FY2005 Defense Budget: Frequently Asked Questions

Congressional research reportJul 12, 2004

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FY2005 Defense Budget:

Frequently Asked Questions

July 12, 2004

name redacted

Analyst in National Defense

Foreign Affairs, Defense, and Trade Division

Congressional Research Service ˜ The Library of Congress

FY2005 Defense Budget:

Frequently Asked Questions

Summary

This report is designed to provide facts and figures about the United States

defense budget in order to help answer frequently asked questions about defense

spending. The answers to these questions are based on analysis of recent and

historical trends in the defense budget up to and including the fiscal year (FY) 2005

budget request.

Using figures taken primarily from the White House Office of Management and

Budget’s (OMB’s) Budget of the United States Government, Fiscal Year 2005:

Historical Tables (February 2004), this report answers frequently asked questions

that fall within four categories:

(1) trends in defense spending over time, from World War II through OMB’s

FY2009 budget projections (questions 1, 2, 3, and 4);

(2) the impact of defense on the economy (questions 5, 6, and 7);

(3) costs of wars and supplemental appropriations (questions 8 and 9);

(4) trends in force structure (questions 10, 11, and 12).

The fifth section of the report consists of additional, more general budget data

tables and a glossary of frequently used budget terms.

This report will be updated as necessary.

Contents

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

Key Budget Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Budget Authority, Obligations, and Outlays . . . . . . . . . . . . . . . . . . . . . 2

The “050” vs. the “051” Budget Function . . . . . . . . . . . . . . . . . . . . . . . 2

Current and Constant Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Discretionary and Mandatory Spending . . . . . . . . . . . . . . . . . . . . . . . . . 3

Part I: Trends in Defense Spending Over Time . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Question 1: What Are the Recent, Historic, and Projected Trends in

Budget Authority and Outlays for National Defense? . . . . . . . . . . . . . . 3

Question 2: What Are the Recent Trends in Budget Authority for

Each Defense Appropriations Title? . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Question 3: What Are the Historical Trends in Defense’s Share of

Total Federal Outlays? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Question 4: What Are the Historical Trends in Defense’s Share of

Total Federal Discretionary Outlays? . . . . . . . . . . . . . . . . . . . . . . . . . 13

Part II: The Impact of Defense on the Economy . . . . . . . . . . . . . . . . . . . . . . . . . 14

Question 5: What Are the Historical Trends in U.S. Defense Outlays

as a Percentage of Gross Domestic Product (GDP)? . . . . . . . . . . . . . . 14

Question 6: What Are the Historical Trends in Different Categories of

Federal Spending as a Percentage of GDP? . . . . . . . . . . . . . . . . . . . . . 15

Question 7: How Do U.S. Defense Outlays Compare to Those of

Other Countries, Both in Dollars and as a Percentage of GDP? . . . . . 16

Part III: Costs of Wars and Defense Supplementals . . . . . . . . . . . . . . . . . . . . . . 17

Question 8: How Much Has Congress Enacted in Defense Supplemental

Appropriations since September 11, 2001? . . . . . . . . . . . . . . . . . . . . . 17

Question 9: How Much Has Each Major War in the History of the

United States Cost? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Part IV: Trends in Force Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Question 10: What Have Been the Recent Trends in U.S. Military

Personnel Levels? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Question 11: What Are the Recent Trends in U.S. Military Force

Structure? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Question 12: How Much Budget Authority Has Been Provided to

Each Service in Recent Years? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Part V: Appendix and Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

CRS Defense Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

List of Figures

Figure 1. National Defense Budget Authority and Outlays, FY1947-FY2009 . . . 3

Figure 2. National Defense Budget Authority and Outlays, FY1997-FY2009 . . . 4

Figure 3. Department of Defense Budget Authority by Appropriations Title,

FY1976-FY2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Figure 4. Shares of Total Federal Outlays by Type of Spending,

FY1962-FY2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Figure 5. Defense and Non-Defense Discretionary Outlays as a Share of

Total Federal Discretionary Outlays, FY1962-FY2009 . . . . . . . . . . . . . . . . 13

Figure 6. GDP and Defense’s Share of GDP, FY1962-FY2005 . . . . . . . . . . . . 14

Figure 7. Federal Spending by Category as a Percentage of GDP,

FY1962-FY2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Figure 8. Regular and Supplemental Defense Appropriations,

FY2001-FY2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Figure 9. Active Duty and Selected Reserve End-Strength, Selected Years,

FY1989-FY2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Figure 10. Department of Defense Budget Authority by Service,

FY2005 Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

List of Tables

Table 1. National Defense Budget Function and Department of Defense Budget,

FY1997-FY2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Table 2. National Defense Budget Function Trends by Appropriations Title,

Budget Authority, FY1997-FY2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Table 3. National Defense Budget Function by Appropriations Title,

Budget Authority, Selected Years, FY1976-FY2005 . . . . . . . . . . . . . . . . . 10

Table 4. National Defense Budget Function Outlays by

Appropriations Title, FY1997-2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Table 5. Defense Spending of Top 25 Countries . . . . . . . . . . . . . . . . . . . . . . . . 16

Table 6. Regular and Supplemental Appropriations for the National Defense

Budget Function, FY2001-2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Table 7. Costs of Major U.S. Wars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Table 8. Department of Defense Personnel Levels, Selected Years . . . . . . . . . . 22

Table 9. U.S. Military Force Structure, FY1980-2005 . . . . . . . . . . . . . . . . . . . . 23

Table 10. Department of Defense Budget Authority by Service,

FY1995-FY2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Table 11. Real Growth/Decline in National Defense Budget Authority and

Outlays, FY1940-FY2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Table 12. National Defense Outlays as a Percentage of GDP,

FY1910-FY2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Table 13. Allocation of Federal Outlays by Budget Enforcement Act

Category, FY1962-FY2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Table 14. Percentage Allocation of Federal Outlays by

Budget Enforcement Act Category, FY1962-FY2009 . . . . . . . . . . . . . . . . . 30

FY2005 Defense Budget:

Frequently Asked Questions

Introduction

This report is designed to answer Congress’s most frequently asked questions

and provide essential facts and figures about the defense budget. It includes figures

from the president’s fiscal year (FY) 2005 budget request and provides brief analyses

of recent and historical trends in the defense budget.

Each frequently asked question about the defense budget falls within one of the

following four sections in this report:

(1) trends in defense spending over time, from World War II through OMB’s

FY2009 budget projections (questions 1, 2, 3, and 4);

(2) the impact of defense on the economy (questions 5, 6, and 7);

(3) costs of wars and supplemental appropriations (questions 8 and 9);

(4) trends in force structure (questions 10, 11, and 12);

The fifth section of the report consists of additional data tables with historical

budget authority and outlay figures, and a glossary of frequently used budget terms.

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

prepared by the Office of Management and Budget (OMB).1 It is important to note

that OMB figures for budget authority and outlays through FY2004 include both

regular and supplemental appropriations. As a result, budget authority and outlay

totals for FY2003 and FY2004, which included significant supplemental

appropriations, are sometimes larger than totals for FY2005, which represent the

president’s FY2005 request and do not include any FY2005 supplemental

appropriations. In addition, please note that the budget authority and estimated

outlay figures for the president’s FY2005 request include the $25 billion budget

amendment for Iraq and Afghanistan submitted by the president to Congress on May

12, 2004. Outlay estimates provided by the Congressional Budget Office (CBO) for

the $25 billion amendment are added to OMB outlay projections for FY2006FY2009 included in this report.

Please note as well that all figures provided for FY2006 through FY2009 in this

report are either OMB, CBO, or Department of Defense projections, and represent

neither congressional appropriations nor the President’s request.

Most figures are from the Office of Management and Budget, Budget of the United States

Government, Fiscal Year 2005: Historical Tables, February 2004.

CRS-2

Key Budget Terminology

The federal budget has its own unique vocabulary, a basic understanding of

which is essential to understand the significance of defense budget figures and trends.

The following budget terms, which will be used often in this report, are frequently

used, yet sometimes misunderstood.

Budget Authority, Obligations, and Outlays. When Congress

appropriates money, it provides agencies with “budget authority.” Budget authority

gives an agency the legal authority to obligate money for the provision of goods or

services. Appropriations are the most common, but not the only, type of budget

authority.2

Obligations then occur, for example, when agencies enter into contracts, submit

purchase orders, and employ personnel. When those obligations are liquidated — or

in simpler terms, when the “check is written” and the performance of an obligation

is paid for — outlays occur.

The term “defense spending” technically refers to outlays, although budget

authority and outlays are frequently confused in budget discussions.

The “050” vs. the “051” Budget Function. The federal budget is divided

into several functions, including the National Defense Budget Function, or “050”

function. The 050 function consists of three sub-functions — Department of Defense

(051), atomic energy defense activities (053), and defense-related activities in other

agencies (054).

Thus, “national defense” spending consists of more than just the Department of

Defense’s annual expenditures. Although the majority of the 050 function consists

of the Department of Defense (051) function, the 050 function also consists of

billions of dollars ($16.75 billion in FY2004) appropriated to the Department of

Energy for atomic energy defense activities.

This report contains figures for both the 050 and 051 functions, depending on

which is most useful to the reader.

Current and Constant Dollars. The cost of goods or services in current

dollars is the value of such goods or services in terms of prices current at the time of

purchase. For example, FY1985 national defense outlays in current dollars represent

the amount spent on national defense in FY1985 according to what the dollar was

worth in FY1985. Current dollars may also be referred to 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 a particular reference year (normally the current budget year),

Other types include borrowing authority and contract authority — for further explanation

of these terms, see Allen Schick, The Federal Budget: Politics, Policy, Process

(Washington, D.C.: Brookings Institution Press, 2000).

CRS-3

are determined by dividing current dollars by a deflator based on the prices in the

reference year.

Constant dollars are used to measure the growth rates of programs over time

independently of the effects of inflation. For this reason, figures in this report

measuring trends in the defense budget use constant-dollar figures.

Discretionary and Mandatory Spending. Within the federal budget,

budget authority is classified as either discretionary or mandatory. Generally, budget

authority is discretionary if provided by Congress in appropriations acts and

mandatory if provided in permanent authorizing law (examples include Social

Security, Medicare, and federal employee retirement). However, a portion of

mandatory budget authority, including Medicaid and certain veterans’ programs, is

funded in annual appropriations acts.

Discretionary budget authority must be renewed annually, while most mandatory

budget authority is available automatically each year without legislative action by

Congress. Outlays are also classified as discretionary or mandatory according to the

classification of the budget authority from which they flow.

Part I: Trends in Defense Spending Over Time

The following section (questions 1, 2, 3, and 4) provides figures and an analysis

of trends in defense spending over time.

Question 1: What Are the Recent, Historic, and Projected

Trends in Budget Authority and Outlays for National

Defense?

Figure 1. National Defense Budget

Authority and Outlays, FY1947-FY2009

(constant FY2005 dollars in billions)

Source: Office of Management and Budget, Budget of the United States Government, Fiscal Year

2005: Historical Tables, February 2004, pp. 53-58, 82-85, [http://www.whitehouse.gov/omb/budget/

fy2005/pdf/hist.pdf]. Figures for FY2006-FY2009 are projected; CBO estimated outlays for the $25

billion budget amendment for Iraq and Afghanistan are included in FY2005-FY2009 outlay figures.

CRS-4

Figure 1 shows the pattern of budget authority and outlays since World War II.

Since 1947, there have been four periods of significant increases in budget authority

and outlays — the Korean War, the Vietnam War, the Reagan era military build-up,

and the post-9/11 defense spending increases. Each period to date has been followed

by a period of significant decreases in budget authority and outlays.

Following the end of the Cold War and the disappearance of the Soviet threat,

some observers believed that this cyclical pattern in budget authority and outlays

would end with a long, or even permanent, decline in defense spending.3 However,

the events of September 11, 2001, and the subsequent wars in Afghanistan, Iraq, and

the ongoing Global War on Terrorism ended the decline in budget authority and

outlays that had continued through most of the 1990s.

Figure 2 shows recent trends in budget authority and outlays from FY1997

through projected totals for FY2009. Table 1, below, shows budget authority and

outlays in current and constant FY2005 dollars for both the national defense budget

function (the “050” function) and the Department of Defense budget (the “051”

function) from FY1997 through FY2009.

Figure 2. National Defense Budget

Authority and Outlays, FY1997-FY2009

(constant FY2005 dollars in billions)

Source: Office of Management and Budget, Budget of the United States Government, Fiscal Year

2005: Historical Tables, February 2004, pp. 58-59, 84-85, [http://www.whitehouse.gov/omb/budget/

fy2005/pdf/hist.pdf]. Figures for FY2006-FY2009 are projected; CBO outlay estimates for the $25

billion budget amendment for Iraq and Afghanistan are included in FY2005-FY2009 outlay figures.

FY1998 was the final year of a period of decline in budget authority and outlays

that began in FY1986. From FY1999 through FY2001, budget authority and outlays

increased modestly in real terms, by 8.6% and 4.8%, respectively. From FY2001

through FY2004, budget authority increased by 27.7% and outlays increased by

Colonel Joe Conley, “Impacts of Declining Budgets and Defense Mergers on the

Department of Defense,” U.S. Army War College, Carlisle Barracks, PA, April 2002, p.3.

CRS-5

37.7%. The Bush Administration’s regular FY2005 national defense budget request

of $423.1 billion, when combined with the administration’s $25 billion budget

amendment for Iraq and Afghanistan submitted to Congress on May 12, 2004 and a

supplemental request that is expected early in calendar year 2005, will most likely

exceed FY2004 budget authority.

292.3

339.5

5.1%

274.9

320.3

0.4%

278.5

323.5

5.1%

261.3

304.4

0.1%

270.4 271.3

330.3 323.1

-0.7% -2.2%

270.5 268.5

328.9 318.9

-0.6% -3.0%

257.9 258.5

315.2 307.9

-0.8% -2.3%

258.3 256.1

314.1 304.2

-0.5% -3.2%

281.2

318.4

4.6%

290.4

328.8

1.6%

294.5

333.5

4.1%

304.1

344.2

1.4%

Proj.

2006

464.8

443.0

2.1%

Proj.

2007

434.8 448.4 420.5 427.7

442.9 448.4 411.3 408.6

9.6% 1.2% -8.3% -0.7%

444.9

424.1

2.5%

453.7 469.4 441.0 447.9

462.1 469.4 431.3 427.9

9.4% 1.6% -8.1% -0.8%

345.0 437.9 441.7 427.6 423.7

369.2 456.9 450.5 427.6 413.8

5.1% 23.8% -1.4% -5.1% -3.2%

291.0 332.0 387.3

319.7 354.6 404.0

0.4% 10.9% 13.9%

319.4

351.3

6.8%

Est. Req.

2004 2005

362.1 456.2 460.5 448.1 444.0

387.6 476.0 469.7 448.1 433.7

5.1% 22.8% -1.3% -4.6% -3.2%

305.5 348.6 404.9

335.6 372.3 422.5

0.6% 10.9% 13.5%

335.5

368.9

7.2%

Actual Actual Actual Actual Actual Actual Actual

1997 1998 1999 2000 2001 2002 2003

447.9

417.5

2.2%

466.8

433.8

2.3%

467.4

435.7

1.8%

485.8

451.5

1.9%

Proj.

2008

468.1

425.6

1.9%

488.9

443.0

2.1%

487.4

443.2

1.7%

508.2

460.5

2.0%

Proj.

2009

Note: FY2005-FY2009 outlay figures include unpublished CBO outlay estimates for the $25 billion amendment to the FY2005 request submitted

by the Administration to Congress on May 12, 2004.

Source: Office of Management and Budget, Budget of the United States Government, Fiscal Year 2005: Historical Tables, February 2004, pp. 58-59,

84-85, [http://www.whitehouse.gov/omb/budget/fy2005/pdf/hist.pdf]. FY2005 Dept. of Defense deflators used for conversions to constant FY2005

dollars.

Fiscal Year:

National Defense Budget Function

Budget Authority

Current year dollars

Constant FY2005 dollars

Real growth/decline

Outlays

Current year dollars

Constant FY2005 dollars

Real growth/decline

Department of Defense

Budget Authority

Current year dollars

Constant FY2005 dollars

Real growth/decline

Outlays

Current year dollars

Constant FY2005 dollars

Real growth/decline

(current and constant FY2005 dollars in billions)

Table 1. National Defense Budget Function and Department of Defense Budget,

FY1997-FY2009

CRS-6

CRS-7

Question 2: What Are the Recent Trends in Budget Authority

for Each Defense Appropriations Title?

Figure 3. Department of Defense Budget

Authority by Appropriations Title,

FY1976-FY2005

200

Operations and

Maintenance

Military Personnel

150

100

Procurement

R,D,T&E

1976

1981

1986

1991

1996

2001

Source: Office of Management and Budget, Historical Tables: Budget of the United States

Government, Fiscal Year 2005, February 2004, pp. 82-85, [http://www.whitehouse.gov/omb/budget/

fy2005/pdf/hist.pdf]; FY2005 deflators from DOD Comptroller.

Note: Figures for FY2005 do not include the $25 billion budget amendment for Iraq and Afghanistan

submitted by the Bush Administration to Congress on May 12, 2004, as the Administration’s

amendment did not allocate funds by appropriation title.

As shown in Figure 3, budget authority for procurement has varied far more

than that of the other appropriations titles since FY1976. When national defense

budget authority increased during this period — especially during the Reagan-era

build-up — procurement budget authority increased sharply. On the other hand,

when national defense budget authority was reduced significantly after the Cold War,

procurement funding faced much deeper cuts than military personnel, operations and

maintenance (O&M), and research, development, test, and evaluation (R,D,T&E).

Tables 2, 3, and 4 list recent budget authority in current year and constant year

dollars, and outlay levels in current year dollars for each of these appropriations

titles, respectively.

Budget authority for military personnel also declined considerably after the Cold

War, due largely to the drawdown in active duty and selected reserve personnel that

took place from 1989 to 1999. On the other hand, the O&M and R,D,T&E titles

have, until recently, been funded at relatively steady levels during periods of overall

increases and decreases in national defense budget authority.

Since FY2002, budget authority for each appropriations title has increased

sharply, in part as a result of the wars in Iraq and Afghanistan and enhanced security

for defense installations. Supplemental appropriations in FY2003 and FY2004 were

CRS-8

a major cause of the sharp increases in military personnel and O&M budget authority.

Procurement and R,D,T&E have increased steadily in regular appropriations since

FY1997, and have also received some additional funding in recent supplemental

appropriations.

270.4

271.3

292.3

1.6

1.2

335.5

14.4

12.4

304.1

319.5

290.5

362.1

1.8

15.3

345.0

87.0

133.2

62.7

48.7

6.6

4.0

2.7

Req.

2005

2.1

16.8

3.2

17.2

456.2 460.5 448.1

2.0

16.4

109.1 117.7 106.3

178.3 168.5 141.2

78.5 80.9 74.9

58.1 64.7 68.9

6.7

6.0

5.3

4.2

3.8

4.2

3.0

0.2

1.7

25.0

437.9 441.7 427.6

Est.

2004

Proj.

2007

Proj.

2008

Proj.

2009

2.3

17.6

2.4

16.7

2.4

16.9

444.0 464.8 485.8 508.2

2.3

18.1

423.7 444.9 466.8 488.9

110.9 114.7 118.4 122.1

146.8 151.8 156.9 164.6

80.4 90.6 105.1 114.0

71.0 70.7 71.6 70.7

8.8 12.1 10.8 10.2

4.6

4.5

3.6

3.5

1.1

0.5

0.3

3.8

Proj.

2006

$25 billion amendment to the FY2005 request, for Iraq and Afghanistan, submitted by the Bush administration to Congress on May 12, 2004,

[http://www.whitehouse.gov/omb/budget/amendments/amendment_5_12_04.pdf]. The Administration did not allocate the $25 billion by appropriations

title, so in this table the amendment is reflected separately from the appropriations titles but as part of the Department of Defense subtotal and national

defense total.

Sources: Figures through FY2005 taken from the Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal

Year 2005, February 2004, pp.84-85, [http://www.whitehouse.gov/omb/budget/fy2005/pdf/hist.pdf]. Projected figures for FY2006-FY2009 for the

Department of Defense taken from National Defense Budget Estimates for FY2005, Office of the Undersecretary of Defense (Comptroller), March 2004,

p. 115, [http://www.defenselink.mil/comptroller/defbudget/fy2005/fy2005_greenbook.pdf].

Total, National Defense

76.9

115.8

62.6

41.6

5.4

3.7

13.5

73.8

108.8

55.0

38.7

5.1

3.5

5.6

Actual Actual Actual Actual Actual Actual Actual

1997

1998

1999

2000

2001

2002

2003

Department of Defense (military activities only)

Military Personnel

70.3

69.8

70.6

Operation & Maintenance

92.4

97.2 105.0

Procurement

43.0

44.8

51.1

RDT&E

36.4

37.1

38.3

Military Construction

5.7

5.5

5.4

Family Housing

4.1

3.8

3.6

Other

6.1

0.3

4.6

Budget Amendment

Subtotal, Department of

258.0 258.6 278.6

Defense

Department of Energy

Atomic Energy Defense

11.4

11.7

12.6

Activities

Other Agencies

Defense-Related Activities

1.0

1.1

Fiscal Year:

(current year dollars in billions)

Table 2. National Defense Budget Function Trends by Appropriations Title, Budget Authority,

FY1997-FY2009

CRS-9

1.2

1.3

14.6

321.6 333.6 493.9 435.2 330.3 323.1 339.5

1.2

0.9

13.9

1.8

15.8

1.9

16.4

2.0

17.1

2.1

17.1

344.2 368.9 387.6 476.0 469.7

1.4

14.1

448.1

3.2

17.2

106.3

141.2

74.9

68.9

5.3

4.2

1.7

25.0

427.6

Req.

2005

$25 billion amendment to the FY2005 request, for Iraq and Afghanistan, submitted by the Bush administration to Congress on May 12, 2004,

[http://www.whitehouse.gov/omb/budget/amendments/amendment_5_12_04.pdf]. The Administration did not allocate the $25 billion by appropriations

title, so in this table the amendment is reflected separately from the appropriations titles but as part of the Department of Defense subtotal and national

defense total.

Sources: Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2005, February 2004, pp. 82-85,

[http://www.whitehouse.gov/omb/budget/fy2005/pdf/hist.pdf]; FY2005 deflators from Department of Defense Comptroller.

Total, National Defense

13.9

328.8 351.3 369.2 456.9 450.5

420.4 315.2 307.9 323.5

13.9

88.9 89.7 95.9 115.6 120.9

124.5 127.7 143.2 186.3 171.8

58.6 66.1 65.4 80.8 82.2

41.6 44.1 50.9 59.8 65.6

5.5

5.8

7.0

6.9

6.0

3.8

3.9

4.2

4.3

3.9

5.9 14.2

2.8

3.1

0.2

Est.

2004

132.7 95.3 90.7 89.1

127.1 113.8 116.3 122.5

103.3 47.5 49.1 55.3

47.5 40.8 41.1 41.9

6.6

6.4

6.1

5.9

4.1

4.6

4.2

3.9

-1.0

6.7

0.4

4.9

Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual

1976

1980 1985

1990

1997

1998

1999

2000 2001

2002

2003

Department of Defense (military activities only)

Military Personnel

125.8 118.8 133.0

Operation & Maintenance

90.0 99.7 132.7

Procurement

63.0 71.9 146.3

RDT&E

27.3 27.2 48.6

Military Construction

6.3

4.4

8.6

Family Housing

3.7

3.0

4.4

Other

-0.5

1.1

7.1

Budget Amendment

Subtotal, Department of

315.6 326.2 480.8

Defense

Department of Energy

Atomic Energy Defense

5.6

6.9 12.3

Activities

Other Agencies

Defense-Related Activities

0.5

0.8

Fiscal Year

(constant FY2005 dollars in billions)

Table 3. National Defense Budget Function by Appropriations Title, Budget Authority,

Selected Years, FY1976-FY2005

CRS-10

270.5 268.5 274.9 294.5 305.5

348.6 404.9

1.6

1.8

Req.

2005

Proj.

2006

Proj.

2007

Proj.

2008

3.3

17.7

2.2

18.4

2.3

17.9

453.7 469.4 436.1 447.0

2.3

16.6

2.4

467.1

17.1

117.3 108.9 110.4 111.4 117.8

165.7 163.9 147.0 151.2 155.8

77.7 78.2 78.4 81.8 89.1

60.6 66.2 69.0 70.1 70.7

6.2

6.0

7.6

9.7

3.9

4.0

4.1

4.3

4.4

3.4

2.4

0.6

0.3

0.1

18.8

4.9

0.8

0.3

434.8 448.4 415.5 426.9 447.6

Est.

2004

487.2

2.4

16.9

121.6

161.9

98.6

70.5

10.0

4.5

0.8

0.2

467.9

Proj.

2009

Based on unpublished CBO outlay estimates of the $25 billion amendment to the FY2005 request, for Iraq and Afghanistan, submitted by the Bush

administration to Congress on May 12, 2004, [http://www.whitehouse.gov/omb/budget/amendments/amendment_5_12_04.pdf].

Sources: Figures through FY2005 taken from Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year

2005, February 2004, pp. 58-59, [http://www.whitehouse.gov/omb/budget/fy2005/pdf/hist.pdf]. Figures for FY2005 do not include the $25 billion budget

amendment for Iraq and Afghanistan submitted by the Bush Administration to Congress on May 12, 2004. Projected figures for FY2006-FY2009 for the

Department of Defense taken from National Defense Budget Estimates for FY2005, Office of the Undersecretary of Defense (Comptroller), March 2004,

p.133, [http://www.defenselink.mil/comptroller/defbudget/fy2005/fy2005_greenbook.pdf.]

Total, National Defense

16.0

14.8

332.0 387.3

86.8 106.7

130.0 151.4

62.5 67.9

44.4 53.1

5.1

5.9

3.7

3.8

-0.5

-1.5

Actual Actual Actual Actual Actual Actual Actual

1997

1998

1999

2000 2001

2002

2003

Department of Defense (military activities only)

Military Personnel

69.7 69.0 69.5 76.0 74.0

Operation & Maintenance

92.4 93.4 96.3 105.8 112.0

Procurement

47.7 48.2 48.8 51.7 55.0

RDT&E

37.0 37.4 37.4 37.6 40.4

Military Construction

6.2

6.0

5.5

5.1

5.0

Family Housing

4.0

3.9

3.7

3.4

3.5

Other

1.2

-1.9

0.6

1.6

1.1

Budget Amendment

Subtotal, Department of

258.3 256.1 261.3 281.2 291.0

Defense

Department of Energy

Atomic Energy Defense

11.3 11.3 12.2 12.1 12.9

Activities

Other Agencies

Defense-Related Activities

1.0

1.1

1.4

1.2

1.6

Fiscal Year

(current year dollars in billions)

Table 4. National Defense Budget Function Outlays by Appropriations Title, FY1997-2009

CRS-11

CRS-12

Question 3: What Are the Historical Trends in Defense’s

Share of Total Federal Outlays?

Figure 4. Shares of Total Federal Outlays by

Type of Spending, FY1962-FY2009

Source: Office of Management and Budget, Historical Tables: Budget of the United States

Government, Fiscal Year 2005, February 2004, pp. 127-128, [http://www.whitehouse.gov/omb/

budget/fy2005/pdf/hist.pdf]; FY2005 deflators from DOD Comptroller.

Notes: See p. 3 for definitions of mandatory and discretionary budget authority and outlays.

Figure 4 reveals two important long-term trends. The first trend is the decline

of defense discretionary outlays as a percentage of total federal outlays since FY1962.

In FY1962, defense discretionary represented 49.2%, or almost half, of total federal

outlays, while in FY2003 its share of total federal outlays declined to 18.8%.

Defense discretionary outlays have declined consistently as a percentage of

federal outlays in large part because of a second trend: the rapid increase of

mandatory outlays, mostly for major “entitlement” programs. Between FY1962 and

FY2004, mandatory outlays rose by 833% while defense outlays rose by 30% in real

terms.4 The share of federal outlays of mandatory programs increased from 26.1%

in FY1962 to 54.1% in FY2004 and is projected to reach 56.5% by FY2009.

Percent growth in mandatory outlays and defense outlays between FY1962 and FY2004

is measured in constant FY2000 dollars using figures from the Office of Management and

Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2005,

February 2004, p. 126, [http://www.whitehouse.gov/omb/budget/fy2005/pdf/hist.pdf].

CRS-13

Question 4: What Are the Historical Trends in Defense’s

Share of Total Federal Discretionary Outlays?

Figure 5. Defense and Non-Defense

Discretionary Outlays as a Share of

Total Federal Discretionary Outlays,

FY1962-FY2009

Source: Office of Management and Budget, Historical Tables: Budget of the United States

Government, Fiscal Year 2005, February 2004, [http://www.whitehouse.gov/omb/budget/fy2005/

pdf/hist.pdf]; p.127.

Note: See p. 3 for definition of discretionary budget authority and outlays.

Defense discretionary outlays have declined from almost 75% of total

discretionary outlays in FY1962 to just under 50% of total discretionary outlays in

FY2003. This steady decline was interrupted significantly by the Reagan build-up

of the 1980s, during which time defense discretionary outlays rose from 50.1% of

total discretionary outlays in FY1981 to 62% in FY1987. Since FY1995, defense

discretionary outlays have remained between 47% and 50% of total discretionary

outlays, although this percentage has increased from 47.1% in FY2001 to 49.7% in

FY2004. Under current projections, defense will rise to 51.4% of total discretionary

outlays by FY2009.

CRS-14

Part II: The Impact of Defense on the Economy

The following section (questions 5, 6, and 7) looks at the impact of defense on

the economy, measured in terms of defense outlays and federal outlays as a

percentage of gross domestic product (GDP), and compares U.S. defense outlays to

those of foreign countries.

Question 5: What Are the Historical Trends in U.S. Defense

Outlays as a Percentage of Gross Domestic Product (GDP)?

Figure 6. GDP and Defense’s Share of GDP,

FY1962-FY2005

(constant FY2005 dollars in trillions / percent of GDP)

Source: GDP deflators and figures from the Office of Management and Budget, Historical Tables:

Budget of the United States Government, Fiscal Year 2005, February 2004, [http://www.

whitehouse.gov/omb/budget/fy2005/pdf/hist.pdf], pp. 128, 184.

Advocates of higher defense spending frequently cite defense’s declining

percentage of GDP to argue that the nation can afford more for defense. These

observers note that even with recent increases, defense spending is still at relatively

low levels historically as a percentage of GDP, as shown in Figure 6. Whereas

defense spending reached 9.5% of GDP in FY1968 and 6.2% of GDP in FY1986 at

the height of the Reagan build-up, it equaled only 3.9% of GDP in FY2004.5

Others’ counterargument, however, is that defense spending as a percentage of

GDP is as much dependent on the level of GDP growth as it is dependent on the level

of defense spending growth. Since 1962, GDP has grown 306% in real terms while

See Table 12 in the Appendix for the data that correspond to Figures 6 and 7.

CRS-15

defense outlays have risen 30% during the same period.6 Therefore, some say, the

story of defense’s decline as a percentage of GDP is as much a story of the rapid

growth of the U.S. economy as it is a story of declining defense spending.

Question 6: What Are the Historical Trends in Different

Categories of Federal Spending as a Percentage of GDP?

It should be noted that the trend in defense outlays is part of a broader long-term

trend in the federal budget, in which both defense and non-defense discretionary

outlays have declined as shares of GDP while mandatory outlays have increased. As

Figure 7 below shows, total federal spending has been remarkably stable at about

20% of GDP over the past 40 years.

Figure 7. Federal Spending by Category as

a Percentage of GDP, FY1962-FY2005

Source: Office of Management and Budget, Budget of the United States Government, Fiscal Year

2005: Historical Tables, February 2004, [http://www.whitehouse.gov/omb/budget/fy2005/pdf/

hist.pdf], p. 128.

Percent growth in GDP and defense outlays between FY1962 and FY2004 is measured in

constant FY2000 dollars using figures from the Office of Management and Budget,

Historical Tables: Budget of the United States Government, Fiscal Year 2005, February

2004, pp. 126, 184-185, [http://www.whitehouse.gov/omb/budget/fy2005/pdf/hist.pdf].

CRS-16

Question 7: How Do U.S. Defense Outlays Compare to Those

of Other Countries, Both in Dollars and as a Percentage of

GDP?

Table 5 ranks the top 25 countries in defense spending and lists the share of

GDP that each country devotes to defense.

Table 5. Defense Spending of Top 25 Countries

(current year U.S. dollars in millions)

Country

Rank

WMEATa

1999-2000

Defense

Expenditures

(1999 Data)

IISS Military Balanceb

2003-2004

GDP

Defense

Expenditures

(2002 Data)

GDP

United States

281,000

3.0%

348,500

3.3%

China — Mainland

88,900

2.2%

51,000

4.1%

Japan

43,200

1.0%

39,500

1.0%

France

38,900

2.7%

40,200

2.5%

United Kingdom

36,500

2.5%

37,300

2.4%

Russia

35,000

5.6%

50,800

4.8%

Germany

32,600

1.6%

33,300

1.5%

Italy

23,700

2.0%

25,600

1.9%

Saudi Arabia

21,200

14.9%

22,200

12.0%

China — Taiwan

15,200

5.2%

7,900

2.7%

South Korea

11,600

2.9%

13,300

2.8%

India

11,300

2.5%

13,800

2.7%

Turkey

9,950

5.3%

9,200

5.1%

Brazil

9,920

1.9%

10,200

2.3%

Israel

8,700

8.8%

9,900

9.7%

Canada

8,320

1.4%

8,200

1.1%

Spain

7,560

1.3%

8,700

1.2%

Australia

7,060

1.8%

8,000

2.0%

Netherlands

7,030

1.8%

7,700

1.6%

Iran

6,880

2.9%

5,100

4.6%

Poland

6,690

2.1%

3,600

1.9%

Greece

6,060

4.7%

6,500

4.4%

Sweden

5,330

2.3%

4,200

1.7%

Dem. Rep. of Congo

5,150

14.4%

1,000

21.7%

Ukraine

5,110

3.0%

5,000

2.2%

Source: Data from the International Institute of Strategic Studies (IISS) and the U.S. Dept. of State.

U.S. Department of State, World Military Expenditures and Arms Transfers (WMEAT), Washington,

February 2003; countries are ranked according to WMEAT figures.

International Institute for Strategic Studies (IISS), The Military Balance: 2003-2004 (Oxford

University Press, 2003).

CRS-17

Part III: Costs of Wars and Defense Supplementals

The following section (questions 8 and 9) provides figures and analysis on the

costs of wars and recent supplemental appropriations for the Department of Defense.

Question 8: How Much Has Congress Enacted in Defense

Supplemental Appropriations since September 11, 2001?

Figure 8. Regular and Supplemental

Defense Appropriations,

FY2001-FY2005

(current year dollars in billions)

Source: House Appropriations Committee tables.

Note: FY2005 figures include the $25 billion amendment to the FY2005 request, for Iraq and

Afghanistan, submitted by the Bush Administration to Congress on May 12, 2004, [http://www.

whitehouse.gov/omb/budget/amendments/amendment_5_12_04.pdf].

Congress enacted a total of $165.63 billion7 in supplemental appropriations for

defense from FY2001 through FY2004. More than half of this $165.63 billion was

enacted in FY2003 and FY2004 emergency supplemental appropriations, which

funded the wars in Iraq and Afghanistan.8 As shown in Figure 8, the combination

Total excludes $5.834 billion appropriated by Congress in P.L. 107-20, FY2001 nonemergency supplemental appropriations, enacted before September 11, 2001; total also

reflects the $3.49 billion recission in P.L. 108-87, FY2004 DoD regular appropriations, of

funds appropriated in P.L. 108-11, FY2003 emergency supplemental appropriations.

For a detailed analysis, see CRS Report RL32090, FY2004 Supplemental Appropriations

for Iraq, Afghanistan, and the Global War on Terrorism: Military Operations and

Reconstruction Assistance, by (name redacted), (name redacted), (name redacted), and Rhoda

CRS-18

of increased supplemental and regular appropriations has resulted in a significant

increase in overall defense appropriations for the last four fiscal years. Table 6 lists

administration requests and the enacted levels of regular and supplemental

appropriations for defense since FY2001. For FY2005, Figure 8 includes the $25

billion budget amendment requested by the president on May 12, 2004 to cover the

costs of Iraq and Afghanistan for part of FY2005.

(...continued)

Margesson.

CRS-19

Table 6. Regular and Supplemental Appropriations for the National Defense

Budget Function, FY2001-2005

(current year dollars in millions)

Request

Enacted

Difference

305,312.9

309,974.0

+4,661.1

Non-emergency supplemental H.R. 2216, P.L. 107-20a

5,841.0

5,834.0

-7.0

Emergency supplemental H.R. 2228, P.L. 107-38

14,041.0

0.0

325,194.9

329,849.0

+4,654.1

343,435.0

343,429.0

-6.0

Emergency Terrorism Response, H.R. 3338, P.L. 107-117

7,467.0

3,867.0

-3,600.0

Emergency supplemental, H.R. 4775, P.L. 107-206

14,022.0

13,370.0

-652.0

364,924.0

360,666.0

-4,258.0

392,837.0

382,027.0

-10,809.0

Consolidated Appropriations Resolution, H.J.Res2

10,000.0

+10,000.0

Emergency supplemental, H.R. 1559, P.L. 108-11

62,587.0

62,583.0

-4.0

FY2001

Regular Appropriations

Supplemental Appropriations:

TOTAL FY2001

FY2002

Regular Appropriations

Supplemental Appropriations

TOTAL FY2002

FY2003

Regular Appropriations

Supplemental Appropriations

Rescission of funds from P.L. 108-11

TOTAL FY2003

-3,490.0

455,424.0

451,120.0

-4,304.0

400,476.0

398,688.0

-1,788.0

65,560.0

65,251.0

-309.0

466,036.0

463,939.0

-2,097.0

FY2004

Regular Appropriations

Supplemental Appropriations

Emergency supplemental, H.R. 3289, P.L. 108-106

TOTAL FY2004

FY2005 (Request)

Regular Appropriationsc

448,098.0

Budget Amendment

25,000.0

473,098.0

TOTAL FY2005

Source: Conference Reports for each bill and House Appropriations Tables as printed in the Congressional Record.

Total for FY2005 include the $25 billion budget amendment for Iraq and Afghanistan submitted by the Bush

Administration to Congress on May 12, 2004.

Enacted before September 11, 2001.

Congress rescinded $3.49 billion from P.L. 108-11 (FY2003 emergency supplemental) in the FY2004 Department of

Defense appropriations act (P.L. 108-87). This rescission reduces the funding scored in FY2004 but reduces the

resources available in the FY2003 emergency supplemental.

Total includes $25.0 billion budget amendment for Iraq and Afghanistan submitted by the Bush administration to

Congress on May 12, 2004.

CRS-20

Question 9: How Much Has Each Major War in the History of

the United States Cost?

Table 7 lists the costs of each major war in United States’ history in current and

constant FY2005 dollars.

Table 7. Costs of Major U.S. Wars

(amounts in millions and billions of dollars)

American Revolution

Current Year

Constant FY2005 $

War of 1812

Current Year

Constant FY2005 $

Mexican War

Current Year

Constant FY2005 $

Civil War: Union

Current Year

Constant FY2005 $

Civil War: Confederacy

Current Year

Constant FY2005 $

Spanish American War

Current Year

Constant FY2005 $

World War Ia

Current Year

Constant FY2005 $

World War II

Current Year

Constant FY2005 $

Korea

Current Year

Constant FY2005 $

Vietnam

Current Year

Constant FY2005 $

Persian Gulf War (1991)b

Current Year

Constant FY2005 $

$120

$3,315

million

$89

$1,043

million

$82

$1,841

million

$2,300

$52,165

million

$1,000

$22,707

million

$270

$6,750

million

$33

$613

billion

$360

$5,008

billion

$50

$426

billion

$111

$609

billion

$61

$86

billion

Sources and Notes: American Revolution through Korean War Costs from the Statistical Abstract

of the United States, 1994; deflators and all other data from the Office of the Under Secretary of

Defense (Comptroller). Costs for the American Revolution through the Korean War were converted

to constant FY2005 dollars from figures cited in the Statistical Abstract.

World War I figures include the amount of war loans to allies, which totaled between $9.4 and $9.5

billion in current year dollars, or 28%-29% of the total cost.

Most Persian Gulf War costs were offset by allied contributions or were absorbed by DOD. Net

costs to U.S. taxpayers totaled $4.7 billion in current year dollars, or 7.7% of the total cost. Source:

Department of Defense Annual Report to Congress, January 1993.

CRS-21

Part IV: Trends in Force Structure

The following section (questions 10, 11, and 12) provides figures and analysis

on U.S. military personnel levels, force structure, and budget authority by service.

Question 10: What Have Been the Recent Trends in U.S.

Military Personnel Levels?

Figure 9. Active Duty and Selected Reserve

End-Strength, Selected Years,

FY1989-FY2005

Sources: See Table 8 sources on following page.

As shown in Figure 9 and in Tables 8 and 9, the United States military

experienced a sharp drawdown in military personnel and forces that began in the late

1980s and ended, for the most part, by FY1999. The decision to decrease both

active duty and selected reserve forces reflected the disappearance of the Soviet

threat and congressional efforts to reduce budget deficits in the 1990s.

Although Congress has enacted significant increases in funding for national

defense, and military forces have been deployed in large numbers abroad since March

2003, the force structure has remained stable. In response to the demands of military

operations in Iraq and Afghanistan, the Secretary of Defense has temporarily

increased active-duty end strength temporarily by 30,000 troops, exercising authority

that allows the President to waive authorized end strength ceilings in national

emergencies.

CRS-22

Table 8. Department of Defense Personnel Levels, Selected Years

(end strength /civilian employees in thousands)a

Fiscal Year:

Army

Navy

Marine Corps

Air Force

Total Active

Selected Reserves

Total Civilians

Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Est.

1981 1985 1989 1991 1993 1995 1997 1999 2001 2002 2003 2004

781 781 770 725 572 509 492 479 481 487 499 482

540 571 593 571 510 435 396 373 378 383 382 374

191 198 197 195 178 174 174 173 173 174 178 175

570 602 571 511 444 400 378 361 354 368 375 359

2,082 2,151 2,130 2,002 1,705 1,518 1,440 1,386 1,385 1,412 1,434 1,391

851 1,188 1,171 1,138 1,058 946 902 877 869 874 875 863

984 1,107 1,075 1,013 891 802 723 666 647 645 636 648

Proj.

2005

482

366

175

360

1,383

861

651

Sources: Active duty force levels and selected reserve levels for FY2003-FY2005 from Department of Defense,

Undersecretary of Defense Comptroller, National Defense Budget Estimate for FY2005, March 2004, pp. 33, 212-213,

[http://www.defenselink.mil/comptroller/defbudget/fy2005/fy2005_greenbook.pdf]. Selected reserve 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 levels from Office of Management and Budget, Historical Tables: Budget of the United States

Government for FY2005, February 2004, pp. 295-296, [http://www.whitehouse.gov/omb/budget/fy2005/pdf/hist.pdf].

End strength refers to the number of military personnel on board on the last day of a fiscal year. Selected reserves do

not include Standby Reserve, Individual Ready Reserve, and Inactive National Guard. Totals may not add due to

rounding.

CRS-23

Question 11: What Are the Recent Trends in U.S. Military

Force Structure?

Table 9 lists the force structure for each service from FY1980 though FY2005.

Table 9. U.S. Military Force Structure, FY1980-2005

Fiscal

Year

Army

Divisions

Marine

Divisions

Naval Forces

Air Force

Tactical Wings

Active

Reserve

Active

Reserve

Carriers

Total

Active

Reserve

1980

477

1981

491

1982

513

1983

514

1984

524

1985

542

1986

556

1987

569

1988

566

1989

567

1990

546

1991

526

1992

466

1993

434

1994

387

1995

11+1

373

1996

11+1

365

1997

11+1

357

1998

11+1

333

1999

11+1

317

7.2

2000

11+1

316

7.6

2001

11+1

316

12.6

7.6

2002

11+1

315

12+

2003

11+1

296

12+

2004

11+1

292

12+

2005

11+1

290

12+

Sources: [http://www.defenselink.mil/pubs/almanac/]; U.S. Navy, Highlights of the Department of the Navy

FY2005 Budget, [http://navweb.secnav.navy.mil]; briefing materials accompanying the FY2005 budget request

and similar materials provided in prior years; CRS Report 90-401, U.S./Soviet Military Balance: Statistical

Trends, 1980-1989, RCO, by John M. Collins and (name redacted); CRS Report 91-672, U.S. Armed Forces:

Statistical Trends, 1985-1990, by John M. Collins and (name redacted); 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 FY2004 and FY2005 are Administration projections.

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

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

carrier (shown as “+1”) since FY1995.

CRS-24

Question 12: How Much Budget Authority Has Been Provided

to Each Service in Recent Years?

Table 10 shows Department of Defense budget authority by service from

FY1995-FY2005, and Figure 10 shows the Administration’s FY2005 request by

service as a percent of total Department of Defense budget authority.

Table 10. Department of Defense Budget Authority by Service, FY1995FY2005

(current year dollars in billions/percent of total)

Fiscal Year:

Actual

1995

Actual

1996

Actual

1997

Actual

1998

Actual

1999

Actual

2000

Actual

2001

Actual

2002

Actual

2003

Est.

2004

Proj.

2005

Army

63.3

64.5

64.4

64.0

68.4

73.2

77.0

85.9

121.1

132.9

97.0

% of DOD Total

Navy/Marines

% of DOD Total

Air Force

% of DOD Total

Defense Wide

% of DOD Total

DOD Total

24.8% 25.4% 25.0% 24.8% 24.5% 25.2% 24.9% 24.9% 27.7% 30.1% 24.1%

76.9

80.0

79.5

80.7

84.0

88.8

95.5

102.4

124.0

120.3

119.2

30.1% 31.4% 30.8% 31.2% 30.2% 30.6% 30.8% 29.6% 28.3% 27.2% 29.6%

73.9

73.0

73.2

76.3

81.9

83.1

89.5

100.2

125.2

124.0

120.4

28.9% 28.7% 28.4% 29.5% 29.4% 28.6% 28.9% 29.0% 28.6% 28.1% 29.9%

41.6

37.0

40.8

37.6

44.3

45.5

47.9

57.1

67.4

64.5

66.0

16.3% 14.5% 15.8% 14.5% 15.9% 15.7% 15.4% 16.5% 15.4% 14.6% 16.4%

255.7

254.4

258.0

258.6

278.6

290.5

309.9

345.6

437.7

441.7

Figure 10. Department of Defense Budget

Authority by Service, FY2005 Request

Source: Department of Defense Comptroller, National Defense Budget Estimates for FY2005, April

2004, [http://www.defenselink.mil/comptroller/defbudget/fy2005/fy2005_greenbook.pdf].

402.6

CRS-25

Part V: Appendix and Glossary

Part V provides additional data tables and a glossary of frequently used defense

budget terms.

Table 11 provides the real growth/decline in national defense budget authority

and outlays from FY1940 to FY2009, in both current and constant FY2005 dollars.

Table 12 lists national defense outlays as a percentage of GDP from FY1910 to

FY2009. The amounts of defense discretionary spending, non-defense discretionary

spending, mandatory spending, and net interest that make up total federal outlays

from FY1962 to FY2009 are shown in Table 13, while Table 14 shows each of these

four categories as a percentage of total federal outlays from FY1962 to FY2009.

CRS-26

Table 11. Real Growth/Decline in National Defense Budget

Authority and Outlays, FY1940-FY2009

(current and constant FY2005 dollars in billions)

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

1987

BUDGET AUTHORITY

Current

Dollars

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

287.4

Constant

FY2005

Dollars

740.8

637.7

138.4

122.5

149.0

187.2

488.8

594.3

522.8

383.5

326.7

325.1

348.8

335.8

352.8

340.8

344.5

376.6

382.6

365.7

350.6

405.6

442.8

450.8

440.8

401.0

365.7

351.6

335.6

318.2

307.6

321.6

334.5

329.8

328.1

333.6

370.8

410.0

442.7

462.5

493.9

474.9

460.2

Real

Growth/

Decline

-13.9%

-78.3%

-11.5%

21.60%

25.6%

161.1%

21.6%

-12.0%

-26.7%

-14.8%

-0.5%

7.3%

-3.7%

5.1%

-3.4%

1.1%

9.3%

1.6%

-4.4%

-4.1%

15.7%

9.2%

1.8%

-2.2%

-9.0%

-8.8%

-3.9%

-4.6%

-5.2%

-3.3%

4.6%

4.0%

-1.4%

-0.5%

1.7%

11.1%

10.6%

8.0%

4.5%

6.8%

-3.8%

-3.1%

OUTLAYS

Current

Dollars

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

282.0

Constant

Real

FY2005

Growth/

Dollars

Decline

30.0

97.9

226.8%

329.7

236.7%

806.5

144.6%

1,055.0

30.8%

1,202.4

14.0%

647.7

-46.1%

182.7

-71.8%

125.2

-31.5%

173.5

38.5%

170.3

-1.9%

261.0

53.3%

451.0

72.8%

497.7

10.4%

473.3

-4.9%

408.1

-13.8%

385.5

-5.5%

390.6

1.3%

380.9

-2.5%

380.0

-0.3%

370.8

-2.4%

369.9

-0.2%

390.9

5.7%

395.3

1.1%

391.1

-1.0%

359.0

-8.2%

383.1

6.7%

441.9

15.4%

480.8

8.8%

469.5

-2.3%

436.2

-7.1%

398.1

-8.7%

369.3

-7.2%

336.9

-8.8%

322.4

-4.3%

315.0

-2.3%

305.1

-3.1%

307.4

0.8%

307.5

0.0%

316.9

3.1%

324.9

2.5%

339.5

4.5%

362.6

6.8%

391.0

7.8%

406.7

4.0%

433.2

6.5%

455.1

5.0%

456.5

0.3%

CRS-27

FISCAL

YEAR

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

BUDGET AUTHORITY

Current

Dollars

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

335.5

362.1

456.2

460.5

448.1

444.0

464.8

485.8

508.2

Constant

Real

FY2005

Growth/

Dollars

Decline

451.3

-1.9%

445.5

-1.3%

435.2

-2.3%

411.5

-5.4%

390.8

-5.0%

374.2

-4.2%

343.2

-8.3%

340.0

-0.9%

332.5

-2.2%

330.3

-0.7%

323.1

-2.2%

339.5

5.1%

344.2

1.4%

368.9

7.2%

387.6

5.1%

476.0

22.8%

469.7

-1.3%

448.1

-4.6%

433.7

-3.2%

443.0

2.1%

451.5

1.9%

460.5

2.0%

OUTLAYS

Current

Dollars

290.4

303.6

297.9

296.7

286.1

283.9

278.9

271.0

265.2

270.5

268.5

274.9

294.5

305.5

348.6

404.9

453.7

469.4

441.0

447.9

467.4

487.4

Constant

Real

FY2005

Growth/

Dollars

Decline

454.9

-0.4%

456.0

0.3%

435.3

-4.5%

417.1

-4.2%

389.0

-6.7%

376.1

-3.3%

360.8

-4.1%

345.0

-4.4%

331.0

-4.1%

328.9

-0.6%

318.9

-3.0%

320.3

0.4%

333.5

4.1%

335.6

0.6%

372.3

10.9%

422.5

13.5%

462.1

9.4%

469.4

1.6%

431.3

-8.1%

427.9

-0.8%

435.7

1.8%

443.2

1.7%

Sources: Current dollar budget authority figures for FY1940-FY1975 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 2005, February 2004, [http://www.whitehouse.gov/omb/budget/fy2005/

pdf/hist.pdf]; constant dollar figures calculated by CRS using FY2005 deflators from Department of

Defense Comptroller.

Note: CBO outlay estimates for $25 billion budget amendment for Iraq and Afghanistan included in

FY2005 outlay figures. FY2006-FY2009 outlay estimates for the amendment were not available at

the printing of this report.

CRS-28

Table 12. National Defense Outlays as a Percentage of GDP,

FY1910-FY2009

(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

1945

1946

1947

1948

1949

1950

1951

1952

1953

1954

1955

1956

1957

1958

1959

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

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

GNP/

GDPa

35.3

35.8

39.4

39.6

38.6

40.0

48.3

60.4

76.4

84.0

91.5

69.6

74.1

85.1

84.7

93.1

97.0

94.9

97.0

103.1

97.4

83.8

67.6

57.6

61.2

69.6

78.5

87.8

89.0

89.1

96.8

114.1

144.3

180.3

209.2

221.3

222.7

233.2

256.7

271.3

273.2

320.3

348.7

372.6

377.1

395.9

427.0

450.9

460.0

490.2

Outlays

as % of

GNP/GDP

0.8%

0.7%

0.8%

0.7%

0.6%

1.0%

9.3%

16.1%

4.4%

3.7%

1.3%

0.8%

0.6%

0.7%

0.8%

0.9%

1.0%

1.1%

0.9%

1.0%

1.2%

1.1%

1.2%

1.7%

5.6%

17.8%

37.0%

37.9%

37.5%

19.2%

5.5%

3.6%

4.8%

5.0%

7.3%

13.2%

14.1%

13.1%

10.8%

9.9%

10.1%

10.2%

10.0%

Fiscal

Year

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

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

National

Defense

Outlays

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

282.0

290.4

303.6

299.3

273.3

298.4

291.1

281.6

272.1

265.8

270.5

268.5

274.9

294.5

305.5

348.6

404.9

453.7

469.4

441.0

447.9

467.4

487.4

GNP/

GDP

518.9

529.9

567.8

599.2

641.4

687.5

755.8

810.2

868.5

948.3

1,012.9

1,080.3

1,176.9

1,311.0

1,438.9

1,560.8

1,738.8

1,974.4

2,218.3

2,502.4

2,725.4

3,058.6

3,225.5

3,442.7

3,846.7

4,148.9

4,406.7

4,654.4

5,011.9

5,401.7

5,737.0

5,934.2

6,240.6

6,578.4

6,964.2

7,325.1

7,697.4

8,186.6

8,626.3

9,127.0

9,708.4

10,040.7

10,373.4

10,828.3

11,466.0

12,042.4

12,641.1

13,279.1

13,972.6

14,701.6

Outlays

as % of

GNP/GDP

9.3%

9.4%

9.2%

8.9%

8.5%

7.4%

7.7%

8.8%

9.4%

8.7%

8.1%

7.3%

6.7%

5.9%

5.5%

5.7%

5.6%

5.3%

5.2%

4.9%

5.1%

5.7%

6.1%

5.9%

6.1%

6.2%

6.1%

5.8%

3.1%

5.2%

4.6%

4.8%

4.4%

4.1%

3.7%

3.5%

3.3%

3.1%

3.0%

3.4%

3.7%

3.9%

3.5%

3.4%

3.3%

Sources: Outlays, FY1910-FY1939, and GNP/GDP, FY1910-FY1939, from U.S. Department of

Commerce, Historical Statistics of the United States (Washington: GPO, 1975); outlays, FY1940FY2009, and GDP, FY1940-FY2009, from U.S. Office of Management and Budget, Historical

Tables: Budget of the United States Government, Fiscal Year 2005, February 2004, pp. 110, 184-185.

Figures for FY1910-FY1929 were calculated in gross national product (GNP) rather than GDP.

CRS-29

Table 13. Allocation of Federal Outlays by Budget Enforcement

Act Category, FY1962-FY2009

(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

2008

2009

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

306.1

348.9

404.9

451.6

467.0

434.6

445.6

465.5

485.6

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

343.3

385.4

420.8

456.6

465.8

457.7

458.8

457.4

456.7

Mandatory

Outlays

Net Interest

Total Federal

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

900.1

951.0

1,008.3

1,105.7

1,178.9

1,254.4

1,307.9

1,367.6

1,441.5

1,526.7

1,612.0

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

138.6

151.8

169.0

184.3

194.4

199.3

198.7

202.9

232.1

241.1

244.0

241.1

229.8

223.0

206.2

171.0

153.1

156.3

177.9

213.4

246.2

274.6

299.1

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

745.7

808.4

851.9

946.4

990.4

1,004.1

1,064.5

1,143.6

1,253.2

1,324.4

1,381.7

1,409.5

1,461.9

1,515.8

1,560.5

1,601.2

1,652.6

1,701.9

1,788.8

1,863.8

2,011.0

2,157.6

2,318.8

2,399.8

2,473.3

2,592.1

2,724.3

2,853.5

Source: Office of Management and Budget: Budget of the United States Government, Fiscal Year

2005: Historical Tables, February 2004, p. 125, [http://www.whitehouse.gov/omb/budget/fy2005/pdf/

hist.pdf].

CRS-30

Table 14. Percentage Allocation of Federal Outlays by

Budget Enforcement Act Category, FY1962-FY2009

(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

2008

2009

Defense

Discretionary

Outlays

49.2

48.3

46.4

43.1

43.9

45.7

46.1

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

24.0

24.1

21.9

20.7

19.3

18.0

17.0

16.4

16.2

16.5

16.4

17.4

18.8

19.5

18.7

17.6

17.2

17.1

17.0

Non-Defense

Discretionary

Outlays

18.3

19.4

20.3

22.6

23.2

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

18.4

19.2

19.5

19.7

19.4

18.5

17.7

16.8

16.0

Mandatory

Outlays

Net

Interest

26.1

25.4

26.3

26.9

26.0

25.9

27.5

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

54.1

55.0

54.6

54.1

54.5

55.3

55.6

56.0

56.5

6.4

7.0

6.9

7.3

7.0

6.5

6.2

6.9

7.4

7.1

6.7

7.1

8.0

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

8.5

7.1

6.7

7.4

8.6

9.5

10.1

10.5

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

47.1

47.5

49.0

49.7

49.1

48.7

49.3

50.4

51.5

Source: Office of Management and Budget: Budget of the United States Government, Fiscal Year

2005: Historical Tables, February 2004, p. 127, [http://www.whitehouse.gov/omb/budget/fy2005/pdf/

hist.pdf].

CRS-31

Glossary

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 a selected reference year (generally the most recent fiscal year), are

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

reference year. Constant dollars are used to assess changes in funding of

programs independently of the effects of inflation. Growth rates in constant,

inflation-adjusted 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,

FY2005 begins on October 1, 2004 and will end on September 30, 2005. (Note

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

CRS-32

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 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.

CRS-33

CRS Defense Reports

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

systems and other defense issues that impact the defense budget. For updated lists

of CRS products on defense-related issues, congressional offices should go to

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

Selected defense-related products include:

CRS Report RL32305, Authorization and Appropriations for FY2005: Defense, by

(name redacted) a nd (name redacted).

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

redacted).

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

by Richard A. Best, Jr.

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

by (name redacted).

CRS Report RS20851, Naval Transformation: Background and Issues for Congress,

by Ronald O’Rourke.

CRS Report RS21059, Navy DD(X) Destroyer Program: Background and Issues for

Congress, by Ronald O’Rourke.

CRS Report RS21195, Evolutionary Acquisition and Spiral Development in DoD

Programs: Policy Issues for Congress, by (name redacted) and Ronald

O’Rourke.

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

(name redacted).

CRS Report RL31872, Unmanned Aerial Vehicles: Background and Issues for

Congress, by (name redacted).

CRS Report RS20859, Air Force Transformation, by (name redacted).

CRS Report RL30802, Reserve Component Personnel Issues: Questions and

Answers, by (name redacted).

CRS Report RL32141, Funding for Military and Peacekeeping Operations: Recent

History and Precedents, by (name redacted).

CRS Report RL32321, Policing in Peacekeeping and Related Stability Operations:

Problems and Proposed Solutions, by (name redacted).

CRS Report RS21822, Military Base Closures: DoD’s 2005 Internal Selection

Process, by Daniel Else

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