Outlook for U.S. Defense Budget by Managing Director Doug Berenson
Near-Term: FY16 and FY17 Budgets
- Speaker Boehner’s move to resign makes a government shut down less likely
- Democrats and moderate GOP could strike a deal like Murray-Ryan (2013)
- But there’s limited time before Boehner leaves to do a deal
- Some possibility for a deal covering FY16 and FY17 budgets
Mid-Term: Presidential Election and Budgets for FY18 and Beyond
- The next president is likely to pursue a DoD topline that is equal or higher than Obama Admin’s plans
- Only Sen. Bernie Sanders, (very unlikely to win in ’16) would push hard to cut the DoD topline
- Funding above BCA (sequester) levels are likely
Long-Term: Can DoD Gain Internal Efficiencies?
- Growth in O&S costs risks crowding out Investment
- Rising cost of R&D and production limits new starts
- Political opposition to some reforms: BRAC, pay limits, etc.
- DoD opposition to some Congressional acquisition reform proposals
- Budget pressure will continue to limit investment growth
Enactment of a formal spending bill for the rest of FY16 is feasible, but there are critical challenges
- Can all parties get to a deal on FY16 appropriations before Boehner is replaced?
- Can the Senate move this fast, given the presidential candidates in its ranks?
- Will differences on non-defense spending bar a deal on defense?
- Are there too many other issues (e.g., debt ceiling, EXIM Bank, immigration) to address the budget in time?