June 14, 2021
Biden’s First Defense Budget
President Biden’s $715 billion FY22 Department of Defense (DoD) budget provides a 1.6% increase above FY21 enacted funding and shows a shift from procurement to research, development, test, and evaluation (RDT&E) (see Chart I). This shift is consistent with DoD’s modernization goals stemming from a national security strategy that calls for capabilities to defeat near-peer competitors such as China or Russia. It is also consistent with President Biden’s interim national security guidance. While the first Biden budget is not a dramatic budgetary course change, it advances areas such as AI, supercomputing, autonomous platforms, hypersonics, cyber, and space.
The 1.6% topline increase for DoD is below inflation and does not allow for real growth. The national defense strategy calls for topline real growth of 3-5% to meet its goals. Because the topline does not increase above inflation, the Biden budget shifts funds within the topline towards modernization priorities and away from legacy platforms. This is not the first budget to propose legacy platform cuts to make headroom for newer technologies, but existing platforms like the A-10 have congressional constituencies that make reductions difficult.
As noted in Chart I, the President’s request increases RDT&E spending by 5.2% to $112 billion. This spending will be guided by DoD’s newly-established Innovation Steering Group. Even with this level of spending proposed for RDT&E, there is overall concern in Congress that the DoD topline increase is insufficient to support modernization. Senate Defense Appropriations Subcommittee Ranking Member Shelby (R-AL) expressed his concern over DoD’s topline when he remarked at an April 13 hearing: “[t]his committee has supported the necessary budget increases in areas such as hypersonics, artificial intelligence, unmanned systems, and microelectronics to address warfighter needs and capability gaps, and…I’m currently concerned about our ability to continue to make those essential strategic investments that will allow us to keep pace.”
In keeping with President Biden’s focus on climate change, the DoD budget contains $617 million in new investments to improve resiliency. These include hardening and strengthening structures, science and technology investments, and climate mitigation investments. The budget also includes $15 million for climate contingency and preparedness. As we have seen with other departments, climate change is a priority of this administration. While it is yet unclear exactly how much of an impact climate policy will have on DoD or how much DoD will be called upon to expedite the climate agenda, we expect the Department to be involved.
The budget calls for a $27 billion investment in the recapitalization of the Cold War era strategic defense, including Columbia Class submarine production, Ground Based Strategic Deterrent as a follow-on to ICBM, and the B-21 to replace an aging bomber fleet. There is also $20.4 billion for missile defense, including the next generation interceptor for ballistic, cruise, and hypersonic missiles as well as improved regional defense with the deployment of four Army short range air defense battalions in FY23. The budget provides funding for the fielding of the Army’s Long Range Hypersonic Weapon in FY23 and the Navy’s conventional prompt strike hypersonic weapon in FY25.
Regarding space, the budget provides $2.6 billion for next generation Overhead Persistent Infrared as well as $1.8 billion for two GPS follow-on satellites to harden positioning, navigation, and timing. The budget also calls for five space launch vehicles for assured access to space and invests in Low Earth Orbit data transport and missile warning solutions.
As is the case with other agencies following the SolarWinds breach, DoD realizes it needs the resources to better defend its networks. The budget requests $10 billion to improve operation and capability in cyberspace by embedding a zero-trust architecture into the defense networks. The budget funds four additional cyber mission force teams to hold targets at risk and to defend against malicious actors.
Pursuant to section 1251 of the FY21 National Defense Authorization Act (NDAA), the Department was instructed to establish a Pacific Deterrence Initiative (PDI). The budget carves out a $5.1 billion subset of its request that it identifies as targeted PDI investments for the Indo-Pacific region. The budget requests a total of $66 billion for the Indo-Pacific region inclusive of PDI. The PDI highlights DoD investments that improve capabilities, posturing, training, and readiness in conjunction with key allies and partners.
Chart II outlines spending and quantities for major weapons systems and include both procurement and RDTE funding.
Initial reaction to the Biden proposal from congressional leaders with DoD oversight was not positive. Senator Inhofe (R-OK), Ranking Member of the Senate Armed Services Committee (SASC) and Representative Rogers (R-AL), Ranking Member of the House Armed Services Committee (HASC), issued a joint statement calling the Biden budget “wholly inadequate.” Senator Reed (D-RI), Chairman of the SASC, wasn’t quite as blunt, but did show caution in his support of the budget by saying the budget is “an outline and a starting point.” As is typical, much attention is being paid to the $2.8 billion in divestments the budget proposes. Divestments are used as offsets to help fund higher priority programs. Vice Admiral Boxall, the Joint Chiefs of Staff Director of Force Structure, Resources, and Assessment, said on May 28 that “without divestments, we cannot afford to modernize to the evolving threat environment.”
Reed called the Department’s divestment plan “well-reasoned,” but it has already elicited a quick response from those most impacted. Senators Collins (R-ME) and King (I-ME), along with Representatives Pingree (D-ME) and Golden (D-ME), expressed their opposition to the budget’s shipbuilding plan because it calls for just one DDG-51 destroyer. Likewise, Representative Courtney (D-CT), Chairman of the HASC Seapower Subcommittee, questioned the proposed reductions in surface warships. Chart III shows the proposed divestment savings by service.
The Navy and the Air Force are the primary bill payers when it comes to savings. The Navy proposes decommissioning:
- Two Cruisers (CG-66 and 68) to allow for investment in more capable Air Defense Commander Ships
- One LSD (LSD-41) to make additional funding available for Future Naval Force Structure shipbuilding requirements for Light Amphibious Warships (LAW), which will supplement LPD-17 as a replacement capability
- Four Littoral Combat Ships (LCS), two of which have experienced major propulsion train casualties and two of which are configured with outdated mission packages; they will be replaced by the FFG-62 Constellation class
- 12 MKVI Patrol Boats from Coastal Riverine Squadrons, which will be replaced by other Navy platforms as well as the use of U.S. Coast Guard assets to escort High Value Units
- 55 F/A-18 A-D aircraft, which were initially phased for divestment by FY24; this budget accelerates that divestment to FY22
- The Broad Area Maritime Surveillance-Demonstrator (BAMS-SD), which was slated for divestment in FY23, is accelerated to FY22
The Air Force also proposes a number of platforms (aircraft) for divestment:
- 42 A-10
- 48 F-15C/D
- 47 F-16C/D
- 18 KC-135
- 14 KC-10
- 4 E-8 (JSTARS)
- 20 RQ-4 Block 30 Global Hawk
The Army has the smallest proposed divestitures that address seven programs:
- Aviator Night Vision System
- Hellfire Missile Launcher
- Joint Technology Center System Integration
- Launcher, 2.75” Rocket
- Lightweight Counter Mortar Radar
- Multi-Function Electronic Warfare
- Spider Networked Munition System
The President’s budget proposes a 2.7% pay raise for both military and civilian personnel with an increase of civilian FTE’s from 777,400 to 786,000 (1.1%) and a decline in active component end strength from 1,351,000 to 1,346,400 (-0.3%). FBIQ forecasts a reduction in military end strength by FY23 due in part to budget pressures resulting from pay and benefits for servicemembers and families. With the largest force, we expect the Army to eventually bear the largest troop reductions. Biden’s FY22 budget focuses the largest percentage reductions on the Marine Corps and the Navy (see Chart IV). DoD explains that this is the result of the Marine Corps progression towards Force Design 2030 and the Navy’s decommissioning of ships calling for fewer sailors. The increase for Space Force is to be expected as the Service begins to operate as an independent entity.
We expect many changes to Biden’s DoD budget when Congress considers appropriations and authorization bills in the coming weeks. The House Appropriations Committee is expected to hold its defense and military construction markups by mid-July. Senate Appropriations Committee markups will follow. The SASC markup of the FY22 NDAA is likely to be in mid-to-late July, with the HASC markup delayed to September.