Today, overall totals of intelligence spending are made public, but the process for appropriating funds for intelligence activities remains complicated and not well understood. Director of National Intelligence (DNI) James R. Clapper Jr. recently stated that sequestration would require a 7% cut, or roughly $4 billion, to the National Intelligence Program (NIP) budget and warned of reduced global coverage and decreased human and technical intelligence collection. Intelligence Spending: An Overview and Trends

Total intelligence spending can be understood as the combination of (1) the NIP, which covers the programs, projects, and activities of the intelligence community oriented towards the strategic needs of decision makers, and (2) the Military Intelligence Program (MIP), which funds defense intelligence activity intended to support tactical military operations and priorities. For broader intelligence spending in the NIP, however, it is not clear what activity is supported by NIP OCO funds or to what extent that activity is qualitatively different than other intelligence operations taking place across the globe. Policy makers have remarked that intelligence spending has doubled since September 11, 2001. After sequestration, the NIP budget from 2001 to 2013 will have roughly doubled. Publicly available data suggest the total intelligence budget in FY2001 was roughly $37 billion, or almost half of the $78 billion intelligence budget for FY2012. Spending appears to have quadrupled between 1980 and 2010 before declining over the past three years. Both the DCI disclosures and the commission appear to combine national and military intelligence spending. Perhaps one of the most critical questions facing Congress is whether intelligence spending will fall in concert with other defense spending. Hence, this would explain and to some extent justify the divergence of intelligence spending from other national defense spending since the end of the Cold War, when many experts agree the number of threats to U.S. interests multiplied even while the sheer magnitude of the threat may have decreased. During a previous round of budget cuts in the 1990s and prior to the establishment of the DNI, some critics argued that the intelligence community lacked a rigorous system to establish priorities and to shape the intelligence budgets to meet those priorities. Proposed Changes to Intelligence Appropriations

The complexities of the intelligence appropriations process have led to a number of proposals for different approaches that seek in various ways to disentangle national intelligence funding from the defense budget. While the DNI effectively has authority over the NIP today, in the event of major changes to the budgets of the DOD component of the intelligence community, this ambiguity in the statute could result in challenges to the DNI's stewardship of the intelligence community. Some observers have suggested that intelligence appropriations should be separated from defense appropriations and that Congress should consider a separate appropriations act (or a separate title in a larger appropriations act) for intelligence. Sections below discuss these proposals in more detail. An Intelligence Title Within Defense Appropriations Acts? Efforts to establish new congressional committees with both authorization and appropriations responsibilities appear to have generated little interest. Nonetheless, DNI authorities may be more critical now, when declining budgets force choices between different intelligence platforms and agencies, as opposed to when the DNI faced the relatively easy process of managing a decade of budgetary growth. The select panel was established to:
Review and study on a continuing basis budget requests for and execution of intelligence activities; make recommendations to relevant subcommittees of the Committee on Appropriations; and, on an annual basis, prepare a report to the Defense Subcommittee of the Committee on Appropriations containing budgetary and oversight observations and recommendation for use by such subcommittee in preparation of the classified annex to the bill making appropriations for the Department of Defense.
It is now publicly acknowledged that intelligence appropriations are a significant component of the federal budget, over $78 billion in FY2012 for both the national and military intelligence programs. Limited publicly available data suggest intelligence spending, measured in constant 2014 dollars, has roughly doubled since the September 11, 2001, terrorist attacks and, before declines over the last three years, was almost double spending at its peak at the end of the Cold War. The recent disclosure by the Washington Post of details from the Administration's FY2013 National Intelligence Program (NIP) budget request may spark further debate about intelligence spending. It is likely that Members of Congress will more closely examine intelligence programs to ensure they are both effective and affordable. Perhaps the most important questions for Members are how and to what extent intelligence spending, after a decade of sharp growth, should fall in comparison to declines in other defense spending. See the section titled "Comparison with National Defense Spending" for further discussion on that topic.
Fiscal pressures today will require intelligence officials to more clearly establish priorities and to make difficult choices between different intelligence collection platforms and agencies. Such choices may not have been required during the past decade, during which additional funding could be found to address new threats and to fix organizational weaknesses. In the 1990s, during a previous round of budget cuts and prior to the establishment of the Director of National Intelligence (DNI), it was argued that the intelligence community lacked a rigorous system to establish priorities and to tailor the intelligence budgets to meet those priorities. It remains unclear whether intelligence reforms after September 11, 2001, sufficiently addressed this issue.
Intelligence spending is spread across the 17 organizations comprising the intelligence community. Over 90% of NIP funding, which focuses on strategic needs of decision makers and is notionally under DNI control, falls within the Department of Defense (DOD) budget. DOD members of the intelligence community also receive funding for tactical intelligence from the Military Intelligence Program (MIP), which is under the authority of the Secretary of Defense but which may fund intelligence collection platforms that could be used for both tactical and strategic purposes. The remaining portions of the NIP fall within several other Cabinet departments and two independent agencies. These overlaps complicate both budget formulation and the congressional appropriation process.
The appropriations process for intelligence activities is complex and not widely understood. A number of changes have been proposed that would streamline the process or disentangle the NIP from the Department of Defense budget. Some, such as the proposal by a 9/11 Commission to combine authorization and appropriation responsibilities in a single committee, would be inconsistent with congressional practices during the past century. Other proposals to separate intelligence appropriations from defense appropriations, or to establish a separate intelligence title within defense appropriations acts, are less radical, but have met with opposition.
As a result, the congressional intelligence appropriations process is likely to receive continued attention. Congress may choose to review the DNI budget formulation process and appropriations procedures to ensure that they maximize effective decision making at a time when both national budgets and international threats to the United States remain issues of major public concern.