JUST IN: Esper Worried COVID-19 Response Will Constrain Defense Budgets

Secretary of Defense Mark Esper

Army photo by Dana M Clarke

The Pentagon is concerned the trillions of dollars allocated in COVID-19 relief stimulus packages will negatively affect the topline of future defense budgets, the head of the department said May 4.

“On the topline, I have said that we need, if we are going to continue to increase readiness, make this shift to implement the [national defense strategy], etc., we need a 3 to 5 percent annual real growth,” said Secretary of Defense Mark Esper. “I am concerned that the massive infusion into the economy by the Congress and the executive branch, nearly $3 trillion, may throw us off that course.”

Defense officials recognize that the United States has a large budget deficit, and concerns about growth in national debt caused by the relief packages could lead to smaller defense budgets, Esper said during a webinar event hosted by Brookings Institution.

The Pentagon is pursuing its top modernization priorities including the nuclear triad, artificial intelligence, hypersonics, space capabilities, cyber and directed energy, he said. The U.S. military wants next-generation systems to replace aging equipment and prepare for a potential war with advanced adversaries such as China and Russia.

“Those investments will continue,” he added.

Even before the COVID-19 pandemic hit, military budgets were expected to flatten. The Defense Department requested $705 billion for fiscal year 2021, which represents just an $800 million increase over the enacted 2020 level excluding natural disaster relief and emergency funding, according to budget documents.

While concerned about the high levels of total spending on pandemic response, Esper and other Pentagon leaders still want additional money from another stimulus bill in order to aid the defense industrial base.

The Coronavirus Aid, Relief and Economic Security, or CARES, Act provided $2.2 trillion to stimulate the economy and help businesses affected by the pandemic. The package included approximately $10.5 billion for the Defense Department to help protect national security-related supply chains and meet other needs.

“We anticipate the likely need for additional money … if there is a fourth supplemental,” Esper said.

The Defense Department wants to buy medical supplies and equipment, but also use the funds to assist the defense industrial base, he said.

“We want people at work, we want our base at work, we want to continue with payments, we want to continue with cash flow, and we are looking at a variety of ways by which we can do that,” he said “We really rely heavily on the private sector, and so many of our private sector workforce has been affected by COVID-19.”

Defense officials are in talks with lawmakers and the Office of Management and Budget to receive additional funding to offset inefficiencies caused by COVID-19, Undersecretary of Defense for Acquisition and Sustainment Ellen Lord told reporters last month.

“We are looking for something in the next CARES Act package, which is headed towards OMB shortly, ... and we are in active conversation with members [of Congress] and staffers," she said.

Lord did not disclose exactly how much money the Pentagon is seeking, but said it was "billions and billions" of dollars.

Esper voiced extra concern for challenges sub-tier vendors are facing due to the pandemic.

“The further you go out into the supply chain, the more vulnerable, the more susceptible your producers are,” he said. “We have to take care of them first and work our way back."

Esper said he plans to reach out to members of industry this week to see how the department can help meet their needs.

“I will be sending a letter to the [defense industrial base] this week expressing my thanks for what they’re doing and asking them how we can do better keeping the DIB, as we call it, at full capacity," he said.

Topics: Defense Department