How the Defense Budget Could Actually Increase (Slightly)

Conventional wisdom is that defense spending will be cut or remain flat under the next administration. There is certainly reason to think it might. The president’s Fiscal Year 2021 request indicates a flat budget over the next five years and the Democratic platform advocates a reduction in defense spending. It is a safe bet that President-elect Joe Biden’s budget request will reduce or maintain the defense budget. Once all is said and done, though, it is more likely that defense spending will end up growing rather than shrinking. However, there remain several potential political complications that could prevent the Pentagon from benefitting.

Reaching a bipartisan budget deal for FY2022 (along with passing all corresponding appropriations bills) will be a tumultuous and slow process whose conclusion is by no means certain. Should a budget deal be reached, it will likely include an increase, if only slight, to defense spending.

The way this would happen is as follows: the Biden administration’s FY2022 budget request will likely increase domestic — but not defense  — spending. Overall, congressional Democrats will support the budget. The progressives within the Democratic Party may request a greater increase to domestic spending. Meanwhile, among congressional Republicans, the fiscal conservatives will object to a budget that increases the deficit, while more national security-minded Republicans will demand real growth in defense spending.

So long as the legislative filibuster remains part of the Senate, 60 votes are needed to pass appropriations bills, meaning bipartisan support will be required. In the past few years, that meant the support of almost all Democrats and a group of Republicans. All three previous budget deals have passed with the same vote make-up — a combination of almost all Senate Democrats and about half of Senate Republicans. This has been true regardless of who the president was or who controlled the House and Senate.

*Appropriations bills typically get more support than budget deals. The Bipartisan Budget Act of 2018 included both the budget deal as well as corresponding appropriations.

If past is prologue, it is very likely that fiscal conservatives will not support any budget or appropriations bills under a Biden administration unless it somehow eliminates the deficit without raising taxes. And due to the Democratic control of the White House and Congress, an even greater number of Republicans are expected to vote against a spending bill. As a result, defense hawks will become the Senate Republicans necessary to reach the 60-vote threshold. But they will not support a budget that prioritizes domestic spending over defense, even if both are increasing. Thus, the negotiations will revert back to the dollar-for-dollar construct, where every dollar increase for domestic spending is matched with a dollar increase to defense spending.

The dollar-for-dollar construct was born out of the Budget Control Act of 2011, which set up the framework to divide discretionary spending into two categories, defense and non-defense. The purpose of this framework was to enable automatic reductions in spending (sequestration) to be applied to both categories equally. Since then, follow-on budget deals to increase spending above the Budget Control Act discretionary caps have maintained that framework. In the past, Democrats have been the most ardent believers in maintaining dollar-for-dollar increases. It is safe to assume that the script will flip in the 117th Congress.

Some Democrats in Congress, including the chairman of the House Armed Services Committee, have been vocal about the need to reduce defense spending. But when it comes to the overall budget negotiations, this is not their top priority. For the Democratic Party, increasing domestic spending is more important than decreasing defense spending. And so long as the debt can continue to grow, it is not a zero-sum game. Thus, the fate of the defense topline rests on what the Biden administration has planned for domestic spending.

This possibility of an increase in spending for defense is positive news for the Pentagon and defense hawks, but there are still many ways things can go wrong. One area of constant concern is timing. With the change in administration, the president’s budget request will likely be delivered one or two months late to Congress. In addition, Congress is notoriously slow when it comes to budget negotiations and appropriations bills, and FY2022 will be no different. Any budget deal will likely be packaged with other must-pass legislation, such as another emergency COVID-19 package or debt ceiling increase. While the current debt ceiling suspension expires in July 2021, the Treasury Department routinely uses extraordinary measures to delay the deadline by several months before Congress needs to extend the suspension or raise the debt ceiling. Given the change in government, budget negotiations will be harder fought, and thus the safe assumption is that there will not be spending bills until December of 2021 at the earliest. If the increase in spending comes too late in the fiscal year, it becomes much more difficult for the Department of Defense to use the increase strategically.

The other possible pitfall would be if Congress failed reach a budget deal altogether and instead relied on continuing resolutions for the entire fiscal year. This approach would be incredibly damaging to the Department of Defense because continuing resolutions prevent the department from changing spending at the programmatic level, whether it be terminating, starting, or even growing individual programs. At a time when the military is seeking to redesign the force to address peer adversaries, a continuing resolution would do outsize damage to military competitiveness. But because they are less problematic for other federal agencies and would lock in high levels of funding for non-defense programs, continuing resolutions could prove politically tempting if a budget deal is too hard to come by.

While there is a scenario where defense spending will increase for FY2022, this increase will likely come in a chaotic and uncertain environment. Those in Congress seeking to increase spending for defense will have to balance the need for additional funding with the risk of resorting to long-term continuing resolutions should they fail to reach a budget deal.

Diem Salmon is an adjunct senior fellow at the Center for New American Security (CNAS) and also works at Anduril Industries, a defense technology company. Prior to that, she was the budget director and deputy policy director for the Senate Armed Services Committee for Chairmen John McCain and Jim Inhofe.

Image: U.S. Air National Guard (Photo by Airman Thomas Cox)