Defense Budget for FY2003: Data Summary

Congressional research reportMar 29, 2002

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Defense Budget for FY2003:

Data Summary

March 29, 2002

/name redacted/

Specialist in National Defense

and

/name redacted/

Consultant

Foreign Affairs, Defense, and Trade Division

Congressional Research Service ˜ The Library of Congress

Defense Budget for FY2003:

Data Summary

Summary

This report is designed to be a readily accessible source of facts and figures on

the FY2003 defense budget. Part I presents basic data on the national defense budget

request, including figures on budget authority and outlays for the Department of

Defense and for the national defense budget function. Part II shows trends in overall

defense spending, including figures on the growth and decline of defense spending,

on defense outlays as a share of federal expenditures, on defense outlays as a share

of gross domestic product, and on foreign military spending. Part III defines key

defense budget terms.

To illustrate trends in the regular defense program, most of the data included in

this report exclude costs of Operation Desert Shield/Desert Storm, which was largely

financed by allied contributions.

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Part I: The FY2003 Defense Budget Request . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Part II: Trends in Defense Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Part III: Definitions of Budget Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

List of Figures

Figure 1: DOD Budget Authority by Service, FY2003 Request . . . . . . . . . . . . . 9

Figure 2: DOD Budget Authority by Title, FY1985-2007 . . . . . . . . . . . . . . . . 14

Figure 3: Active Duty End-Strength by Service, Selected Years, FY1987-2003 14

Figure 4: Active Duty End-Strength, FY1950-2003 . . . . . . . . . . . . . . . . . . . . . 16

Figure 5: National Defense Outlays, FY1910-2007 . . . . . . . . . . . . . . . . . . . . . 22

Figure 6: National Defense Budget Authority and Outlays, FY1947-2007 . . . . 22

Figure 7: National Defense Outlays, Percentage of GDP/GNP, FY1910-2007 . 23

Figure 8: National Defense Outlays, Percentage of GDP, FY1947-2007 . . . . . 23

Figure 9: National Defense Outlays, Percentage of Federal Outlays,

FY1940-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Figure 10: Federal Outlays by Budget Enforcement Act Category,

FY1962-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

List of Tables

Table 1. National Defense Budget Function and Department of Defense

Budget, FY1995-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Table 2. National Defense Budget Function by Appropriations Title,

Budget Authority, FY1995-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Table 3. National Defense Budget Function by Appropriations Title,

Outlays, FY1995-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Table 4. Department of Defense Budget Authority by Service, FY1994-2003 . . 9

Table 5. Operation Desert Shield/Desert Storm Budget Authority and

Outlays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Table 6. National Defense Budget Authority Trends by Appropriations

Title, FY1976-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Table 7. Department of Defense Personnel Levels, Selected Years . . . . . . . . . 15

Table 8. Department of Defense Active Duty Personnel Levels,

FY1950-2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Table 9. U.S. Military Force Structure, FY1980-2003 . . . . . . . . . . . . . . . . . . 17

Table 10. Real Growth/Decline in National Defense Funding, FY1940-2007 . . 18

Table 11. National Defense Outlays as a Percentage of GNP/GDP,

FY1910-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Table 12. Allocation of Federal Outlays by Budget Enforcement Act

Category, FY1962-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Table 13. Allocation of Federal Outlays by Budget Enforcement Act

Category, FY1962-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Table 14. Trends in Department of Defense Future-Years Defense Plans . . . . . 27

Table 15. Defense Spending by Top 25 Foreign Nations . . . . . . . . . . . . . . . . . 28

Defense Budget for FY2003:

Data Summary

Introduction

This report is designed to be a readily accessible source of facts and figures on

the FY2003 defense budget. Part I provides basic data on the Administration’s

FY2003 national defense budget request, submitted on February 4, 2002. It includes

data on budget authority and outlays for the Department of Defense (DOD) and for

the national defense budget function (Function 050). Part II shows trends in overall

defense spending, in personnel levels, and in military force structure. It includes data

showing the growth and decline of defense spending over time, defense outlays as a

share of total federal expenditures, and defense outlays as a share of gross domestic

product. It also includes a table showing military spending by foreign nations. Part

III defines key defense budget terms.

Data showing long term spending trends can be interpreted in different ways.

For example, while defense outlays are at historically low levels as a percentage of

total federal outlays, this trend is more a reflection of increases in federal entitlement

programs – notably the escalating costs of Medicare and Social Security – than

decreases in defense spending. Also, while defense outlays as a percentage of GDP

are at their lowest levels since World War II, in constant dollar terms they remain

comparable to average peacetime defense outlays during the Cold War.

Most of the data used in this report are taken from annual budget documents

prepared by the Office of Management and Budget (OMB). These data have several

features that users of this report should be aware of.

! First, figures represent the Administration’s request to Congress, including

requested changes in standing legislation, such as this year’s request for

changes in accounting for retirement benefits;

! Second, OMB sometimes adjusts figures for prior year budgets for purposes

of comparison with proposed budgets; and

! Third, the data show estimates of funding in years prior to the budget year

(FY2003) according to OMB conventions for “scoring” of funding, which may

differ from those used by the Congressional Budget Office or the Department

of Defense.

CRS-2

This year, all of these features of the OMB data have some quite significant

effects on estimated and projected funding for defense and other parts of the budget.

Major adjustments include:

(1) Financing of benefits for military and civilian personnel on an accrual

basis: Most federal retirement benefits, including benefits for uniformed military

personnel and DOD civilian personnel, have long been funded on the basis of “accrual

accounting,” in which the cost of future benefits for current employees is charged to

the employing agency as the benefits are accrued. Under accrual accounting

procedures, federal agencies pay the actuarily determined cost of future benefits into

a trust fund. Payments to retirees are then charged to the fund, not to the agency.

In the FY2003 and FY2004 defense budgets, three substantial adjustments involving

accrual accounting have a large effect on reported budget totals. These are:

! Accrual accounting for over-65 health care benefits for uniformed

personnel: The FY2001 Defense Authorization Act included a provision,

known as “Tricare-for-Life,” that guarantees DOD-provided health care to

over-65 military retirees and their dependents. Beginning in FY2003, these

benefits are being funded on an accrual basis. This results in (1) an increase of

$8.1 billion in FY2003 in the military personnel accounts to reflect the accrual

cost of future benefits for current uniformed personnel and (2) a reduction of

$5.6 billion in operation and maintenance accounts to reflect a payment from

the health care trust fund to DOD for providing care to over-65 retirees.

! Accrual accounting for all civilian personnel retirement pension and

health benefits: While most federal civilian retirement benefits are funded on

an accrual basis, a small part is not. Now the Administration is proposing to

fund all retirement benefits on an accrual basis. In FY2003, the proposed

change results in an increase of $3.3 billion (both in budget authority and in

outlays) in the Department of Defense budget.

! Accrual accounting for under-65 health care benefits for uniformed

personnel: Beginning in FY2004, the Administration is also proposing to

finance health care benefits for under-65 military retirees on an accrual basis,

in which, again, DOD would pay into a trust fund the cost of future benefits

for current employees and would receive reimbursement from the fund for

costs of under-65 retiree health care that it provides. Both the contributions

to the fund and reimbursements from the fund are reflected in budget

projections from FY2004 on.

(2) Adjustment of prior year budget figures for accrual accounting: OMB

has adjusted FY2001 and FY2002 figures – though not figures for earlier years – to

be comparable to the new, proposed treatment of civilian retirement and health

benefits. Thus, OMB figures include $3.0 billion in FY2001 and $3.2 billion in

FY2002 Department of Defense budget totals (both in budget authority and in

outlays) for increased civilian retirement accrual even though this accounting

procedure was not in place in those years.

(3) Fiscal year scoring of funding provided by the Emergency Terrorism

Response supplemental appropriations act: Congress and the executive branch

CRS-3

sometimes count or “score” appropriations differently. This year, there are major

differences in how OMB and the Congressional Budget Office (CBO) show the

allocation of funds provided in the Emergency Terrorism Response supplemental

appropriations measure that Congress approved on September 14, 2001. In all,

Congress appropriated $40 billion for responding to the September 11 terrorist

attacks, including $20 billion that was made available to agencies after the President

notified Congress how the funds would be distributed and a second $20 billion that

was made available only after Congress allocated the funds in a subsequent

appropriations act. Of the $40 billion total, $17.5 billion was allocated to the Defense

Department, of which $14.0 billion was from the first $20 billion and $3.5 billion from

the second $20 billion. An additional $374 million was allocated to the Department

of Energy for defense-related activities, of which $5 million came from the initial $20

billion and $369 million from the second. These amounts are part of the national

defense budget function. CBO and OMB differ in allocating these funds –

! CBO scoring conventions: CBO scores funds by fiscal year according to the

date when Congress makes funds available to the executive branch. Thus,

CBO allocates all of the initial $20 billion in supplemental funding to FY2001,

when the original appropriation was enacted, while it allocates all of the second

$20 billion to FY2002, which is when Congress approved a subsequent

appropriations measure distributing the funds among federal agencies. Under

this convention, CBO shows $14.0 billion of supplemental funds in the

Department of Defense budget for FY2001 and $3.5 billion in the budget for

FY2002 (all in budget authority).

! OMB scoring conventions: OMB, however, normally allocates funds by

fiscal year based on when the executive branch actually releases money to the

agencies. Following that rule, OMB allocates $4.3 billion to DOD in FY2001

because the President had sent two notifications to Congress distributing that

amount to DOD before the end of the fiscal year on September 30, 2001.

OMB allocates the $3.5 billion that Congress provided for DOD in the second

$20 billion to FY2002. OMB did not, however, include in either year’s DOD

budget the remaining $9.8 billion that was allocated to DOD out of the initial

$20 billion in supplemental funding. Instead, OMB shows those funds in the

Emergency Response Fund, a government-wide account into which the funds

were initially appropriated. Although OMB released all but a small amount of

the initial $20 billion before the budget was released on February 4, it does not

show funds released after September 30, 2001, in agency totals.

This report relies primarily on OMB data, so the figures shown here follow

OMB’s scoring conventions.

CRS annually prepares a number of issue briefs and reports on specific weapon

programs and other defense issues. For up-to-date lists of CRS products on defenserelated issues, congressional offices should go to:

[http://www.crs.gov/products/browse/is-defense.shtml].

Selected defense-related products include:

CRS-4

CRS Issue Brief IB10062, Defense Research: DOD’s Research, Development, Test

and Evaluation Program, by John Dimitri Moteff.

CRS Issue Brief IB10089, Military Pay and Benefits: Key Questions and Answers,

by (name redacted).

CRS Issue Brief IB93103, Military Medical Care Services: Questions and Answers,

by Richard A. Best, Jr.

CRS Issue Brief IB85159, Military Retirement: Major Legislative Issues, by (name

redacted).

CRS Report RL31111, Missile Defense: the Current Debate, coordinated by (name

redacted) and (name redacted).

CRS Report RS20535, Navy Ship Procurement Rate and the Planned Size of the

Navy: Background and Issues for Congress, by (name redacted).

CRS Report RS20643, Navy CVNX Aircraft Carrier Program: Background and

Issues for Congress, by (name redacted).

CRS Report RS21059, Navy DD(X) Future Surface Combatant Program:

Background and Issues for Congress, by (name redacted).

CRS Issue Brief IB94040, Peacekeeping: Issues of U.S. Military Involvement, by

Nina Maria Serafino.

CRS Report RL31297, Recruiting and Retention in the Active Component Military,

by (name redacted).

CRS Issue Brief IB92115, Tactical Aircraft Modernization: Issues for Congress, by

(name redacted).

CRS Report RL31187, Terrorism Funding: Congressional Debate on Emergency

Supplemental Allocations, by (name redacted) and Larry Q. Nowels.

CRS Report RS21133, The Nuclear Posture Review: Overview and Emerging Issues,

by (name redacted).

CRS Issue Brief IB86103, V-22 Osprey Tilt-Rotor Aircraft, by (name redacted).

For an extensive discussion of the defense budget process, see CRS Report

RL30002, A Defense Budget Primer, by (namer edacted)

and (name r edacted).

CRS-5

Part I: The FY2003 Defense Budget Request

The following section provides basic data on the FY2003 defense budget

request. Table 1 provides data on the national defense budget function and the

Department of Defense budget, including figures for budget authority and outlays in

current and constant dollars and percentages of real growth. For a definition of terms,

see the glossary at the end of this report.

Tables 2 and 3 show, respectively, budget authority and outlay figures for the

national defense budget function broken down by appropriations title.

Table 4 shows DOD budget authority broken down by military component —

i.e., the military services. Figure 1 graphically displays shares of DOD budget

authority by service for the FY2003 budget request.

Table 5 shows budget authority and outlays associated with Operation Desert

Shield/Desert Storm. In order to reflect accurately trends in defense funding, most

of the data in this report have been adjusted to exclude costs associated with the

Persian Gulf War, since that conflict was largely financed by U.S. allies. Table 5

allows the reader to compare the adjusted data published in this report with

unadjusted data published elsewhere.

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Table 1. National Defense Budget Function and Department of Defense Budget, FY1995-2007

(current and constant FY2003 dollars in billions)

Fiscal Year:

National Defense Budget Function

Budget Authority

Current year dollars

Constant FY2002 dollars

Real growth/decline

Outlays

Current year dollars

Constant FY2003 dollars

Real growth/decline

Department of Defense

Budget Authority

Current year dollars

Constant FY2003 dollars

Real growth/decline

Outlays

Current year dollars

Constant FY2003 dollars

Real growth/decline

Actual

1995

Actual

1996

Actual

1997

Actual

1998

Actual

1999

Actual

2000

Actual Estimate Request

2001

2002

2003

Proj.

2004

Proj.

2005

Proj.

2006

Proj.

2007

266.4

324.2

-0.9%

266.2

317.2

-2.2%

270.4

315.3

-0.6%

271.3

309.1

-2.0%

292.3

325.3

+5.2%

304.1

329.9

+1.4%

329.0

346.5

+5.0%

350.7

396.8

358.5

396.8

+3.5% +10.7%

405.6

396.1

-0.2%

426.6

406.5

+2.6%

447.7

416.2

+2.4%

469.8

426.1

+2.4%

271.0

329.1

-4.5%

265.2

315.5

-4.1%

270.4

313.8

-0.5%

268.4

304.8

-2.9%

274.9

306.3

+0.5%

294.5

319.5

+4.3%

308.5

324.9

+1.7%

348.0

355.2

+9.3%

379.0

+6.7%

393.8

384.5

+1.5%

413.5

394.2

+2.5%

428.5

398.4

+1.1%

442.5

401.1

+0.7%

255.7

311.3

-0.3%

254.6

303.3

-2.5%

258.0

300.8

-0.8%

258.6

294.6

-2.1%

278.6

310.0

+5.2%

290.5

315.1

+1.7%

313.0

329.6

+4.6%

333.0

378.6

340.4

378.6

+3.3% +11.2%

387.4

378.3

-0.1%

408.3

389.0

+2.8%

429.2

398.9

+2.5%

450.9

409.0

+2.5%

258.4

313.7

-4.4%

252.7

300.5

-4.2%

258.2

299.6

-0.3%

256.1

290.8

-2.9%

261.4

291.2

+0.2%

281.2

305.1

+4.8%

294.0

309.6

+1.5%

330.6

337.4

+9.0%

375.6

366.7

+1.6%

395.2

376.7

+2.7%

410.2

381.3

+1.2%

423.9

384.2

+0.8%

361.0

+7.0%

Sources: U.S. Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2003 , February 2002. Deflators and

data on Desert Shield/Desert Storm budget authority and outlays from DOD Comptroller.

Notes: Figures exclude Operation Desert Shield/Desert Storm costs and receipts, which affects outlay amounts from FY1995-1998. This and other tables in this

report use OMB data which reflect enacted and proposed changes in accounting for retirement benefits. Figures reflect (1) enacted accrual accounting for health

care benefits for over-65 military retirees beginning in FY2003; (2) proposed accrual accounting for health care benefits for under-65 military retirees beginning

in FY2004; and (3) proposed accrual accounting for all civilian retirement pension and health benefits beginning in FY2003. Data in these tables also reflect OMB

scoring of funds provided in the Emergency Terrorism Response supplemental appropriations act approved in September 2001. For an explanation of the impact

of accrual accounting and of budget scoring conventions, see the Introduction, above.

CRS-7

Table 2. National Defense Budget Function by Appropriations Title, Budget Authority, FY1995-2007

(current year dollars in billions)

Fiscal Year:

Actual

1995

Actual

1996

Department of Defense (military activities only)

Military Personnel

71.6

69.8

Operation & Maintenance

93.8

93.7

Procurement

43.6

42.6

RDT&E

34.5

35.0

Military Construction

5.4

6.9

Family Housing

3.4

4.3

Other

3.4

2.4

Subtotal, Department of Defense

255.7

254.6

Department of Energy

Atomic Energy Defense Activities

10.1

10.7

Other Agencies

Defense-Related Activities

0.6

0.9

Total, National Defense

266.4

266.2

Proj.

Actual

1997

Actual

1998

Actual

1999

Actual

2000

Actual Estimate Request

2001

2002

2003

Proj.

2004

Proj.

2005

Proj.

2006

2007

70.3

92.4

43.0

36.4

5.7

4.1

6.1

258.0

69.8

97.2

44.8

37.1

5.5

3.8

0.3

258.6

70.6

105.0

51.1

38.3

5.4

3.6

4.6

278.6

73.8

108.8

55.0

38.7

5.1

3.5

5.6

290.5

76.9

117.7

62.6

41.7

5.5

3.7

4.9

313.0

82.0

129.8

61.1

48.6

6.6

4.1

0.9

333.0

94.3

150.4

68.7

53.9

4.8

4.2

2.3

378.6

104.0

140.9

74.7

57.0

5.1

4.3

1.4

387.4

108.1

147.0

79.2

60.7

6.3

5.1

1.9

408.3

113.7

152.3

86.9

58.9

10.8

4.9

1.5

429.2

117.4

155.2

99.0

58.0

13.8

4.8

2.7

450.9

11.4

11.7

12.6

12.4

14.4

16.0

16.5

16.6

16.8

17.1

1.0

1.1

1.2

1.6

1.7

270.4

271.3

292.3

304.1

329.0

350.7

396.8

405.6

426.6

447.7

469.8

Sources: U.S. Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2003, February 2002; except Title level

detail for FY2004-2007 from Office of Management and Budget, Analytical Perspectives: Budget of the United States Government, Fiscal Year 2003, February

2002.

Notes: This and other tables in this report use OMB data which reflect enacted and proposed changes in accounting for retirement benefits. Figures reflect (1)

enacted accrual accounting for health care benefits for over-65 military retirees beginning in FY2003; (2) proposed accrual accounting for health care benefits for

under-65 military retirees beginning in FY2004; and (3) proposed accrual accounting for all civilian retirement pension and health benefits beginning in FY2003.

Data in these tables also reflect OMB scoring of funds provided in the Emergency Terrorism Response supplemental appropriations act approved in September 2001.

For an explanation of the impact of accrual accounting and of budget scoring conventions, see the Introduction, above.

CRS-8

Table 3. National Defense Budget Function by Appropriations Title, Outlays, FY1995-2007

(current year dollars in billions)

Fiscal Year:

Actual

1995

Actual

1996

Department of Defense (military activities only)

Military Personnel

70.8

66.7

Operation & Maintenance

90.9

88.7

Procurement

54.3

48.5

RDT&E

34.6

36.5

Military Construction

6.8

6.7

Family Housing

3.6

3.8

Other

-2.6

1.8

Subtotal, DOD

258.4 252.7

Department of Energy

Atomic Energy Defense Activities

11.8

11.6

Other Agencies

Defense-Related Activities

0.8

0.9

Total, National Defense

271.0

265.2

Actual

1997

Actual

1998

Actual

1999

Actual

2000

Actual Estimate Request

2001

2002

2003

Proj.

2004

Proj.

2005

Proj.

2006

Proj.

2007

69.7

92.4

47.6

37.0

6.2

4.0

1.2

258.2

69.0

93.5

48.2

37.4

6.0

3.9

-1.9

256.1

69.5

96.4

48.8

37.4

5.5

3.7

0.1

261.4

76.0

105.9

51.7

37.6

5.1

3.4

1.6

281.2

74.0

114.0

55.0

40.6

5.0

3.5

1.9

294.0

81.2

133.6

59.6

45.1

5.7

3.8

1.7

330.6

92.8

143.5

62.3

50.8

6.0

3.9

1.7

361.0

102.1

146.2

65.3

52.3

4.7

3.9

1.1

375.6

107.1

147.0

75.0

56.2

4.5

4.0

1.3

395.2

112.8

146.8

81.8

57.6

5.5

4.4

1.4

410.2

116.6

147.9

87.6

57.4

7.8

4.4

2.1

423.9

11.3

12.4

12.2

13.0

15.9

16.3

16.5

16.6

16.7

16.9

0.9

1.1

1.5

1.6

1.7

270.4

268.4

274.9

294.5

308.5

348.0

379.0

393.8

413.5

428.5

442.5

Sources: U.S. Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2003, February 2002; except Title level

detail for FY2004-2007 from Office of Management and Budget, Analytical Perspectives: Budget of the United States Government, Fiscal Year 2003, February

2002. Deflators and data on Desert Shield/Desert Storm outlays from DOD Comptroller.

Notes: Figures exclude Operation Desert Shield/Desert Storm costs and receipts, which affects data from FY1995-1998. This and other tables in this report use

OMB data which reflect enacted and proposed changes in accounting for retirement benefits. Figures reflect (1) enacted accrual accounting for health care benefits

for over-65 military retirees beginning in FY2003; (2) proposed accrual accounting for health care benefits for under-65 military retirees beginning in FY2004;

and (3) proposed accrual accounting for all civilian retirement pension and health benefits beginning in FY2003. Data in these tables also reflect OMB scoring

of funds provided in the Emergency Terrorism Response supplemental appropriations act approved in September 2001. For an explanation of the impact of accrual

accounting and of budget scoring conventions, see the Introduction, above.

CRS-9

Table 4. Department of Defense Budget Authority by Service,

FY1994-2003

(current year dollars in billions)

Actual Actual Actual Actual Actual Actual Actual

1995 1996 1997 1998 1999 2000 2001

Army

63.3

64.5

64.4

64.0

68.4

73.2

77.0

% of DOD Total

24.8% 25.4% 25.0% 24.8% 24.5% 25.2% 24.9%

Navy/Marine Corps

76.9

80.0

79.5

80.7

84.0

88.8

95.5

% of DOD Total

30.1% 31.4% 30.8% 31.2% 30.2% 30.6% 30.8%

Air Force

73.9

73.0

73.2

76.3

81.9

83.1

89.5

% of DOD Total

28.9% 28.7% 28.4% 29.5% 29.4% 28.6% 28.9%

Defense Wide

41.6

37.0

40.8

37.6

44.3

45.5

47.9

% of DOD Total

16.3% 14.5% 15.8% 14.5% 15.9% 15.7% 15.4%

DOD Total

255.7 254.4 258.0 258.6 278.6 290.5 309.9

Fiscal Year:

Est.

2002

80.8

24.5%

98.6

29.9%

94.2

28.6%

56.2

17.0%

329.9

Proj.

2003

90.8

24.0%

108.2

28.6%

106.9

28.2%

72.7

19.2%

378.6

Source: Department of Defense Comptroller, National Defense Budget Estimates for FY2003, March

2002.

Notes: Totals may not add due to rounding. Total is discretionary DOD budget authority. FY2002

and FY2003 Defense-Wide amounts include Defense Emergency Response Fund.

Figure 1: DOD Budget Authority by Service, FY2003 Request

Navy/Marine

28.6%

Army

24.0%

Defense-Wide

19.2%

Air Force

28.2%

CRS-10

Table 5. Operation Desert Shield/Desert Storm Budget Authority and Outlays

(current year dollars in millions)

Budget Authority

Military Personnel

Operations & Maintenance

Procurement

Research, Development,

Test, & Evaluation

Military Construction

Family Housing

Stock Funds

Allied Cash Contributions

Total Budget Authority

Outlays

Military Personnel

Operations & Maintenance

Procurement

Research, Development,

Test, & Evaluation

Military Construction

Family Housing

Stock Funds

Allied Cash Contributions

Total Outlays

FY1990

FY1991

FY1992

FY1993

FY1994

FY1995

FY1996

FY1997

FY1998

Total

281

1,328

5,824

24,366

5,278

2,409

8,132

1,950

–

8,514

33,826

7,238

–

400

–

2,028

–

271

-43,154

-7,311

106

–

-5,240

7,357

–

184

671

-48,394

2,074

267

1,033

5,382

16,212

-152

2,734

11,152

2,154

114

3,974

2,619

–

1,142

1,369

–

147

729

–

378

–

8,497

33,736

7,159

–

156

–

1,462

–

-1,778

-43,154

-23,440

–

1,348

-5,240

12,237

–

429

–

7,188

–

259

–

2,783

–

166

–

1,048

–

510

–

182

670

-48,394

1,885

Source: Department of Defense Comptroller.

Notes: Totals may not add due to rounding. Totals in this table represent only cash outlays and receipts. DOD estimates that the total cost of Operation

Desert Shield/Desert Storm was $61.1 billion, including activities supported through allied in-kind assistance and material losses not replaced.

CRS-11

Part II: Trends in Defense Spending

Part II provides data on trends in the defense budget that may be of particular

interest to Congress. In assessing trends, current levels of spending are often

compared to the peak levels reached during the defense buildup of the 1980s.

FY1985 was the peak year in budget authority for national defense, FY1987 was the

peak in the number of military personnel, and FY1989 was the peak in outlays.

Table 6 shows budget authority by appropriations title for selected years for the

period FY1976 through FY2007 in inflation-adjusted dollars and calculates

cumulative real growth or decline over the selected parts of that period. Figure 2

graphically shows trends in budget authority by title from FY1985 to FY2007.

Table 7 shows the trend in personnel levels for active duty forces, reserve

forces, and DOD civilians for FY1981 and selected years thereafter. Figure 3

illustrates the trend in active duty military personnel levels. Table 8 and Figure 4

show total active duty end-strength levels from FY1950-2003.

Table 9 shows the trend in major elements of force structure (Army and Marine

Corps divisions, Air Force tactical air wings, and Navy ships) for FY1980-2003.

Table 10 shows the trend in total national defense budget authority and outlays

in current and constant FY2003 dollars from FY1940 to FY2007.

Table 11 tracks national defense outlays as a share of gross national product

(GNP) and gross domestic product (GDP) from FY1910 to FY2007.

Figure 5 illustrates the trend in national defense outlays in constant FY2003

dollars from FY1910 to FY2007.

Figure 6 illustrates trends in national defense budget authority and outlays in

constant FY2003 dollars from FY1947 to FY2007.

Figures 7 and 8 illustrate trends in national defense outlays as a percentage of

GNP/GDP from FY1910 to FY2007 and as a percentage of GDP from FY1947 to

FY2007.

Table 12 shows the allocation of outlays by budget enforcement act category in

the federal budget in current year dollars, and Table 13 and Figure 9 show the same

data as percentages of total federal outlays. Figure 10 shows the allocation of federal

outlays in constant FY2003 dollars.

Table 14 follows the trend in DOD five- and six-year defense plans since 1987.

Finally, Table 15 shows defense spending of the top 25 foreign nations.

CRS-12

Table 6. National Defense Budget Authority Trends by Appropriations Title, FY1976-2007

(constant FY2003 dollars in billions)

Fiscal Year

Military Personnel

Operation and Maintenance

Procurement

RDT&E

Military Construction

Family Housing

Other

Subtotal, Department of Defense

Dept. of Energy Defense-Related

Other Defense-Related

Total, National Defense

Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual

1976

1980

1985

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

117.9

111.3

123.4

123.2

117.9

114.8

105.8

96.9

94.9

90.5

88.6

84.8

83.2

85.3

94.4

126.9

121.5

120.2

110.5

113.8

110.2

114.3

111.6

107.9

110.5

116.7

61.0

69.7

144.0

101.8

81.4

72.5

61.4

50.4

49.0

47.1

47.0

48.5

54.5

26.7

47.8

46.7

45.0

44.0

44.7

40.1

39.3

39.0

40.0

40.3

41.1

6.2

4.3

8.4

6.5

6.4

6.3

5.4

6.9

6.2

7.7

6.3

6.0

5.8

3.6

3.0

4.3

4.0

4.1

4.5

4.6

4.0

3.8

4.7

4.5

4.1

3.8

-0.5

1.1

7.0

-1.0

1.5

4.6

3.5

3.6

3.8

2.7

6.6

0.4

4.8

300.2

310.6

461.7

402.6

376.5

357.2

339.2

312.2

311.3

303.3

300.8

294.6

310.0

5.3

6.6

11.8

13.4

15.4

15.6

15.3

13.5

12.3

12.7

13.2

13.3

14.0

0.5

0.8

1.5

1.3

2.3

1.3

0.7

1.1

1.2

1.3

306.0

317.6

474.3

416.8

393.3

374.0

356.8

327.0

324.2

317.2

315.3

309.1

325.3

CRS-13

Table 6. – continued

(constant FY2003 dollars in billions)

Fiscal Year

Military Personnel

Operation and Maintenance

Procurement

RDT&E

Military Construction

Family Housing

Other

Subtotal, Department of Defense

Dept. of Energy Defense-Related

Other Defense-Related

Total, National Defense

Actual

2000

83.2

118.5

57.7

40.8

5.4

3.7

5.8

315.1

13.5

1.3

329.9

Actual

2001

83.9

123.3

64.7

43.2

5.7

3.8

5.0

329.6

15.2

1.7

346.5

Est.

2002

84.8

132.4

62.1

49.3

6.7

4.1

0.9

340.4

16.4

1.8

358.5

Proj.

2003

94.3

150.4

68.7

53.9

4.8

4.2

2.3

378.6

16.5

1.7

396.8

Proj.

2004

100.9

137.4

73.4

56.0

5.0

4.2

1.3

378.3

16.1

1.7

396.1

Proj.

2005

101.7

139.7

76.4

58.5

6.1

4.9

1.8

389.0

15.8

1.6

406.5

Proj.

2006

103.7

141.0

82.2

55.6

10.2

4.6

1.5

398.9

15.7

1.6

416.2

Real

Growth/ Growth/ Growth/ Growth/

Proj. Decline Decline Decline Decline

2007 FY76-85 FY85-90 FY90-98 FY98-03

103.9

+5%

-31%

+11%

139.8

+49%

-4%

-9%

+36%

91.9 +136%

-29%

-52%

+42%

53.7

+79%

-2%

-14%

+34%

12.7

+36%

-23%

-8%

-20%

4.5

+20%

-7%

+3%

+2%

2.5

409.0

+54%

-13%

-27%

+29%

15.5 +123%

+13%

-0%

+23%

1.6

+76%

+4%

+37%

+49%

426.1

+55%

-12%

-26%

+28%

Sources: U.S. Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2003, February 2002; except Title level

figures for FY2004-2007 from Office of Management and Budget, Analytical Perspectives: Budget of the United States Government, Fiscal Year 2003, February

2002. Deflators and data on Desert Shield/Desert Storm costs and receipts from DOD Comptroller.

Notes: Data for FY1990-92 exclude Desert Shield/Desert Storm costs and receipts (see Table 5, above). Totals may not add due to rounding. This and other tables

in this report use OMB data which reflect enacted and proposed changes in accounting for retirement benefits. Figures reflect (1) enacted accrual accounting for

health care benefits for over-65 military retirees beginning in FY2003; (2) proposed accrual accounting for health care benefits for under-65 military retirees

beginning in FY2004; and (3) proposed accrual accounting for all civilian retirement pension and health benefits beginning in FY2003. Data in these tables also

reflect OMB scoring of funds provided in the Emergency Terrorism Response supplemental appropriations act approved in September 2001. For an explanation

of the impact of accrual accounting and of budget scoring conventions, see the Introduction, above.

CRS-14

Figure 2: DOD Budget Authority by Title, FY1985-2007

160

140

Operation & Maintenance

120

100

Military Personnel

Procurement

RDT&E

1985

1990

1995

2000

2005

Figure 3: Active Duty End-Strength by Service,

Selected Years, FY1987-2003

2500

2000

Air Force

Marine Corps

Navy

Army

1500

1000

500

1987 1989 1991 1993 1995 1997 1999 2000 2001 2002 2003

CRS-15

Table 7. Department of Defense Personnel Levels, Selected Years

(end strength/ full-time equivalents in thousands)

Fiscal Year:

Army

Navy

Marine Corps

Air Force

Total Active

Selected Reserves

Total Civilians (FTEs)

Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual

1981

1985

1987

1989

1991

1993

1995

1997

1999

2000

2001

781

770

725

572

509

492

479

482

481

540

571

587

593

571

510

435

396

373

378

191

198

200

197

195

178

174

173

570

602

607

571

511

444

400

378

361

356

354

2,082 2,151 2,174 2,130 2,002 1,705 1,518 1,440 1,386 1,384 1,385

851 1,188 1,151 1,171 1,138 1,058

946

902

877

865

869

947 1,029 1,032 1,023

969

932

822

746

681

660

650

Est.

2002

480

376

173

359

1,387

864

635

Proj.

2003

480

376

175

359

1,390

865

627

Sources: Active and reserve force levels for FY2001-FY2003 from Office of Management and Budget, Budget of the United States Government for

FY2003: Appendix, February 2002; active duty force levels for prior years from Department of Defense, Undersecretary of Defense Comptroller,

National Defense Budget Estimate for FY2002, August 2001; reserve force levels for prior years from U.S. Department of Defense, Manpower

Requirements Report, FY1998, July 1998 and prior years and from Office of Management and Budget, Budget of the United States Government for

FY2002: Appendix, April 2001 and prior years; civilian FTE levels from Office of Management and Budget, Historical Tables: Budget of the United

States Government for FY2003, February 2002.

Notes: Figures reflect end-strength for active and reserve forces and full time equivalent (FTE) employment levels for civilians. End-strength represents

force levels at the end of each fiscal year. Selected reserves do not include Standby Reserve, Individual Ready Reserve, and Inactive National Guard.

Totals may not add due to rounding. Active duty totals do not include full time Guard and Reserve.

CRS-16

Table 8. Department of Defense Active Duty Personnel

Levels, FY1950-2003

(end-strength in thousands)

1950

1951

1952

1953

1954

1955

1956

1957

1958

1959

1960

1961

1962

1963

1,459

3,249

3,636

3,555

3,302

2,935

2,806

2,795

2,600

2,504

2,475

2,483

2,808

2,700

1964

1965

1966

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

2,688

2,656

3,094

3,377

3,548

3,460

3,065

2,714

2,322

2,252

2,161

2,127

2,081

2,073

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

2,061

2,024

2,050

2,082

2,108

2,123

2,138

2,151

2,169

2,174

2,138

2,130

2,069

2,002

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

1,808

1,705

1,610

1,518

1,472

1,440

1,406

1,386

1,384

1,385

1,387

1,390

Sources: FY2001-FY2003 from Office of Management and Budget, Budget of the

United States Government for FY2003: Appendix, February 2002; FY1950-2000

from Under Secretary of Defense Comptroller, National Defense Budget Estimates

for FY2002, June 2001.

Figure 4: Active Duty End-Strength, FY1950-2003

4,000

3,000

2,000

1,000

1950

1960

1970

1980

1990

2000

CRS-17

Table 9. U.S. Military Force Structure, FY1980-2003

Fiscal

Year

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Army Divisions

Active

Reserve

Marine Divisions

Active

Reserve

Naval Forces

Carriersb Total Ships

477

491

513

514

524

542

556

569

566

567

546

526

466

434

387

11+1

373

11+1

365

11+1

357

11+1

333

11+1

317

11+1

316

11+1

316

11+1

315

11+1

308

Air Force

Tactical Wingsa

Active

Reserve

7.2

7.6

12.6

7.6

12+

Sources: U.S. Navy, Highlights of the Department of the Navy FY2003 Budget, February 2002; U.S. Department of

Defense, briefing materials accompanying the FY2002 budget request (mimeo), June 2001 and similar materials

provided in prior years. U.S. Library of Congress, Congressional Research Service, U.S./Soviet Military Balance:

Statistical Trends, 1980-1989, CRS Report 90-401 RCO, by John M. Collins and (name redacted),

Aug. 6, 1990.

U.S. Library of Congress, Congressional Research Service, U.S. Armed Forces: Statistical Trends, 1985-1990, CRS

Report 91-672 RCO, by John M. Collins and (name redacted),

Sep. 6. 1991. U.S. Department of the Navy (Program

Information Center), Listing of U.S. Naval Ship Battle Forces as of 30 September 1993, Washington 1993 and

previous editions.

Notes: Figures for FY2002 and FY2003 are Administration projections.

a. Air Force figures do not include a wing of F-117 aircraft prior to FY1990.

b. Carrier figures exclude one auxiliary training carrier for FY1980-92 but include one operational reserve training

carrier (shown as “+1") since FY1995.

CRS-18

Table 10. Real Growth/Decline in National Defense

Funding, FY1940-2007

(current and constant FY2003 dollars in billions)

Budget Authority

Fiscal

Year

1940

1941

1942

1943

1944

1945

1946

1947

1948

1949

1950

1951

1952

1953

1954

1955

1956

1957

1958

1959

1960

1961

1962

1963

1964

1965

1966

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

Outlays

Current

Dollars

Constant

FY2003

Dollars

Real

Growth/

Decline

Current

Dollars

Constant

FY2003

Dollars

Real

Growth/

Decline

–

39.2

44.0

9.0

9.5

10.9

16.5

57.8

67.5

56.9

38.7

32.9

35.0

39.4

40.1

45.1

44.3

45.1

50.2

52.1

51.6

50.6

64.4

73.1

77.2

78.5

75.3

72.7

76.4

79.1

81.5

86.2

97.3

110.2

117.2

126.5

143.9

180.0

216.5

245.0

265.2

294.7

289.1

–

612.9

558.1

115.5

108.8

127.8

175.8

470.5

570.4

497.0

361.2

306.8

306.4

329.4

318.5

335.7

324.8

328.2

359.1

364.9

348.4

333.5

387.7

423.1

430.5

420.5

380.9

347.4

333.8

318.8

302.4

292.1

306.1

318.3

313.9

312.3

317.8

354.7

393.3

425.5

445.0

474.3

455.6

–

-8.9%

-79.3%

-5.8%

+17.5%

+37.5%

+167.7%

+21.2%

-12.9%

-27.3%

-15.1%

-0.1%

+7.5%

-3.3%

+5.4%

-3.2%

+1.0%

+9.4%

+1.6%

-4.5%

-4.3%

+16.3%

+9.1%

+1.7%

-2.3%

-9.4%

-8.8%

-3.9%

-4.5%

-5.2%

-3.4%

+4.8%

+4.0%

-1.4%

-0.5%

+1.7%

+11.6%

+10.9%

+8.2%

+4.6%

+6.6%

-4.0%

1.7

6.4

25.7

66.7

79.1

83.0

42.7

12.8

9.1

13.2

13.7

23.6

46.1

52.8

49.3

42.7

42.5

45.4

46.8

49.0

48.1

49.6

52.3

53.4

54.8

50.6

58.1

71.4

81.9

82.5

81.7

78.9

79.2

76.7

79.3

86.5

89.6

97.2

104.5

116.3

134.0

157.5

185.3

209.9

227.4

252.7

273.4

26.2

97.0

352.8

844.3

1,031.9

1,118.3

574.2

157.3

107.7

149.1

154.6

237.6

423.7

469.9

447.0

385.3

364.1

368.9

360.4

360.2

353.1

352.5

372.8

377.1

373.3

341.6

365.2

422.1

460.0

448.6

416.2

379.6

351.9

320.8

307.2

300.1

290.6

293.0

293.3

302.4

310.2

324.5

347.0

374.8

390.0

414.5

436.0

–

+269.8%

+263.6%

+139.3%

+22.2%

+8.4%

-48.7%

-72.6%

-31.5%

+38.4%

+3.7%

+53.7%

+78.3%

+10.9%

-4.9%

-13.8%

-5.5%

+1.3%

-2.3%

0.0%

-2.0%

-0.2%

+5.8%

+1.2%

-1.0%

-8.5%

+6.9%

+15.6%

+9.0%

-2.5%

-7.2%

-8.8%

-7.3%

-8.8%

-4.3%

-2.3%

-3.2%

+0.8%

+0.1%

+3.1%

+2.6%

+4.6%

+6.9%

+8.0%

+4.1%

+6.3%

+5.2%

CRS-19

Budget Authority

Fiscal

Year

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Current

Dollars

287.4

292.0

299.6

301.2

296.2

287.7

281.1

263.3

266.4

266.2

270.4

271.3

292.3

304.1

329.0

350.7

396.8

405.6

426.6

447.7

469.8

Constant

FY2003

Dollars

440.9

432.2

426.7

416.8

393.3

374.0

356.8

327.0

324.2

317.2

315.3

309.1

325.3

329.9

346.5

358.5

396.8

396.1

406.5

416.2

427.5

Real

Growth/

Decline

-3.2%

-2.0%

-1.3%

-2.3%

-5.6%

-4.9%

-4.6%

-8.3%

-0.9%

-2.2%

-0.6%

-2.0%

+5.2%

+1.4%

+5.0%

+3.5%

+10.7%

-0.2%

+2.6%

+2.4%

Outlays

Current

Dollars

282.0

290.4

303.6

297.9

296.7

286.1

283.9

278.9

271.0

265.2

270.4

268.4

274.9

294.5

308.5

348.0

379.0

393.8

413.5

428.5

442.5

Constant

FY2003

Dollars

437.4

435.8

437.1

416.8

397.9

372.3

359.0

344.4

329.1

315.5

313.8

304.8

306.3

319.5

324.9

355.2

379.0

384.5

394.2

398.4

401.1

Real

Growth/

Decline

+0.3%

-0.4%

+0.3%

-4.6%

-4.5%

-6.5%

-3.5%

-4.1%

-4.5%

-4.1%

-0.5%

-2.9%

+0.5%

+4.3%

+1.7%

+9.3%

+6.7%

+1.5%

+2.5%

+1.1%

+0.7%

Sources: Current dollar FY1940-1975 budget authority figures from Department of Defense

Comptroller, National Defense Budget Estimates for FY1982, March 1983; all other current dollar

figures from U.S. Office of Management and Budget, Historical Tables: Budget of the United States

Government, Fiscal Year 2003, February 2002; constant dollar figures calculated by CRS using

deflators from Department of Defense Comptroller; figures on Desert Shield/Desert Storm costs and

receipts from Department of Defense Comptroller.

Notes: This and other tables in this report use OMB data which reflect enacted and proposed changes

in accounting for retirement benefits. Figures reflect (1) enacted accrual accounting for health care

benefits for over-65 military retirees beginning in FY2003; (2) proposed accrual accounting for health

care benefits for under-65 military retirees beginning in FY2004; and (3) proposed accrual accounting

for all civilian retirement benefits beginning in FY2003. Data in these tables also reflect OMB scoring

of funds provided in the Emergency Terrorism Response supplemental appropriations act approved in

September 2001. For an explanation of the impact of accrual accounting and of budget scoring

conventions, see the Introduction, above. Figures for FY1990 and beyond exclude costs and receipts

of Operation Desert Shield/Desert Storm. Figures prior to FY1976 are from DOD data that have not

been revised to reflect accrual accounting for military retirement in years prior to its adoption in

FY1985. Figures from FY1976 on have been revised by OMB to reflect accrual accounting.

CRS-20

Table 11. National Defense Outlays as a Percentage of

GNP/GDP, FY1910-2007

(current year dollars in billions)

Fiscal

Year

1910

1911

1912

1913

1914

1915

1916

1917

1918

1919

1920

1921

1922

1923

1924

1925

1926

1927

1928

1929

1930

1931

1932

1933

1934

1935

1936

1937

1938

1939

1940

1941

1942

1943

1944

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

National

Defense

Outlays

0.3

0.6

7.1

13.5

4.0

2.6

0.9

0.7

0.6

0.7

0.6

0.5

0.7

0.9

1.0

1.1

1.7

6.4

25.7

66.7

79.1

134.0

157.5

185.3

209.9

227.4

252.7

273.4

282.0

290.4

303.6

Outlays

GNP/

as % of Fiscal

GDP GNP/GDP Year

35.3

0.8% 1945

35.8

0.8% 1946

39.4

0.7% 1947

39.6

0.7% 1948

38.6

0.8% 1949

40.0

0.7% 1950

48.3

0.6% 1951

60.4

1.0% 1952

76.4

9.3% 1953

84.0

16.1% 1954

91.5

4.4% 1955

69.6

3.7% 1956

74.1

1.3% 1957

85.1

0.8% 1958

84.7

0.8% 1959

93.1

0.6% 1960

97.0

0.6% 1961

94.9

0.6% 1962

97.0

0.7% 1963

103.1

0.7% 1964

97.4

0.8% 1965

83.7

0.9% 1966

67.5

1.0% 1967

57.4

1.1% 1968

61.2

0.9% 1969

69.7

1.0% 1970

78.5

1.2% 1971

87.8

1.1% 1972

89.0

1.2% 1973

89.0

1.2% 1974

96.7

1.7% 1975

114.0

5.6% 1976

144.2

17.8% 1977

180.1

37.0% 1978

209.0

37.9% 1979

2,732.1

4.9% 1995

3,061.6

5.1% 1996

3,228.6

5.7% 1997

3,440.5

6.1% 1998

3,839.4

5.9% 1999

4,136.6

6.1% 2000

4,401.4

6.2% 2001

4,647.0

6.1% 2002

5,014.7

5.8% 2003

9,824.4

3.1% 2004

National

Defense

Outlays

83.0

42.7

12.8

9.1

13.2

13.7

23.6

46.1

52.8

49.3

42.7

42.5

45.4

46.8

49.0

48.1

49.6

52.3

53.4

54.8

50.6

58.1

71.4

81.9

82.5

81.7

78.9

79.2

76.7

79.3

86.5

89.6

97.2

104.5

116.3

272.1

265.8

270.5

268.5

274.9

294.5

308.5

348.0

379.0

393.8

Outlays

GNP/

as % of

GDP GNP/GDP

221.3

37.5%

222.7

19.2%

234.6

5.5%

256.4

3.6%

271.5

4.8%

273.4

5.0%

321.0

7.3%

348.8

13.2%

373.4

14.1%

378.0

13.0%

395.2

10.8%

427.7

9.9%

450.7

10.1%

461.1

10.2%

492.1

10.0%

518.9

9.3%

531.8

9.3%

568.5

9.2%

599.7

8.9%

641.3

8.5%

687.9

7.4%

754.2

7.7%

813.5

8.8%

868.4

9.4%

949.2

8.7%

1,013.2

8.1%

1,081.4

7.3%

1,181.5

6.7%

1,308.1

5.9%

1,442.1

5.5%

1,559.8

5.5%

1,736.7

5.7%

1,971.3

5.6%

2,218.6

5.3%

2,503.8

5.2%

7,324.0

3.7%

7,694.6

3.5%

8,185.2

3.3%

8,663.9

3.1%

9,124.3

3.0%

9,744.3

3.0%

10,150.5

3.0%

10,361.6

3.4%

10,922.3

3.5%

11,525.8

3.4%

CRS-21

Fiscal

Year

1990

1991

1992

1993

1994

National

Defense

Outlays

299.3

273.3

298.4

291.1

281.6

Outlays

GNP/

as % of

GDP GNP/GDP

5,735.6

5.2%

5,930.4

4.6%

6,218.6

4.8%

6,558.4

4.4%

6,944.6

4.1%

Fiscal

Year

2005

2006

2007

National

Outlays

Defense GNP/

as % of

Outlays GDP GNP/GDP

413.5 12,158.9

3.4%

428.5 12,803.3

3.3%

442.5 13,448.0

3.3%

Sources: Outlays, FY1910-1939, and GNP, FY1910-1929, from U.S. Department of Commerce,

Historical Statistics of the United States, Washington: GPO, 1975; outlays, FY1940-2007, and GDP,

FY1930-2007, from U.S. Office of Management and Budget, Historical Tables: Budget of the United

States Government, Fiscal Year 2003, February 2002.

Notes: This and other tables in this report use OMB data that reflect enacted and proposed changes

in accounting for retirement benefits. Figures reflect (1) enacted accrual accounting for health care

benefits for over-65 military retirees beginning in FY2003; (2) proposed accrual accounting for

health care benefits for under-65 military retirees beginning in FY2004; and (3) proposed accrual

accounting for all civilian retirement pension and health benefits beginning in FY2003. Data in

these tables also reflect OMB scoring of funds provided in the Emergency Terrorism Response

supplemental appropriations act approved in September 2001. For an explanation of the impact of

accrual accounting and of budget scoring conventions, see the Introduction, above. For this and

following tables, national defense outlay figures for FY1990 and beyond do not exclude Operation

Desert Shield/Desert Storm costs and receipts, since the amounts involved cannot be separated from

national economic activity or from total federal outlays. GNP before 1930, GDP thereafter.

CRS-22

Figure 5: National Defense Outlays, FY1910-2007

1,200

1,000

800

600

400

200

1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Figure 6: National Defense Budget Authority and

Outlays, FY1947-2007

600

500

400

300

200

Budget Authority

Outlays

100

1947

1957

1967

1977

1987

1997

2007

CRS-23

Figure 7: National Defense Outlays,

Percentage of GDP/GNP, FY1910-2007

40%

30%

20%

10%

1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Figure 8: National Defense Outlays,

Percentage of GDP, FY1947-2007

16%

14%

12%

10%

1950

1960

1970

1980

1990

2000

CRS-24

Table 12. Allocation of Federal Outlays by Budget Enforcement

Act Category, FY1962-2007

(current year dollars in billions)

Fiscal

Year

1962

1963

1964

1965

1966

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Defense

Discretionary

Outlays

52.6

53.7

55.0

51.0

59.0

72.0

82.2

82.7

81.9

79.0

79.3

77.1

80.7

87.6

89.9

97.5

104.6

116.8

134.6

158.0

185.9

209.9

228.0

253.1

273.8

282.5

290.9

304.0

300.1

319.7

302.6

292.4

282.3

273.6

266.0

271.7

270.2

275.5

295.0

309.1

348.0

379.0

393.7

413.4

428.5

442.5

Non-Defense

Discretionary

Outlays

19.5

21.6

24.1

26.8

31.1

34.5

35.8

34.6

38.3

43.5

49.2

53.3

57.5

70.3

85.7

99.6

114.1

123.2

141.7

149.9

140.0

143.4

151.4

162.7

164.7

161.7

173.5

184.8

200.4

213.6

231.2

247.0

259.1

271.3

266.7

275.6

281.9

296.5

319.9

348.3

392.5

410.0

421.3

424.9

429.3

437.5

Mandatory

Outlays

27.9

28.3

31.2

31.8

35.0

40.7

49.1

53.6

61.0

72.8

86.7

98.0

109.7

151.1

169.5

182.2

204.6

221.4

262.1

301.6

334.8

365.2

361.3

401.1

415.9

421.3

448.2

485.8

568.2

596.6

648.5

671.4

717.5

738.8

786.8

810.0

859.4

900.2

951.0

1,000.3

1,133.4

1,158.6

1,185.3

1,248.3

1,322.9

1,402.4

Net

Interest

6.9

7.7

8.2

8.6

9.4

10.3

11.1

12.7

14.4

14.8

15.5

17.3

21.4

23.2

26.7

29.9

35.5

42.6

52.5

68.8

85.0

89.8

111.1

129.5

136.0

138.7

151.8

169.0

184.4

194.5

199.4

198.7

203.0

232.2

241.1

244.0

241.2

229.8

223.0

206.2

178.4

180.7

188.8

190.2

188.3

185.3

Total Federal

Outlays

106.8

111.3

118.5

118.2

134.5

157.5

178.1

183.6

195.6

210.2

230.7

245.7

269.4

332.3

371.8

409.2

458.7

504.0

590.9

678.2

745.8

808.4

851.9

946.4

990.5

1,004.1

1,064.5

1,143.7

1,253.2

1,324.4

1,381.7

1,409.5

1,461.9

1,515.8

1,560.6

1,601.3

1,652.6

1,701.9

1,788.8

1,863.9

2,052.3

2,128.2

2,189.1

2,276.9

2,369.1

2,467.7

Source: U.S. Office of Management and Budget, Historical Tables: Budget of the United States Government,

Fiscal Year 2003, February 2002.

Note: National defense outlay figures do not exclude Desert Shield/Desert Storm costs and receipts. This and

other tables in this report use OMB data which reflect enacted and proposed changes in accrual accounting for

retirement benefits after FY2003. Data in these tables also reflect OMB scoring of funds provided in the

Emergency Terrorism Response supplemental appropriations act approved in September 2001. For an

explanation of the impact of accrual accounting and of budget scoring conventions, see the Introduction, above.

CRS-25

Table 13. Allocation of Federal Outlays by

Budget Enforcement Act Category, FY1962-2007

(percentage of total outlays)

Fiscal

Year

1962

1963

1964

1965

1966

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Defense

Non-Defense

Discretionary Discretionary

Outlays

49.3

48.2

46.4

43.1

43.9

45.7

46.2

45.0

41.9

37.6

34.4

31.4

30.0

26.4

24.2

23.8

22.8

23.2

22.8

23.3

24.9

26.0

26.8

26.7

27.6

28.1

27.3

26.6

23.9

24.1

21.9

20.7

19.3

18.0

17.0

16.3

16.2

16.5

16.6

17.0

17.8

18.0

18.2

18.1

17.9

18.3

19.4

20.3

22.7

23.1

21.9

20.1

18.8

19.6

20.7

21.3

21.7

21.3

21.2

23.1

24.3

24.9

24.4

24.0

22.1

18.8

17.7

17.8

17.2

16.6

16.1

16.3

16.2

16.0

16.1

16.7

17.5

17.7

17.9

17.1

17.2

17.1

17.4

17.9

18.7

19.1

19.3

19.2

18.7

18.1

17.7

Mandatory

Outlays

Net

Interest

26.1

25.4

26.3

26.9

26.0

25.8

27.6

29.2

31.2

34.6

37.6

39.9

40.7

45.5

45.6

44.5

44.6

43.9

44.4

44.5

44.9

45.2

42.4

42.0

42.1

42.5

45.3

45.0

46.9

47.6

49.1

48.7

50.4

50.6

52.0

52.9

53.2

53.7

55.2

54.4

54.1

54.8

55.8

56.8

6.5

6.9

7.3

7.0

6.5

6.2

6.9

7.4

7.0

6.7

7.0

7.9

7.0

7.2

7.3

7.7

8.5

8.9

10.1

11.4

11.1

13.0

13.7

13.8

14.3

14.8

14.7

14.4

14.1

13.9

15.3

15.4

15.2

14.6

13.5

12.5

11.1

8.7

8.5

8.6

8.4

7.9

7.5

Defense

Discretionary

73.0

71.3

69.5

65.6

65.5

67.6

69.7

70.5

68.1

64.5

61.7

59.1

58.4

55.4

51.2

49.5

47.8

48.7

51.3

57.0

59.4

60.1

60.9

62.4

63.6

62.6

62.2

59.9

56.7

54.2

52.1

50.2

49.9

49.7

48.9

48.2

48.0

47.0

48.0

48.3

49.3

50.0

50.3

Source: U.S. Office of Management and Budget, Historical Tables: Budget of the United States Government,

Fiscal Year 2003, February 2002.

Note: National defense outlay figures do not exclude Desert Shield/Desert Storm costs and receipts. This and

other tables in this report use OMB data which reflect enacted and proposed changes in accrual accounting for

retirement benefits after FY2003. Data in these tables also reflect OMB scoring of funds provided in the

Emergency Terrorism Response supplemental appropriations act approved in September 2001. For an

explanation of the impact of accrual accounting and of budget scoring conventions, see the Introduction, above.

CRS-26

Figure 9: National Defense Outlays,

Percentage of Federal Outlays, FY1940-2007

100%

80%

60%

40%

20%

1940

1950

1960

1970

1980

1990

2000

Figure 10: Federal Outlays by Budget Enforcement Act Category,

FY1962-2007

2,500

Net Interest

Mandatory

Non-Defense Discretionary

Defense Discretionary

2,000

1,500

1,000

500

1962

1967

1972

1977

1982

1987

1992

1997

2002

2007

CRS-27

Table 14. Trends in Department of Defense Future-Years Defense Plans

(budget authority, current year dollars in billions)

Admin. Request

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

FY1987, 2/86

FY1988, 1/87

FY1989, 2/88

Reagan FY1990

Bush FY1990

FY1991, 1/90

FY1992, 2/91

FY1993, 1/92

FY1994, 3/93

FY1995, 2/94

FY1996, 2/95

FY1997, 3/96

FY1998, 2/97

FY1999, 2/98

FY2000, 2/99

FY2001, 2/00

FY2002, 6/01

FY2003, 2/02

312

282

279

332

303

283

284

354

323

291

290

291

375

344

307

306

296

289

291

293

396

365

324

321

311

295

280

298

284

276

387

342

336

322

300

278

269

275

282

360

351

336

304

278

268

259

267

366

350

308

278

268

251

249

251

312

281

270

248

252

253

256

283

270

240

243

246

252

254

255

287

275

233

240

243

250

258

241

247

248

251

255

259

253

256

254

256

257

263

278

279

266

262

263

267

280

290

277

270

271

286

291

301

313

277

274

288

295

328

333

284

299

301

337

379

308

346

387

319

316

356

408

366

429

451

Sources: U.S. Office of Management and Budget, Historical Tables: Budget of the United States Government, FY2003, February 2002 and prior years; for FY2002 request, U.S. Office of

Management and Budget, “Policy Function and Category Summary,” mimeo, August 2001; for FY1994 request, U.S. Office of Management and Budget, Budget Baselines, Historical Data,

and Alternatives for the Future, January 1993.

Notes: Boldface denotes the future-year defense plan projected at the time of the budget submission. Figures for the budget year and following years reflect the Administration’s request and

future budget projections. Figures for the year immediately preceding the year for which funding is requested (e.g., FY2002 in the FY2003 request) represent the Administration’s estimate

of the amount enacted by Congress and may include proposed supplemental appropriations and rescissions. Figures for earlier years reflect changes to the enacted level due to congressional

action on supplemental appropriations and rescissions, transfers of budget authority from one year to another, and/or adjustments in contract authority for Working Capital Funds. The large

discrepancies in year-to-year estimates for FY1991 are due to substantial changes in accounting for Operation Desert Shield/Desert Storm. Figures in this table have not been adjusted to

exclude funding for Operation Desert Shield/Desert Storm. This and other tables in this report use OMB data which reflect enacted and proposed changes in accrual accounting for retirement

benefits after FY2003. Data in these tables also reflect OMB scoring of funds provided in the Emergency Terrorism Response supplemental appropriations act approved in September 2001.

For an explanation of the impact of accrual accounting and of budget scoring conventions, see the Introduction, above.

CRS-28

Table 15. Defense Spending by Top 25 Foreign Nations

(current year U.S. dollars in millions)

IISS:

Country

United States

China — Mainland

Russia

France

Japan

United Kingdom

Germany

Italy

Saudi Arabia

Korea, South

Brazil

China — Taiwan

India

Israel

Australia

Canada

Turkey

Spain

Netherlands

Korea, North

Singapore

Poland

Sweden

Greece

Indonesia

Rank

US Dept. of State:

WMEAT 1998

Defense

Expenditures

(1997 data)

GDP

276,300

3.3%

74,910

2.2%

41,730

5.8%

41,520

3.0%

40,840

1.0%

35,290

2.8%

32,870

1.6%

22,720

2.0%

21,150 14.4%

15,020

3.4%

14,150

1.8%

13,060

4.6%

10,850

2.8%

9,335

9.7%

8,463

2.2%

7,800

1.3%

7,792

4.0%

7,670

1.5%

6,839

1.9%

6,000 27.5%

5,664

5.7%

5,598

2.3%

5,550

2.5%

5,533

4.6%

4,812

2.3%

Military Balance

2001-2002

Defense

Expenditures

(2000 data)

291,200

42,000

60,000

35,000

45,600

34,600

28,800

21,000

18,700

12,800

17,900

17,600

14,700

9,500

7,100

8,100

10,800

7,200

6,500

2,100

4,800

3,300

5,300

5,600

1,500

GDP

3.0%

5.4%

5.0%

2.6%

1.0%

2.4%

1.6%

2.0%

10.1%

2.8%

5.6%

3.1%

8.9%

1.9%

1.2%

5.2%

1.3%

1.9%

13.9%

4.9%

2.0%

2.2%

4.9%

1.0%

Sources: U.S. Department of State: Bureau of Arms Control, World Military Expenditures and

Arms Transfers: 1998, April 2000. International Institute for Strategic Studies, The Military

Balance 2001-2002, October 2001.

Notes: For information on a total of 167 countries and details on this data, see CRS Report RL30931,

Military Spending by Foreign Nations: Data from Selected Public Sources.

Military spending in this table is defined primarily by the NATO standard definition: cash outlays

of central governments to meet costs of national armed forces. This definition includes military

retired pay, which is excluded in the U.S. Office of Management and Budget’s definition of DOD

outlays. Therefore, the U.S. outlay numbers may be higher in this table than the reported DOD

outlay numbers in the rest of the report.

CRS-29

Part III: Definitions of Budget Terms2

The definitions that follow are taken from Office of Management and Budget and

Department of Defense publications.

Accrual Accounting – as applied to military retired pay, a method of recording costs

designed to reflect the liability of the federal government for the future

retirement costs of military personnel currently on active or reserve duty. First

used in FY1985 in DOD, this method of accounting represents a change from

the earlier practice in which the cost of military retirement was measured in

terms of actual payments to current retirees.

Appropriation – one form of budget authority provided by Congress for the funding

of an agency, department, or program for a given amount of time. An

appropriation provides funds for purposes specifically designated by Congress.

Funds will not necessarily all be spent in the year in which they are initially

provided.

Authorization – establishes or maintains a government program or agency by

defining its scope. Authorizing legislation is normally a prerequisite for

appropriations and may set specific limits on the amount that may be

appropriated for the specified program or agency. An authorization, however,

does not make money available, and sometimes appropriations are made without

having been authorized.

Budget Authority – legal authority for an agency to enter into obligations for the

provision of goods or services. It may be available for one or more years. An

appropriation is one form of budget authority.

Current/Constant Dollars – the cost of goods or services in current dollars is the

value in terms of prices current at the time of purchase – current dollars are also

referred to simply as “dollars” or as “then-year dollars.” The cost of goods or

services in constant dollars is the value adjusted to eliminate the effects of

changes in prices (usually due to inflation). Constant dollars, expressed in terms

of an arbitrary reference year (e.g., Fiscal Year 2003 dollars), are determined

by dividing current dollars by a “deflator” based on the prices in the reference

year. Constant dollars are used to assess growth rates of programs

independently of the effects of inflation. Growth rates in constant, inflationadjusted dollars are referred to as “real growth” rates.

Deficit – in the federal budget, the amount by which total federal budget outlays for

a given fiscal year exceed total federal revenues for that year.

Fiscal Year – a fiscal year in the federal government begins on October 1 and ends

on September 30 and is designated by the calendar year in which it ends. Thus,

For a complete glossary of defense budget terms, see CRS Report RL30002, A Defense

Budget Primer by (name redacted) and (name redacted).

CRS-30

FY2003 begins on October 1, 2002 and will end on September 30, 2003. (Note

that the federal fiscal year ran from July 1 to June 30 until FY1977.)

National Defense Budget Function – one of the categories of the federal budget.

It consists of the Department of Defense (DOD) budget, which funds all direct

DOD military programs, and of a number of defense-related activities

administered by other agencies. These activities include atomic energy defense

activities funded through the Department of Energy, civil defense programs

administered by the Federal Emergency Management Agency, and the Selective

Service System. The DOD budget constitutes more than 95% of the National

Defense Budget Function.

Obligation – an order placed, contract awarded, service agreement undertaken, or

other commitments made by federal agencies during a given period which will

require outlays during the same or some future period.

Outlays – money spent by a federal agency from funds provided by Congress.

Outlays in a given fiscal year are a result of obligations that in turn follow the

provision of budget authority.

Unexpended Funds – budget authority that has been appropriated by Congress, but

remains unspent, representing future outlays. Unexpended funds, whether

obligated or as yet unobligated, are formally appropriated by Congress for

specific programs.

Unobligated Funds – budget authority that has been appropriated by Congress for

specific programs but that has not yet been pledged or obligated by contract.

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