USA Defense Threatened by Congress Budget Control Act

October 28th, 2011
in econ_news

Econintersect: In testimony to Congress, Douglas W. Elmendorf, Congressional Budget Office (CBO) Director stated that the military blueprint for national defense likely suffer IF the Joint Select Committee on Deficit Reduction cannot reach a consensus AND the automatic provisions of the Budget Control Act of 2011 initiate.

Even if budget authority for defense programs (other than overseas contingency operations) grew at the rate of inflation, that amount of funding would be insufficient to pay for the Future Years Defense Program (FYDP) provided to the Congress in April 2011 by the Department of Defense. 

Follow up:

CBO has examined the programs and plans contained in that document, which did not include war-related activities, and projected their budgetary impact.   According to CBO’s calculations, over the period from 2012 to 2021, the funding needed to implement DoD’s plan (and finance the small portion of defense spending carried out by other agencies) would exceed by about $480 billion the amounts projected by assuming that current budget authority increased at the rate of inflation.

Most believe this Budget Control Act limits constrains the appropriations to fight wars.  The CBO points out that waging of wars is outside of the act.

The caps set by the Budget Control Act of 2011 also treat funding for the wars separately—the caps do not constrain funding for overseas contingency operations (or funding designated as an emergency requirement). Consequently, for its baseline projections, CBO follows the standard procedures specified in law and assumes that budget authority for overseas contingency operations will continue at current levels with adjustments for inflation.

The automatic provisions of the Budget Control Act have serious consequences to government operations in non-defense as well.

Even if budget authority for nondefense programs grew at the rate of inflation, that amount of funding would be insufficient to continue some current policies over the 2012–2021 period. For example, the cost of veterans’ health benefits—under an assumption that current enrollment rules remain unchanged—is projected to rise more rapidly than inflation and thus to exceed the budget authority calculated simply by extrapolating the current year’s appropriations at the projected rate of inflation. CBO has estimated that this gap will total $70 billion over the 2012-2021 period.

Similarly, maintaining current award amounts for Pell grants would require funding above what would be shown in a projection based on inflating 2011 appropriations. Moreover, many analysts believe that current funding for some programs is insufficient to meet the nation’s future needs. For example, many analysts believe that current national spending on infrastructure is inadequate to provide enough roads, bridges, and other capital assets to maintain the current level of highway services or to fund all of the projects whose benefits exceed their costs.

Source & Complete Presentation PDF: CBO


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