Here’s What You Need to Know About Budget Delays and Defense Programs

The fiscal year 2022 budget will enter its fifth month under a continuing resolution in February, and the President’s fiscal year 2023 budget request is unlikely to meet a Feb. 7 deadline, hampering the start of new Defense Department programs and locking money in the wrong accounts.

It could be March 7, a week after the President’s State of the Union address, before lawmakers have a chance to look at the new budget and begin the deliberation process, a budget expert told Air Force Magazine. One reason may be the Pentagon was asked by the White House to revise its budget needs.

“It does start to get disruptive,” said Todd Harrison, director of defense budget analysis and director of the Aerospace Security Project at the Center for Strategic and International Studies, a think tank in Washington, D.C.

“You can’t start new programs. You can’t ramp up production of anything. You’ve got money stuck in the wrong accounts, in the wrong places,” he explained. “It really handicaps DOD’s ability to execute the budget in an effective and efficient manner.”

While the National Defense Authorization Act outlined the policy priorities and spending goals of the FY 2022 budget, a second act by the Congress to appropriate the money also is required. Until then, DOD is operating on a continuing resolution based on 2021 numbers that is set to expire Feb. 18.

Harrison points out that the lack of 2022 numbers is also likely slowing down the 2023 process.

“They would ideally want to know, what is the FY 22 level of the defense budget before they finalize their plans for the FY 23 budget,” he said.

“The strategic environment is continually shifting,” Harrison added, noting that defense priorities continue to evolve. “So, it’s going to make it harder and harder for the Air Force to defend its budget request the longer that request gets delayed.”

There are multifaceted reasons for the various budget delays, he posed, including a resurgent coronavirus, the failure of the President’s “Build Back Better” domestic program agenda, and Congress’s failure to pass a 2022 budget on time.

But there is another factor at play, a hidden back-and-forth between the White House Office of Management and Budget (OMB) and the Pentagon.

“As you might imagine, we are hard at work on starting to build out the ‘23 budget” Pentagon spokesman John F. Kirby told Air Force Magazine at a Jan. 10 briefing, noting he had no estimated release date to announce.

“Obviously, in a perfect world, you always want to get that laid out as early in the year as possible, to allow for the legislative process to continue so that you can get the funding on time,” he added. “We’re going to keep working at it.”

On Jan. 13, Kirby indicated the DOD was in the “beginning stages of the budget season.” The spokesman said that Deputy Secretary Kathleen H. Hicks is leading the effort, and Defense Secretary Lloyd J. Austin III aims to advance his vision of “integrated deterrence,” a joint approach to deterring conflict, especially in the Indo-Pacific.

Harrison said the fact that DOD is still working on the budget at this late stage is likely a sign a first budget go-round was kicked back by the White House.

“He’s [Kirby] pretty clearly indicating that they are in the middle of reworking and rebuilding the FY 23 budget, and that is unusual at this point in the process,” Harrison said.

“The Pentagon should have put the final touches on its part of the budget in December, and sent that over to OMB for incorporation with the rest of the budget,” the analyst explained. “If they are, in fact, still reworking the FY 23 budget in the Pentagon, that suggests that they’ve gotten additional guidance from the White House on things to change.”

Harrison believes OSD will be driving changes at this point based on White House guidance, but it will likely tap the services to make adjustments with inflation topping 6 percent and a 20-year high 4.6 percent pay raise.

“That will have ripple effects throughout other parts of the budget,” he said, meaning real spending or purchases may have to be cut.

It is not yet known whether OMB will keep the budget at NDAA-approved levels, make cuts to compensate for cost increases, or a combination of the two.

No Budget without a Strategy

Perhaps one of the most important holdups to the budget release is that the 2022 National Defense Strategy has yet to be released. The White House is also pending a new Nuclear Posture Review and Missile Defense Review. The last Congressionally mandated NDS was published in 2018.

“The strategy should kind of provide the narrative, set the priorities, and then the budget should show how they’re going to implement that,” Harrison explained. “If we haven’t seen the strategy yet, then you know, that’s another reason to hold back on the budget.”

The holdup is more than likely due to domestic issues, Harrison projected: “The long pole in the tent right now is probably OMB reworking the non-defense side of the budget.”

President Joe Biden is unlikely to release the budget numbers before describing its overarching themes and goals, something Presidents have typically done in the State of the Union address. This year’s State of the Union is not until March 1, about a month later than usual.

“The last thing you want to do is release your budget, and then follow up with the strategy, because then it makes it look like the budget is driving your strategy,” Harrison said. “They want to show that the strategy is leading, and the budget is following.”

If the new NDS calls for changes like additional divestments of legacy platforms, the authorized funding could be changed. Harrison says strategies rarely make huge changes to the budget.

Ultimately, however, the President’s Budget is just a suggestion to Congress. But, the process does not start until OMB releases his budget.

“It’s a starting point for negotiations with Congress about what the priorities should be and how resources need to be allocated,” Harrison said.

With huge investment in research and development planned for 2022 in areas like hypersonics, Harrison still believes the budget delays will not negatively impact programs.

“The budget request is going to be late,” he said. “Does that directly translate into delays in some of our high priority technology investments? No, it doesn’t. We have a system that is robust and resilient, that can accommodate delays like this, while keeping the technology efforts still going on pace.”