The Real Increase in Defense Spending

The budget deal reached by Democratic and Republican leaders has been signed into law by Trump. I’m posting this because the actual cost of the deal is substantially greater than is widely being reported. When all of the spending increases in the bill are added up, the cost will be at least $500 billion over the next two years. I will demonstrate this by discussing defense spending and discretionary domestic spending separately. As is obvious from the title, this post deals with the increase to defense spending that has resulted from this budget deal. I will address the increase in discretionary domestic spending tomorrow.

Recapping the Budget Process

In August of 2011, The Budget Control Act (BCA) became law. Under BCA, Congress had until November 23, 2011 to pass a bill that would have resulted in reducing the debt by 1.2 trillion dollars. Since Congress failed to meet its own deadline, automatic spending cuts to defense and discretionary domestic spending were triggered. The cuts were to take place every year from 2013 through 2021 and were to be divided evenly between defense and discretionary domestic spending. The cost of war and programs like Social Security and Medicaid were exempt from the automatic cuts. In both 2013 and 2015, Congress voted to partially override the automatic spending cuts it enacted under the BCA. Congress has never allowed the full supposedly automatic spending cuts to take affect.

Defense Spending

Under the BCA, the defense spending that is subject to the budget was supposed to be $549 billion in 2018 and $562 billion in 2019. Under the budget deal, defense spending that is subject to the budget will be $629 billion in 2018 and $647 billion in 2019. So, the deal increases defense spending that’s subject to the budget by $80 billion in 2018 and $85 billion in 2019. That means the total increase to defense spending that’s subject to the budget over the next two years is $165 billion.

In the aftermath of the 9-11 attack, Congress created the Overseas Contingency Operations Fund (OCO). The purpose of the OCO was to hide the actual cost of the wars in Afghanistan and Iraq by keeping those costs out of the normal budgetary process. Under this deal, the Pentagon will get $71 billion added to the OCO in 2018 and $69 billion added to the OCO in 2019.

By adding the increase to defense spending that is covered by the budget process and the amounts added to the OCO, we see that the Pentagon’s actual increase in 2018 will be $151 billion above the amount it would have gotten under the BCA. In 2019, the Pentagon will receive $154 billion more than it would have under the BCA. In total, this deal will increase defense spending by $305 billion over the next two years compared to what defense spending would have been under the BCA.

In 2018, the Pentagon’s total budget will be $700 billion. In 2019, the Pentagon’s total budget will be $716 billion.