Flat budgets are essentially a best-case scenario at this point, but we believe the Pentagon could potentially see an annual loss of real buying power of three percent or more in the coming years.
NEWTOWN, Conn. (PRWEB) June 23, 2020
Massive federal deficits, exacerbated by the COVID-19 crisis, have raised serious questions about the future of U.S. defense spending. Even before the pandemic hit the U.S., the Pentagon's $705.4 billion budget request was already projecting zero real annual growth over the next five years, far shy of the 3-5% real growth desired by military leaders. The government now faces a stalled economy and a 2020 shortfall that could surpass $4 trillion.
The debate is already underway about whether to slash the defense budget to offset government shortfalls or to shield the Pentagon’s coffers in the face of a rapidly changing global security environment. For years, Forecast International has warned that the impending end of sequestration budget caps would not result in a new spending surge for the Department of Defense. That outlook is certainly panning out. "Flat budgets are essentially a best-case scenario at this point, but we believe the Pentagon could potentially see an annual loss of real buying power of three percent or more in the coming years," said Forecast International senior defense analyst Shaun McDougall. "However, the full extent of the damage may be delayed as Washington attempts to shield the defense industrial base in the near-term," he added.
The Pentagon has already taken the approach of trying to divest legacy systems in order to free up funding for new advanced weapons geared toward great power competition, such as hypersonics, artificial intelligence, and robotic vehicles. "Congress is a roadblock to retiring legacy systems, making it impossible for the Pentagon to fully adopt this strategy," McDougall said. "The end result will be a messy tradeoff where some of these high-end projects are scaled back or cancelled due to budget pressure."
The Army's key programs are long-range precision fires, Next Generation Combat Vehicles, Future Vertical Lift, network improvements, air and missile defense, and soldier lethality. "The Army has particularly struggled in recent years with rotorcraft development and fielding a Bradley replacement, and the current environment puts even more pressure on planners to get things right this time around."
The Navy continues its push for a 355-ship fleet, but the latest budget funded only eight battle force ships. "The Navy will likely get the tenth Virginia class submarine it wants to add to its latest multiyear buy, but the service continues to worry about how the staggering cost of the Columbia class submarine program will impact future shipbuilding budgets," McDougall said. For the Air Force, budget pressure could affect procurement rates for aircraft like the F-35, T-7A trainer, or the B-21 bomber, and the service continues to iron out issues with the critical KC-46A tanker.
Forecast International's U.S. Defense Budget Forecast helps navigate this complex landscape by putting critical budget data at your fingertips. The U.S. Defense Budget Forecast is an online database that provides fast and easy access to data on the 2,000+ line items in the Pentagon’s procurement and RDT&E accounts. The database provides an array of comparative analytical tools capable of identifying winning and losing programs in every budget request, allowing clients to identify burgeoning opportunities and see program changes that will impact their own strategic planning efforts.
Users also gain access to the congressional budget tracker, which follows each acquisition program through the entire congressional markup process. "It is particularly important in uncertain times like these to keep a watchful eye on Congress, as its decision-making throughout the markup process sheds light on the framework of the final defense appropriations bill each year," McDougall said. In addition to the in-depth data features, the product also offers written analysis of budget requests, congressional markups, and broader defense spending trends.
About Forecast International
Forecast International, Inc. is a leading provider of Market Intelligence and Consulting in the areas of aerospace, defense, power systems and military electronics. Based in Newtown, Conn., USA, the company specializes in long-range industry forecasts and market assessments used by strategic planners, marketing professionals, military organizations, and governments worldwide. Forecast International also maintains a high posture of situational awareness and geopolitical analysis.