The Real “Base” Pentagon Budget and the Actual “Defense” Budget Winslow T. Wheeler

http://defense.aol.com/2012/02/17/which-pentagon-budget-numbers-are-real-you-decide/

The Real “Base” Pentagon Budget and the Actual “Defense” Budget

Winslow T. Wheeler

When the Pentagon released its budget materials and press releases last Monday, the press dutifully reported the numbers.  The Pentagon’s “base” budget for 2013 is to be $525.4 billion, and with $88.5 billion for the war in Afghanistan and elsewhere added, the total comes to $613.9 billion.  (See the two DOD press releases at http://www.defense.gov/releases/release.aspx?releaseid=15056 and http://www.defense.gov/news/2013budget.pdf.)

Indeed, if you plowed through the hundreds of pages of additional materials the Pentagon released Monday (at http://comptroller.defense.gov/budget.html), you would come up with little reason the doubt the accuracy of those numbers as the totality of what Secretary of Defense Leon Panetta was seeking for the Pentagon.  It would also seem reasonable that those amounts constitute the vast majority of what America spends on “defense,” defined generically.

You would be quite wrong to think so.

The Pentagon’s “base” budget—i.e. the non-war parts—is not $525.4 billion; the formally presented Pentagon budget, as shown by the President and his Office of Management and Budget (OMB) is $6.3 billion higher, making a total of $531.7 billion.  (Find just one version of the OMB presentation at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/32_1.pdf.)

Why isn’t that slightly higher number reported by the press?  Simple; it’s not in the Pentagon press release.  Even when told about the more complete materials at the OMB website (as I attempted to do), the press seems to unanimously prefer the lesser DOD version.

The additional $6.3 billion is for some military retirement and other military personnel costs that are every bit a part of the Department of Defense (DOD) budget as the rest of its personnel costs or any plane, tank or ship in the inventory. It’s a part of the President’s official budget request for the Department of Defense, and it’s money appropriated by Congress, just like the rest. The only difference is that it is appropriated by a different mechanism.  That mechanism is what OMB and others call “mandatory” spending, also known as “entitlement” spending, or as it was originally conceived, permanent appropriations as authorized by law.

You’ll have to ask the Pentagon why its press releases are inaccurate to the tune of $6.3 billion.  They might say that’s the way they have always shown their budget to the press.  They might say that they don’t want to change now and present apples this year compared to last year’s oranges.  They might say they like to hide DOD costs, but I doubt they’ll admit the latter.

They hide other DOD costs as well. There are other expenses for DOD military retirement and also for a part of the DOD healthcare system buried in other parts of the federal budget.  You can find them in the budget requests for Health and Income Security.  (Find them in Budget Functions 550 and 600 in the table at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/32_1.pdf.)  When you net out some intra-governmental transfers and other obscure budget-geek twists and turns, I calculate a total of $29.4 billion in 2013 for the expenditures for these DOD costs not shown in the DOD budget—and certainly not in the Pentagon’s press releases, not ever.

If you want to be a stickler for detail and budgetary ethics (the latter not a particularly popular activity these days, if ever), the “base” Pentagon budget, is not $531.7 for 2013, it is $561.1 billion.  It sure as heck is not the $525.4 billion the Pentagon press release and its avid readers in journalism have reported so profusely.

There is, of course, more.  Technically not a part of the DOD budget, but certainly a generic defense cost are the warheads in the Pentagon’s strategic nuclear delivery systems, like the B-2 bomber and the Minuteman and Trident missiles.  Nuclear warhead research and upkeep are a Department of Energy cost; $19.4 billion in the 2013 budget. 

There are also the costs for what OMB officially calls “defense-related activities” (the Selective Service, the National Defense Stockpile and other cats and dogs) that amount to $7.8 billion for 2013. 

Done?  Not yet.

Consider the $8.2 billion that the State Department wants to spend for the conflicts in Iraq and Afghanistan, which—like it or not—is a national security cost.  And what of the rest of the State Department budget ($61.6 billion) for diplomacy, foreign aid, arms sales, aid to Israel and a lot more.  Some Washington-types call this budget “soft power,” and it is surely an important part of America’s international security presence.

Consider also the human consequences of past and current wars that are born by our veterans and the Department of Veterans Affairs: add another $137.7 billion for 2013.

How about protection in the war on terrorism?  The Department of Homeland Security and the homeland security expenses of various agencies not discussed here (such as the $4.1 billion being sought by the Department of Health and Human Services) are certainly a national security cost: add $46.3 billion for 2013.

Add all that together, and you get $930.6 billion. 

But we’re not quite done yet.

The Pentagon budget and all the other defense related spending have to be taken into account for our annual payment for the national debt.  The net interest on the national debt for 2013 is to be $248 billion.  All defense related spending for 2013 constitutes 25.7 percent of all federal expenditures ($3.8 trillion in 2013); 25.7 percent of the interest payment is $63.7 billion.

The total budget request for all US defense related spending in 2013 is $994.3 billion, by my calculations.

Some might differ with some part of my tabulation, such as using a different formula for calculating a defense share of the debt payment or including or excluding something different (perhaps NASA) from the agencies and expenses I list above.  In any case, however, it will come to a grand total close to $1 trillion.

After Monday’s press releases were consumed, newspaper story after newspaper story described a defense budget that consisted of a $525.4 billion “base” plus $88.5 billion more for the war in Afghanistan, etc.—to make a total of $613.9 billion.  That was $380.4 billion short of the total “defense” (or national security) budget I see if you go through the budget materials a little more thoroughly.

All those numbers are shown in the table below.  Also shown is a comparison to the current fiscal year, 2012.  After all the chatter, some of it still quite hysterical, about “defense cuts,” I find no cut; I find “defense spending” (defined generically) going up by a nominal $8.2 billion, from $986.1 billion to $994.3 billion.

Given the rhetoric we hear out of Washington about “devastating” cuts that fail “to adequately address threats” you have to wonder how much more than $1 trillion do these people want to spend?

Table: Total Defense Spending

DOD or Defense Related Program	2012	2013	Notes/Comments
DOD Base Budget (Discretionary)	530.5	525.4	Widely reported by the press as the “base” DOD budget.
DOD Base Budget (Mandatory)	4.9	6.3	This amount is frequently not counted by DOD, its press releases, and the press as DOD spending.  It is an official part of the DOD budget, always counted—for example—by OMB.
DOD Base Budget (Total)	535.4	531.7	“Total” spending is Discretionary and Mandatory combined.
Overseas Contingency Operations	115.1	88.5
DOD Subtotal (Total)	650.5	620.2
DOE/Nuclear (Total)	18.5	19.4
“Defense-related activities” (Total)	7.8	7.8
National Defense (Total)	676.7	647.4	This is the “National Defense” budget function, also known as “050.”
Net Military Retirement Costs Not Scored to DOD (See Budget Functions 600 & 950)	21.2	26.8	The Military Retirement Trust Fund in Treasury collected and paid $17.1 billion in interest in 2012 and 2013.  That amount is included in the totals to the right.
Net DOD Retiree Health Care Fund Costs Not Scored to DOD (See Budget Functions 550 & 950)	-1.1	2.6	This fund also collected and paid $7.0 and $7.4 billion in interest in 2012 and 2013.
International Affairs (Total)	61.3	69.8	Includes $8.2 billion in OCO for Budget Function 150. The OCO grand total is $96.7 billion.
Veterans Affairs (Total)	124.6	137.7	This spending encompasses the effects of past and current wars; spending for veterans of the last ten years will be increasing dramatically in coming years.
Homeland Security (Total)	46.0	46.3	Includes HS spending in DHS and all federal agencies not shown on this table.
Subtotal of the Above	928.7	930.6	Total Federal Spending is $3.8 trillion in outlays in 2012 and 2013.
24% of Net Interest on the Debt	57.4	63.7	The outlays of the above programs comprise 25.5% and 25.7% of total federal outlays for 2012 and 2013.
Grand Total	986.1	994.3