Episode Notes:

In mid-March, the Biden administration released the fiscal year 2024 defense budget, asking Congress for $842 billion. To discuss the budget request, where money is being allocated, and what it all means, Stacie Pettyjohn, a Senior Fellow and Director of the Defense Program at CNAS joins the WarCast.

[:26] FY 2024 Defense Budget

[2:58] Continuity and trends

[5:50] Procurement 

Episode Transcript

Aaron Stein: My name is Aaron Stein, and I am the Chief Content Officer at War on the Rocks. You are listening to the Warcast, the members-only podcast for what you need to know — now. Today, I am joined by Stacie Pettyjohn, who is a senior fellow and director of the defense program at CNAS. Stacie, it's good to have you on the Warcast. 

Stacie Pettyjohn: It's good to be here, Aaron.

Aaron Stein: The reason I wanted to have you on is because the Biden administration has put out the first draft — and I think we should emphasize that it is the first and that things will change — of their upcoming budget. And the budget obviously has a lot to do with how the U.S. buys weapons and how the U.S. plans for the outfit of its armed forces. Can you take the listeners into the budget and let people know what jumped out to you on your first reading? 

Stacie Pettyjohn: Right now, we have some of the budget documentation, not all of it. Like the nerds that I am, what I really wanna get into, the j-books, haven't been released yet, but the services and the department have released some of their overarching documents and supporting briefing materials to let us know what they want us to know from the budget. And the administration has really been emphasizing that this is the largest defense budget ever, with $842 billion in this request. They have been stressing that this amount is sufficient for what the department needs and that it is entirely driven by the 2022 National Defense Strategy and that there's a lot of continuity there. And I think many of those things are true. You've already heard from some of the Republican members of Congress and some critics that in reality, while this is a huge number that is being requested for the Defense Department, that in real terms, it's only about a 3.2 percent increase from last year, which is less than the rate of inflation is generally understood, so that in real terms, the department is probably actually getting less money to spend than it had in prior years. Another key factor that differentiates this request from last year or the enacted amount that we saw for FY23 is that it does not include any resources for supporting Ukraine. They've bracketed that off and they're trying to keep that separate, given that they've said that they don't know exactly what Ukraine will need, which I'm sure is true, but also I suspect because supporting Ukraine has become somewhat of a more divisive issue on Capitol Hill. So they wanna leave that out of the core request and have this just really be the resources that are needed for the United States primarily. 

Aaron Stein: So if you were to take those — do you see any continuity areas in terms of where the Biden administration has been focusing on since coming into power, and maybe even extending back into the Trump administration, in terms of where dollars are being allocated for defense priorities? 

Stacie Pettyjohn: There are some areas of continuity. The biggest areas of continuity are ones that are somewhat outside of any administration's control, and these are these overarching trends among the accounts within the defense budget where personnel costs are going up. The military personnel accounts are becoming an increasingly large share, and this year, I think there's an over 5 percent increase in pay for military personnel included in this budget. So you're continuing to see people cost a lot of money and that actually is a huge portion of the defense budget. Another big piece of the budget, that I think is up from last year — though I'm not 100 percent certain of that — is operations and maintenance. A lot of the equipment that DOD operates is fairly old, and to keep it performing at the level that's required, it takes longer and costs more money to keep it ready. Also, training of military personnel, ensuring that they're ready to deploy should they need to. Those are huge shares of the budget that sort of haven't really changed much. The other big piece, and this has been foreseen for quite some time, is that the nuclear modernization bill is coming due. It's not costing more, but we're actually beginning to procure some of these systems, and that's a huge piece of the investment budget as a whole. So a lot of the money is going towards systems that all of us hope we will never, ever have to use, like the new Columbia-class nuclear-armed submarine, the B-21, the Sentinel ICBM, and the long-range strike LRSO, the new long-range nuclear-armed cruise missile. So those trends are sort of there and have been the same. From a strategy perspective, I do think you see a continued focus on China and on really trying to overhaul the department and think about the future. So “divest to invest” — the Air Force is still trying to push the retirement of systems like the A-10 that they have for a very long time. The Navy, I think, has eight or nine ships that they're asking to retire this year, and the idea is that they're gonna use that money to invest in new research and game-changing technologies that will help better prepare them to deter and, if needed, defeat China. 

Aaron Stein: A lot of that money being tied up in O&M always leads people, and then obviously with nuclear modernization, always leads people to argue that that top-line overall budget number is not enough for procurement. Can you talk a little bit about what you're seeing in these initial numbers about U.S. procurement, multi-year procurements, and what you think it all means? 

Stacie Pettyjohn: Last year was a record year for research and development in the budget. They had more money into that category than ever before, previously, and a lot of that was basic research, science, and technology. And there's been a lot of concern that the department has been investing a lot of money for years now in these new game-changing technologies and that they don't actually come to fruition. Across the services, there have been all these spectacular failures where you have these massive programs that didn't ever actually enter into procurement. Whether you go from the Army and its Future Combat System, the Zumwalt destroyer — which, you know, one was built, the LCS, which we built some, but now they're already trying to retire. The Air Force has had its own struggles. So across the board, there's a worry that we're investing in technologies and prototyping systems that we're never going to actually be able to procure at scale. And this year, you heard the deputy say in her opening remarks that this is a procurement budget and you do see more money in procurement. And a lot of this is because some programs are making that big shift. Especially in the Army, you're seeing that their long-range hypersonic weapon is supposed to come online this year. They're actually buying missiles, mid-range capabilities, some of the different vehicles that they're set to purchase. And you are continuing to see, I think, one of the Columbia-class submarines is actually in this budget as well. So some of the systems that support the triad and nuclear deterrence are also entering into procurement. So that is beginning to happen. I think that there might be less than some would hope in terms of these really new game-changing technologies that people are excited about that come from Silicon Valley, like the IVAS goggles that the Army's been acquiring. They're slowing that procurement down as they're learning and adapting and figuring out what actually works for soldiers in the field and what doesn't. Multi-year procurements, that's one of the exciting things. Hannah Dennis and I had argued last year in our report, Precision and Posture, that the department should look at that for munitions. We've seen just the incredible consumption rates in Ukraine and realized that missiles and munitions are always sort of what everybody in the department refers to as the “bill payer.” They're easy to cut. We buy hundreds, maybe thousands of them, so if you need to balance the budget, you find that wiggle room by cutting munitions and planning on making that up the next year. But in reality, they never do so. So one way to get around this and also to provide industry with the stability and predictability that they need to make the investments to expand production, because we've also seen that there's not excess capacity and an ability to quickly surge and start churning out, whether it's more GMLRS or 155 or JASSM or LRASM, that is multi-year procurement authorities. So in the NDAA, the department was given last year multi-year procurement authority, and some of those went through — mainly for the Army and, I think, mainly for weapons they were looking at for resupplying stockpiles that had been depleted because they've been given to Ukraine. This year, the department claims that they're making unprecedented use of the multi-year procurement authorities and they're going to extend that to a lot of the weapons and long-range missiles that they want to be prepared for a war in the Pacific, including like the Naval Strike Missile, LRASM, SM6, JASSM — sort of across the board. And it will be really interesting to see if Congress actually appropriates the funds for that, because this is where it fell apart a bit last year in the final stage of authorizing or appropriating money to the budget. They were authorized multi-year procurement and they got it for a few systems. I'm not actually entirely sure which ones it was beyond GMLRS. Then, Congress sort of bulged on the appropriation side and didn't give it for as wide of a range, the money for that, because they prefer to be able to look each year and make their decisions. They have ultimate authority over where the money goes. So hopefully, we will see more multi-year procurement for this year's budget and for these systems that are more relevant for the Indo-Pacific. 

Aaron Stein: Stacie, thanks for joining the Warcast. 

Stacie Pettyjohn: Thanks for having me.