	Will Budget Deficits Constrain Long-Term Defense Budget Plans? * Administration projections. Figures for FY2005 and beyond do not include additionalsupplemental appropriations for Iraq and Afghanistan, while the FY2004 figures includes such funds. National Defense Budget Authority and Outlays, FY1950-FY2010
This relatively modest pace comes after several years of substantially higher growth. Should Further Increases in Military Pay and Benefits be Restrained? The rate of increase in personnelcosts may slow over the next few years, though starting from a higher base than just a few years ago,provided Congress does not authorize additional major increases in personnel benefits. Will Increasing Operation and Maintenance Costs Compete with Weapons Modernization? Many things explain the trend: (1) the steadilygrowing cost of operating and maintaining new generations of more capable and sophisticatedweapons; (2) efforts to improve the extent and quality of military training; (3) efforts to ensure thatthe quality of life in the military keeps up with the quality of life in the civilian sector as the militaryhas shifted to an all volunteer, older, more commonly married, and more skilled force; (4) the growthin health care costs for military personnel and their dependents; (5) requirements that the DefenseDepartment, like other Federal agencies and private organizations, reduce pollution and clean upearlier contamination; and (6) modest but steady real growth in the compensation of DOD civilianpersonnel, most of whom are paid with O&M funds. In the FY2006 budget, the Navy is requesting $394.5 million for "Completion of PriorYear Shipbuilding Programs," and the Navy's long-term program includes and additional $449.8million in FY2007 and $502.5 million for cost growth. Moreover, the Navy is now beginning toreestimate future shipbuilding costs in light of recent experience. What Are the Implications of Changes in Military Strategy for Budget Priorities? A final long-term question is how changes in the international environment -- and in U.S.perceptions of it -- will affect defense budget priorities. Perhaps the key issue in the QDR is to what extent Defense Department priorities may bereshaped in view of new assessments of long term challenges to U.S. security.
Over the next few months, Congress will be considering Administration requests for morethan half a trillion dollars for national defense, including money in the regular defense budget forFiscal Year 2006 (FY2006), supplemental appropriations for costs of ongoing military operationsin FY2005, and, possibly, additional funds in FY2006 to provide a "bridge" until future supplementalappropriations for operations in Iraq and Afghanistan are available.
The Administration's defense budget plans face some potentially daunting, though by nomeans unprecedented, long-term challenges, including:
Will projected budget deficits constrain the Administration's long-term defensebudget plans?
Should Congress try to restrain further increases in military personnel pay andbenefits, as some Administration officials have argued, in view of dramatic increases in personnelcosts in recent years?
What are the implications of continuing, perennial increases in defenseoperation and maintenance costs for the affordability of the Administration'splan?
How affordable is the Administration's long-term plan for modernizing militaryforces in light of substantial and continuing cost growth in many systems?
How might recent widely discussed changes in defense strategy affect prioritieswithin the defense budget?
This report reviews long-term trends in the defense budget and discusses the challengesCongress and the Defense Department may face in trying to adjust plans in the face of fiscalconstraints. It will be updated periodically to reflect congressional action and new information.