The 2007 Defense Budget May Not Be What You Think

Defense Budget Tutorial # 9:

More Chaos than Normal in Defense Budget Numbers

Congress has so complex-ified the defense budget and stuffed it with spending gimmicks, it is difficult to understand just how much is being spent on national defense and the wars in Iraq and Afghanistan. It has become such a jumble that some journalists seem to rely upon press releases from the Senate and House Appropriations Committees and the Senate and House Armed Services Committees to report on the budget. Doing so is a serious mistake; the committees’ numbers are highly misleading, and sometimes have absolutely nothing to do with what is actually spent on defense.

For example, on Sept. 21, the Senate Appropriations Committee announced the completion of the House-Senate Conference Committee to resolve differences in two very dissimilar versions of the Department of Defense Appropriations bills the House and Senate had passed earlier in the year. Describing the final result, the Senate Appropriations Committee stated, “The bill provides $436.6 billion in new discretionary spending authority for the Department of Defense for functions under the Defense subcommittee’s jurisdiction, including $70 billion in additional appropriations to fund operations related to the Global War on Terror (GWOT).”[1]

The next day, the House Appropriations Committee said in its press release that the bill’s total was “$377.6 billion (PLUS a $70.0 billion bridge fund for military operations in Iraq and Afghanistan).”[2] $377.6 billion plus $70.0 billion equals $447.6 billion, not the $436.6 billion the Senate Appropriations Committee cited. There’s an $11 billion difference in describing the same bill!

Both statements are technically correct and quite misleading at the same time.

Neither figure constitutes the Department of Defense’s budget for 2007—with or without including spending for the wars in 2007, which will not be the $70.0 billion the committees described.

The Senate and House Armed Services Committee also just reached agreement on different legislation, the National Defense Authorization Act for Fiscal year 2007. Those committees told us the total for defense was $532.8 billion ($85.2 billion more than the higher House Appropriations Committee figure above). But the numbers from the House and Senate Armed Services Committees—while in agreement with each other—have little, if anything, to do with the amounts will actually be spent on defense in 2007.[3]

Feeling confused?

You’re not alone. Many journalists reported what one of Congress’s defense committees said and, as a result, misreported to the public just what is the budget for defense spending in fiscal year 2007, which started Oct. 1.

Take a deep breath and go along for a ride on just what is the U.S. defense budget and how much money Congress is making available for it in the new fiscal year.

Let’s start with what the president asked for. His budget request for the Pentagon in 2007 was

$439.6 billion in new appropriations, plus another $1.9 billion in DOD’s entitlement programs (also known as “mandatory” spending for things like some military retirement costs). That comes to $441.5 billion.

He also asked for an additional $50.0 billion as a “bridge fund” to start paying for the costs of the wars in Iraq and Afghanistan in 2007. Total: $491.2 billion.

But the Department of Defense’s budget does not constitute all of what we should call “defense spending.”

That broader category includes the nuclear weapons activities of the Department of Energy ($17.0 billion in the president’s request) and what is identified in the federal budget at “Other Defense-Related Activities,” such as international activities against crime and terror by the FBI, the dormant Selective Service, the National Defense Stockpile, and other miscellany ($4.8 billion).

These amounts are included every year in the While House’s budget request for what the Office of Management and Budget calls the “National Defense” budget.

All those numbers come to $513.3 billion, but they constitute only what the president requested earlier in the year, not Congress’ final disposition.

The Department of Defense Appropriations Act that Congress ultimately passed on Sept. 29 (and that the president signed into law the same day) addressed only spending in the Department of Defense, but the bill did not cover everything for DOD.

In a narrow—and misleading—sense, the Senate Appropriations Committee was correct to say it made $436.6 billion available for “new discretionary spending authority for the Department of Defense for functions under the Defense subcommittee’s jurisdiction.” The committee neglected to add that 2007 spending for “functions under the Defense subcommittee’s jurisdiction” also included some old appropriations for 2007 that it enacted two years ago for the costs of military retirees’ healthcare. Not a small oversight, the missing amount was the same $11 billion that the House Appropriations more accurately included in its total for the same bill, $447.6 billion.

OK. So that’s everything for DoD’s budget in 2007, right?

Wrong.

The $447.6 billion “total” does not fund the following DoD programs:

$12.6 billion requested by the president for military construction;

$4.1 billion requested for military family housing;

$13.5 billion requested for other housing costs (“Basic Allowance for Housing”);

$6.2 billion requested for base repairs and maintenance (Facilities Sustainment”);

$1.4 billion for environmental restoration on military bases, and

$21.0 billion for the Defense Health Program for military personnel and military retirees, and the families of both.

That comes to $58.9 billion in military construction and “quality of life” programs the president requested, but that was not included in what the Appropriations Committees incompletely calls “the Department of Defense Appropriations Act for 2007.” Congress didn’t forget about these programs; nor did it reject the president’s requests. It just hasn’t gotten around to them yet.

Those programs are in a separate bill, H.R. 5385, which did not get final action when Congress adjourned on Sept. 30 to permit the members to go home to work on their re-election in the upcoming Nov. 7 congressional elections. This and several other appropriations bills will be dealt with when Congress returns to Washington on Nov. 13 for a “lame duck” session to finish undone business.

The explanation for why the “Department of Defense Appropriations Act for 2007” does not include all DOD programs for 2007 is not simple.

Two years ago, the House Appropriations Committee reorganized itself and gave additional defense budget responsibilities to what had previously been its subcommittee that handled only military construction. All those “quality of life” functions (for basic housing allowances, facilities maintenance, environmental restoration, and defense healthcare) were added to what had previously been the Military Construction subcommittee in the House; it became the subcommittee on Military Quality of Life and Veterans Affairs and Related Agencies.” Accordingly, the House-passed DoD appropriations bill contained none of this spending; it was in the separate bill from the new subcommittee.

The Senate’s counterpart Military Construction subcommittee chose not to so reorganize.[4] It reported out a different bill to the Senate; it addressed just military construction, leaving the DoD “quality of life” spending where it had always been in past appropriations bills (i.e. in the Department of Defense appropriations bill). Thus, when the House and Senate appropriators met to resolve their spending differences this year, they had more than usual to decide, specifically what bill would fund what programs. Last year, they had the same problem and decided to keep all the “quality of life” spending in the final version of the DOD bill. But this year, they decided to switch and to appropriate the “quality of life” programs in the separate House ‘quality of life’” legislation, HR 5385.

Got it? Who knows what they’ll do next year. Do they?

Back to the budget business at hand: When Congress gets around to passing the separate “quality of life” bill (H.R. 5385), it looks like about $58.1 billion will be added to DoD for 2007.

If that $58.1 billion figure remains the final tally for that bill, the new total for DoD spending in 2007 would be $505.7 billion. ($447.6 in the DoD Appropriations Act and $58.1 billion in the separate bill.)

Finally, we are done for DoD in 2007, right?

Wrong.

The $70.0 billion “bridge fund” will not pay for all of the costs of the wars in Iraq and Afghanistan in 2007. In 2006, the wars cost $117.6 billion, and there is no reason to anticipate any significant reduction. In its summer “Mid-Session Review” of the budget for 2007, the Office of Management and Budget estimated that another $60 billion would be required for 2007.[5] That additional money will be requested at some point after the Nov. 7 elections, probably not until February 2007, when next year’s budget is requested. It will bring the total for the wars in 2007 to $110 billion, perhaps to $130 billion. (It is not clear if the additional $60 billion should be added to the $50 billion “bridge fund” the president requested or to the $70 billion amount Congress appropriated.)

Thus, 2007 appropriations for DoD are likely to come to at least $545.7 billion, and perhaps as much as $565.7 billion.

That would finish 2007 appropriations for the Department of Defense, but we have not completed all defense related spending. Still missing are amounts for the nuclear weapons activities of the Department of Energy and the “Other Defense-Related Activities.” Recall that the president requested $17.0 billion for DOE and $4.8 billion for the “miscellany” (for a subtotal of an additional $21.8 billion).

Congress hasn’t finished work on the bills for those programs either. Again, passage is likely in the lame duck session. Based on the initial bills the House and Senate have separately passed, but which have not yet been through a conference committee to resolve all the differences, there will be some reductions from the president’s request, perhaps $0.5 billion less for DOE and $0.1 billion less for the “Other Defense-Related Activities.”[6]

• If that turns out to be the case, to arrive at a final number for “defense” in 2007, $576.9 billion becomes the lower band of likely defense funding; $596.9 billion becomes the upper band (depending on the final amount for the wars in 2007 - $110 billion or $130 billion).

What about the new final bill just out from the House and Senate Armed Services Committees? It passed in final form and was sent to the president on Sept. 30—a day after the DOD appropriations bill was passed. The authorization committees legislated $532.8 billion for all defense activities (including DOE and the “Other”) for 2007. Not even close to the (lower) $576.9 billion projected here; still not close if we remove that additional $60 billion that OMB said would be needed to support the wars but which the president has not gotten around to requesting, which would make $516.9 billion.

What gives?

For once, there is a simple answer: the dollar numbers from the Armed Services Committees are pretty much meaningless. For enabling the federal government to spend annual appropriations, the authorizations committees in Congress, in this case the House and Senate Armed Services Committees, are superfluous. The Armed Services Committees’ numbers are “advisory;” they do not control.

A good example occurs in the 2007 bills. In a number of categories, the authorization bill’s dollar figures are different from those in the appropriations bills. It’s a difference that signifies just about nothing. The Armed Services Committees’ “advice” is not being followed; the appropriations numbers are the ones that count.

The Armed Services Committees’ real budget business is controlling mandatory defense spending (more on that issue in a separate “tutorial”) and on policy and program issues, such as how weapons should be tested and how the Defense Department should be organized.

To date, this author is yet to see an article in any newspaper, magazine, or journal that gets these numbers right for 2007. Many do not know what the budget for the Department of Defense is to be; what bills comprise it, and what’s in those bills. Others confuse generic “defense spending” with the more narrow category of the Pentagon’s budget. Some think the Armed Services Committees and their authorization bills are in control. It’s all quite a mess. Congress doesn’t make understanding it all simple, but that’s no excuse for misreporting the facts to the public.

[1] “Conferees Approve FY 2007 Defense Spending Bill,” U.S. Senate Committee on Appropriations, Press Release, Sept. 21, 2006, p. 1; available here.

[2] “Conferees Approve FY07 Defense Appropriations Bill,” The U.S. House of Representatives Committee on Appropriations, News Room, Sept. 22, 2006, also at http://appropriations.house.gov/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=646.

[3] See House and senate Armed Services Committees’ press releases, respectively, at and http://armed-services.senate.gov/press/Conference%2007%20Press%20Release.pdf

[4] As if this were not complicated enough, both the House and Senate Military Construction subcommittees were also given the added responsibility to appropriate funds for the Department of Veterans Affairs (DVA). The DVA is, of course, not a part of the Department of Defense; but spending for it is now appropriated in the same bill as both the House and Senate handle for the defense activities described above.

[5] “Fiscal year 2007 Mid-session Review,” Budget of the U.S. Government, Office of Management and Budget, p. 6, also here.

[6] Happily, the jurisdiction for these bills has not been scrambled between the Senate and the House in any manner similar to that for military construction and “quality of life.”