funding new and unanticipated pay and health benefits, higher fuel prices, contingency operations in the Balkans and higher-than-forecast inflation – essentially the costs of the current Pentagon program.  Of the remainder, about half will go to additional pay hikes and military family housing.  Even the $2.6 billion increase in research funding may not be “new” money, because it is uncertain what figure the administration is using as a basis for comparison.

The administration suggests that a more sizeable defense increase may be in the offing once the “strategic review” now being conducted is complete.  But let’s be clear about this, too: delay on defense increases carries procedural and political risks.  Under even the most optimistic scenario, Congress will have passed a budget resolution and be well into the appropriations process by the time the strategic review is complete.  Adding a significant sum to the Pentagon budget in the middle of the annual appropriations process will be difficult, at best.  Does the White House expect Congress to acquiesce in significant defense increases without exacting equally large increases in domestic spending? 

Finally, the administration has yet to address the immediate shortfalls in military readiness.  Yes, the Pentagon needs the long-term guidance that will emerge from the ongoing strategic review.  But with more than $7 billion needed simply to meet training, spare parts and ammunition requirements for the current year, and about double that amount required for 2002, the demand for a rapid supplemental appropriation for 2001 and a resolute commitment to sustained and significant defense spending increases remains urgent.