While China Spends, Trump Budget Looks Flat For 2021

UPDATED. WASHINGTON: As the US and Iran teeter on the precipice of war, the Trump administration is expected to unveil a $740 billion fiscal 2021 Pentagon budget, a number essentially flat from 2020’s $738 billion signed into law by the president just last month. The new number, agreed to in July as part of a two-year budget deal, would likely leave the armed services with little wiggle room as they try to design and build critical modernization projects such as hypersonics and artificial intelligence. 

The budget request, slated to be unveiled February 10, comes as the Pentagon says it needs more money to keep ahead of China and Russia as those powers, unburdened by two decades of grinding and expensive wars in the Middle East and Afghanistan, push forward on naval, space and cyber weapons.

Overall, the ‘21 budget “will force the services to make trade-offs between force structure, readiness, and modernization that they haven’t yet been confronted within the Trump administration,” said Andrew Hunter, director of the Defense-Industrial Initiatives Group at the Center for Strategic and International Studies.

Some of those trade-offs have already come to light, such as the back-and forth between the Navy and the White House late last year that revealed the yawning gap between what the Navy says it wants — a 355-ship fleet — and what the service knows it can afford.

Documents from the White House’s Office of Management and Budget, obtained by Breaking Defense last month, showed that in order to meet a tighter budget, the Navy told the White House it would buy one dozen fewer ships, slash its shipbuilding budget, and possibly decommission 12 more hulls over the next four years. The proposals would not move the service any closer to its goal of having 355 ships by 2034, actually shrinking the fleet to 287 warships in 2025, down from the 290 active duty ships it currently has. The OMB appeared to reject the cuts, instructing the Navy to look into ways to begin counting certain unmanned vessels as ships, allowing it to continue to grow in size as the president has directed.  

The Air Force, one source on Capitol Hill says, is expected to suggest retiring large chunks of its legacy aircraft fleets to clear budget room for more F-35s, the B-21 bomber program, upgrades to its troubled tanker fleet and to buy F-15Xs to maintain the size of its fighter fleet.

UPDATE STARTS. This likely will include (once again) seeking to terminate the A-10 close air support fighter, CSIS’s Mark Cancian said. However, he said that OMB is unlikely to accept that proposal, in part due to continued congressional support for the aircraft program, but also because the White House is loathe to allow force cuts for broader political reasons. 

“I heard a rumor that the Air Force is considering cutting aircraft. But then you run into the political problem, which is you have this big defense build up, and your forces are shrinking,” he said. “So a lot of people are going to say: where did the money go?”

Instead, Cancian said, the Air Force may well be forced into actions such as slowing the current production rate of 60 per year for the F-35, and instead keep more F-15s and F-16s in the air. Or, OMB could look to cut big-budget software programs — such as the Air Force’s high-priority Advanced Battle Management System (ABMS) to enable multi-domain operations — because they are less high-profile, Cancian noted. (As Breaking D readers know, Congress is already skeptical of ABMS.) UPDATE ENDS.

The Army might be in slightly better shape as it has already slashed at least $33 billion from its books by scrapping redundant and underperforming programs under then-Army Secretary Mark Esper, and Chief of Staff Gen. Mark Milley. But while the Army has given itself some maneuver space, modernization programs like Future Vertical Lift will require additional resources beyond those provided in the fiscal 2020 budget to really move forward.

Overall, however, in order to move out on the National Defense Strategy’s demands for new systems like hypersonic missiles, hypersonic missile defense, new classes of warships, next-generation aircraft, and major new investments in space — including setting up the Space Force — a flat budget picture is a problem. 

In a note to investors earlier this month, analyst Byron Callan of Capital Alpha Partners observed that defense budgets appear likely to remain flat in the coming years. “We think the most probable scenario for DoD investment budget authority is that it will show little annual growth in FY21-25. Flattening outlays in 2022-25 will ensue,” Callan wrote.

Speaking at the White House this morning about the Iranian missile attacks on Iraqi bases housing US and NATO forces, President Trump boasted, “the American military has been completely rebuilt under my administration at the cost of $2.5 trillion dollars. The US armed forces are stronger than ever before.”

The actual amount spent on equipment is closer to $420 billion, with the rest going to personnel, research and development, and operations.

Those budgets have allowed the Pentagon to rebuild some readiness after years of dealing with budget cuts mandated under the Budget Control Act, which led to deep and harmful reductions in maintenance accounts, reduced training and shortages of spare parts. 

The Trump administration’s first three budgets included increases designed to buy some of that back while kicking off multiple projects, most which have gone to existing production lines rather than developing new designs for weapons systems. “As someone who focuses on modernization programs,” Hunter said, “my fear has always been that the punch bowl might get taken away just as modernization gets ready to really join the party,” which might be the case in the coming years of flat budgets that don’t appear to keep up with the rate of inflation.

UPDATE BEGINS. Indeed, Cancian explained that the Pentagon likely had been planning the 2021 budget to a higher number, having originally asked for $750 billion in 2020. Using typical calculations of inflation and planned cost increases, he said the likely topline DoD officials had in mind for 2021 was around $765 billion with increases continuing from there through 2025. Thus, being bumped back down to a $740 billion for 2021 will affect planning through the future year’s defense plan (FYDP). UPDATE ENDS.

The White House and Congress have already agreed to the $740 billion topline, and now the Pentagon will show them what that will cost.

Theresa contributed to this story.