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With warnings coming from the Obama administration of a 2010 defense budget that will have only a modest $14 billion increase over current funding, lawmakers are coming to realize that the Defense Department's long-range personnel and weapons programs are unsustainable.
Something has to give, and the likelihood is that it will be a combination of reigning in spending on personnel programs — including the possibility of smaller military and civilian pay raises — and a mix of cancellations, reductions and revisions in weapons programs, according to two congressional experts on the defense budget who testified Wednesday before the House Budget Committee.
The Obama White House is not expected to deliver a detailed 2010 federal budget to Congress until April, but a blueprint drawn up by the Office of Management and Budget proposes a 2010 defense budget of about $527 billion, or 8 percent more than the current budget. That does not include supplemental funding for combat operations in Iraq and Afghanistan.
An 8 percent increase might seem large at a time of widespread economic crisis in the U.S., but the $14 billion increase falls far short of the $584 billion budget drawn up last fall by the Joint Chiefs in what has become more of a wish list than a formal budget plan.
Stephen Daggett, a defense policy and budget specialist with the Congressional Research Service, said it is hard for some people to understand how the defense budget can be short of money given dramatic increases over the years.
"CRS's analysis, quite bluntly, is that the budget seems tight because the cost of almost everything we have been doing in defense has been accelerating upward too fast even for growing budgets to keep up," he said.
Personnel expenses, he said, are a prime example. After adjusting for inflation, the average cost of an active-duty service member is 45 percent higher today than in 1998, he said. And, he added, that doesn't even include health care costs, which have grown by an average of 7 percent annually. In the defense budget, health care costs are funded out of operation and maintenance accounts, not personnel accounts.
The Congressional Budget Office prepared some budget alternatives for Congress to deal with defense budget shortfalls. One of its options calls for capping military and federal civilian pay raises through 2015. For several years, raises approved by Congress have been 0.5 percentage point more than the average annual increase in private-sector wages. The CBO proposal would cap raises at 0.5 percentage point less than average private-sector raises, but would increase some special pays and bonuses to make up for the reduced pay.
The alternative budget also proposes increasing enrollment fees and copayments for military retirees using the defense health care system and a reduction in Army and Marine Corps personnel.