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What the Debt Limit Deal Means for the Defense Department—and for Ukraine
The government will have less purchasing power to spend on national security and it will be more difficult to support Kyiv.
THE BIDEN ADMINISTRATION is evidently satisfied that its 2024 national security budget request, which totals $886 billion for fiscal year 2024 and amounts to a 3.3 percent increase over the 2023 budget, survived the debt ceiling negotiations. It looks as if, for once, the president’s budget request might resemble what Congress appropriates. Whereas non-defense discretionary spending was effectively capped at current levels for next year, the text of the bill reflects that Congress agreed to grant President Joe Biden what he asked for. That bipartisan compromise will likely come back to bite us.
Defense spending is not synonymous with spending on the Department of Defense. The overall national security account, termed “function 050” in budget speak, includes the budgets for the Department of Defense, the Department of Energy’s National Nuclear Security Administration (NNSA), the naval nuclear propulsion program, and atomic energy-related activities of other agencies such as the Department of Labor, and some portion of defense- and national security-related activities in the State Department, the Department of Homeland Security, and the intelligence community. NNSA consumes most of the non-Department of Defense portion of function 050.
Since there is going to be no change to the function 050 number, the Defense Department component of function 050—identified as function 051, $842 billion—likewise should be identical to the president’s budget request. That number represents a nominal 3.2 percent increase over the department’s 2023 budget, but a contraction when adjusting for inflation. Inflation in the defense sector is invariably higher than more general indicators such as the Consumer Price Index, so the decline in the actual purchasing power of the departments and agencies funded within function 050 is steep.
Such an increase falls considerably below what many in Congress had anticipated would be the final budget level for 2024. After Congress added $43 billion to President Biden’s 2023 request, it was reasonable to expect that it might appropriate more money than he asked for again for 2024. Given the fixed ceilings that have been applied to function 050, apparently not.
The administration’s failure even to cover inflation undermines its stated objectives of deterring China, Russia, Iran, North Korea, and international terrorists. Despite its ongoing economic troubles, China continues to fund its military expansion, even as it pursues increasingly aggressive tactics in the South China Sea. Russia shows no sign of modifying its brutal tactics in Ukraine, nor has it offered any indication that it might withdraw the forces that have occupied the country. Iran continues to challenge America’s presence in the Middle East, while North Korea proceeds with its nuclear weapons and missile programs. American forces are still deployed in the Middle East to fight ISIS and against other terrorists in Africa. In the face of these multiple threats, the administration’s budget provides few vehicles for expanding the fleet, increasing production of aircraft, meeting Marine Corps requirements for additional amphibious ships, and preventing further shrinkage of the Army.
In theory, the Office of Management and Budget could reallocate more funds to the Department of Defense from those allocated to other agencies within function 050, but that would simply create funding shortfalls in those agencies. And at a time when the world is becoming manifestly less stable and safe, the Biden administration and Congress have agreed to spend less on defense in terms either of constant dollars or percentage of GDP.
The debt agreement leaves little to no room for maintaining the Department of Defense budget in real terms. In past emergencies, Department of Defense benefited from additions to its base budget through emergency supplemental appropriations. These were eventually replaced by the Overseas Contingency Operations account to fund the wars in Iraq and Afghanistan. Those operations have ceased, and in any event, their costs always counted against the debt ceiling. It therefore is not clear whether any new account or any emergency supplemental—for instance, for Ukraine or Taiwan or another emergency—could be approved given the ceilings imposed by the debt agreement.
These restrictions have serious implications for additional support for Ukraine, since the administration had assumed that such support would be funded by supplementals. A White House official reportedly stated that a way would be found around the debt ceiling, but offered few details as to how that might happen. Hopefully the administration will find that magic workaround; otherwise there would be no new funding for Ukraine after the current funding runs out on September 30. One can hope, but it is unlikely the war will be over by then. Wars, like America’s enemies, tend not to observe budget deadlines.
Dov S. Zakheim was a deputy under secretary of defense from 1985 to 1987 and under secretary of defense from 2001 to 2004. He is vice chairman of the Foreign Policy Research Institute and a senior advisor at the Center for Strategic and International Studies.