ARTICLE

November 2003

Modernization Spending Should Not Slow Down

by Lawrence P. Farrell, Jr.

The Defense Appropriations bill signed by President Bush last month—which provides $368.2 billion for fiscal year 2004—continues the upward trend in military spending that began more than two years ago, after the Sept. 11 attacks, as the United States engaged in a global war on terrorism.

The sum represents a $3.8 billion increase over fiscal year 2003 (excluding the amounts provided in the Iraq supplemental in April 2003), and is $3.5 billion below the president’s fiscal year 2004 budget request.

It may be surprising to many that the weapons-buying account only makes up 20 percent of the entire defense budget. That is still a lot of money, but the reality today is that the substantial increases we are seeing in defense spending are not going into procurement accounts.

That is not to say that there are not other, more pressing, budgetary priorities, such as personnel costs, contingency operations and enhancements to the health-care benefits of military retirees. But it’s important to understand that, unless recapitalization spending keeps up, our forces ultimately could pay the price.

Congress appropriated just over $74 billion for procurement of new weapon systems in fiscal year 2004. That is more than $1 billion above the administration’s request, but still considerably below the levels that many experts and military leaders have said is needed to recapitalize the force. Military service chiefs, for example, have testified in recent years that at least $90 billion to $100 billion a year is needed for the Defense Department to modernize the force and replace rapidly aging systems.

The president’s budget plan for the next five years projects that procurement will jump to $77 billion in 2005, $84 billion in 2006, $94 billion in 2007, $104 billion in 2008, and $112 billion in 2009.

The plan certainly moves in the right direction. But it will not be easy to get there, if history is any guide. As has been the case in recent years, procurement accounts inevitably become “bill payers” for short-term needs, like readiness, operations, maintenance and military pay raises. Add to that the mounting costs associated with the war on terrorism, homeland defense and the reconstruction of Iraq, and it’s easy to see how difficult it will be to fund procurement programs, particularly those big-ticket items such as new aircraft, ships and ground combat vehicles. Most of the platforms out in the field today were produced in the 1980s, and therefore are reaching the end of their operational lives.

Further, domestic programs, such as Medicare and Social Security, also will put pressure on defense spending. Amidst a growing number of competing priorities for federal dollars, it would be fair to say that the Pentagon’s long-term projections for procurement increases could be overly optimistic.

Indicative of the modernization problems the services face is the controversial Air Force tanker lease program. Although the Air Force has made a strong and legitimate case for the need to lease 100 new Boeing 767 air-refueling tankers, the deal drew fire from critics who questioned why the Air Force should pay a premium for leasing the aircraft, instead of purchasing them outright. As service officials have stated repeatedly, there is not enough procurement money for the Air Force to pay for its other priorities—the F/A-22, the Joint Strike Fighter and the MC2A command-and-control platform, to name a few—and also buy tankers. Leasing is the best option available to meet near-term operational needs.

Meanwhile, the congressional plus-up of more than a billion dollars for procurement includes several important items. I’d like to highlight a few:

Unmanned aerial vehicles
Congress approved $1.4 billion for procurement and development. That is nearly a $225 million increase from fiscal year 2003. There is also $270 million for the development of the Navy and Air Force Unmanned Aerial Combat Vehicles.

Shipbuilding
A $11.5 billion appropriation marks an increase of $2.4 billion over last year.

Special operations forces
The bill includes $4.5 billion for the Special Operations Command, an increase of $97 million over the budget request and an overall increase of nearly 50 percent over last year.

Chemical and biological defense initiatives
The 2004 appropriation of $1 billion is $135 million more than the administration’s request.

Ground forces modernization
Congress added $417.7 million to procure 144 upgraded Bradley Fighting Vehicles, 43 M1A2 Abrams tanks and other equipment. It added $85 million for the Stryker Brigade fielding and equipment, and fully funded the Army’s request of $1.7 billion for further development of the Army’s Future Combat Systems.

To meet short-term equipment needs ensuing from ongoing conflicts, Congress added $20 million for up-armored Humvees, $60 million for additional PAC-3 missiles, $450 million for the refueling of two Los Angeles class submarines, $69 million for ammunition, $400 million for equipment for the National Guard and Reserves and $310.6 million for Army medical programs.

Looking ahead to next year, the defense budget again will be a juggling act. As the Pentagon prepares to submit the fiscal year 2005 spending plan, it will face many of the same challenges that we have seen this year, when it comes to balancing priorities. Another consideration is how Congress will handle the $87 billion supplemental appropriation the Pentagon is seeking to pay for operations in Iraq, Afghanistan and rebuilding efforts.

It is hoped that next year’s modernization accounts will not once again become bill payers. As our forces increasingly become committed to operations in the war on terrorism and the equipment gets more wear-and-tear than expected, cutting modernization dollars does not seem like a wise decision.

Send your comments to lfarrell@ndia.org

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