CBO forecasts rising Defense costs

To carry out the Obama administration's defense plans, the Pentagon will need its non-war-related spending over the next 18 years to average 6 percent more than the amount sought in its fiscal 2010 budget request, according to CBO testimony Wednesday before the House Budget Committee.

Despite efforts to cut unnecessary programs and otherwise rein in defense budgets that have spiked since 2001, the Pentagon still will need roughly $567 billion annually, in constant 2010 dollars, for its base budgets between fiscal 2011 and fiscal 2028, Matthew Goldberg, CBO acting assistant director, told the panel.

That figure, which does not include war costs, marks a $33 billion increase over the fiscal 2010 base defense budget request.

Real growth in pay and benefits for the Defense Department's military and civilian personnel, combined with projected increases in operations and maintenance costs to deal with aging equipment as well as newer and more complex gear, will contribute to the growth in defense spending, Goldberg said.

Also driving up the defense budget are plans to develop and field new weapons systems and investments in new capabilities, such as advanced intelligence, surveillance and reconnaissance systems, to meet new security threats.

During the hearing, House Budget Chairman Committee John Spratt, D-S.C., raised concerns about the constant growth in military personnel and operations and maintenance accounts, which make up nearly two-thirds of the Pentagon budget. O&M, for instance, has grown at a rate of 2.7 percent a year above inflation.

Those accounts, Spratt said, are threatening to "squeeze out" funding for procurement and research and development, the bedrock of military modernization efforts.

If there is no real growth in the Defense Department budget, acquisition accounts will decrease from 35 percent of the budget in fiscal 2010 to 24 percent in fiscal 2020, Steve Daggett, a defense budget analyst at the Congressional Research Service, told the panel.

Over the same period, O&M costs will take up 45 percent of the budget in fiscal 2020, compared to 34 percent this year. Military personnel accounts will grow more modestly, from 26 percent on Wednesday to 28 percent, in 10 years.

Without any real growth in the defense budget, the military would be forced to make trade-offs to avoid a steep reduction in its acquisition accounts. Those trade-offs, according to Daggett, could include cutting the size of the force or taking measures to reduce operating costs.

Meanwhile, spending on operations in Iraq and Afghanistan still makes up about 35 percent, or $154 billion, of the total defense budget request for fiscal 2010. Long-term estimates on war spending hinge largely on whether and how many additional troops President Obama decides to send to Afghanistan.

Daggett also noted that each U.S. soldier deployed to Afghanistan for one year costs about $1 million. By comparison, one Afghan soldier costs $12,000 annually.

Meanwhile, the current monthly "burn rate" in Afghanistan is $3.6 billion. But that would grow to about $7.2 billion -- or the same rate that the United States is spending monthly in Iraq -- if Obama decides to send in 50,000 additional troops, he said.