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ASMC 2010 Orlando PDI Current Budget Issues June 2010

ASMC 2010 Orlando PDI Current Budget Issues June 2010. John Roth. FY 2011 Budget Request. FY 2011 Base Budget . 3.8%. Military Pay & Healthcare ……………........………............ $169.4B MILCON, Family Housing & Revolving Funds …………... $21.1B

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ASMC 2010 Orlando PDI Current Budget Issues June 2010

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  1. ASMC 2010 Orlando PDICurrent Budget IssuesJune 2010 John Roth

  2. FY 2011 Budget Request FY 2011 Base Budget 3.8% Military Pay & Healthcare……………........………............ $169.4B MILCON, Family Housing & Revolving Funds…………... $21.1B Operations, Readiness, & Support…………….....……... $169.3B Procurement and RDT&E…..………………….............…. $189.0B 30.9% 30.9% 34.4% $548.9B FY 2011 OCO Funding 83.1% Continuing the Fight………………………..…….......…... $132.4B Reconstitution…………………………….…………………. $21.3B Additional Requests………………………………....………. $5.6B 13.4% $159.3B 3.5% $708.2B Numbers may not add due to rounding

  3. Department of Defense ToplineFY 2001 – FY 2015 Base Budget Position OCO Supplemental Non-War Supplemental OCO Funding (Current Dollars in Billions) 708 693 667 667 666 33 648 632 616 601 535 479 468 437 345 316 Numbers may not add due to rounding Base Budget Note: FY 2011 – FY 2015 reflect levels included in the President’s FY 2011 Budget Request; FY 2009 Non-War Supplemental was appropriated through the American Recovery and Reinvestment Act of 2009 Source: Department of Defense Appropriation Acts FY 2001 – FY 2010, FY 2011 President’s Budget documents and OMB Historical Tables, February 2010

  4. 1945 1945 1965 1965 1985 1985 2005 2005 Pressures on Discretionary Defense Spending 60% DoD Outlays as Percent of GDP Mandatory & Other Non-discretionary Budget Authority $2,425.5B 66% 50% WWII34.5% 40% Proposed FY 2011 Total Federal Budget Authority Korea 11.7% 30% TotalDiscretionary Budget Authority $1,265.0B 34% Vietnam 8.9% Gulf War 4.4% FY11 4.7% 20% $3,690.5B 10% 0% Non-DoD DiscretionaryBudget Authority$556.8B 44% Note: FY 2010 includes $129.6B appropriated and $33.0B OCO supplemental request Source: OMB Historical Tables, FY 2011 Budget of the U.S. Government, Proposed FY 2011 Federal Discretionary Budget Authority WWII82.5% DoD Outlays and Projected outlays as Percent of Federal Spending DoD DiscretionaryBudget Authority$708.2B 56% 100% $1,265.0B Korea 57.0% 80% Vietnam 43.4% 60% Gulf War 19.8% FY11 18.7% 40% OCO DiscretionaryBudget Authority$159.3B22% Proposed FY 2011 DoD DiscretionaryBudget Authority 20% Base DiscretionaryBudget Authority$548.9B78% $708.2B 0% Note: FY 2010 includes $129.6B appropriated and $33.0B OCO supplemental request Source: OMB Historical Tables, FY 2011 Budget of the U.S. Government Mounting deficits, interest expenses, and entitlement spending will put downward pressure on defense budgets in the near-term

  5. Federal Budget Surplus/Deficits(Percent of GDP) (Dollars in Billions) $236 (2.4%) $459 (3.2%) $752 (3.9%) $727 (4.2%) $1,267 (8.3%) $1,556 (10.6%) Source: Represents unified federal deficit and GDP projections reflected in the President’s FY 2011 Budget Request, February 2010

  6. Decline Coming?Total Defense Budget Authority(Constant FY 2011 Dollars) Source: National Defense Budget Estimates for FY 2011 (Green Book), March 2010, Tables 1-3, 1-4, and 6.8

  7. Major Cost Drivers Taking Care of People Reshape and Recapitalize • Currently no planned reduction in force structure/end strength • Maintain military pay raises at ECI (Employment Cost Index) or higher • Exceeded GDP deflators by average of 1.2 percentage points in last 5 years • Healthcare • Civilian pay growth • Disability retirement costs likely to rise • High-priority QDR initiatives • Irregular warfare • Ongoing re-capitalization needs • Shipbuilding • New capabilities • 5th Gen TACAIR • Nuclear posture review • Long-range strike • Persistent ISR • Procurement needs may be reduced by cancellations/restructuring • But many already accomplished • Weapons cost growth Maintain Readiness and Operations Afghanistan/Iraq • Financing OCO-to-Base • Global posture • Growth required to support approved force structure • Training OPTEMPO • Fuel fluctuations (hard to anticipate) • Maintain complex weapons • FSRM • Policy changes: Wounded warrior, family support, soft power • Need to plan for annual growth • Troop surge • Reset requirements • Repair or replace theater-provided equipment • Will occur gradually as equipment returns • Enablers • MRAPs • ISR • Counter IED • Afghan Security Forces • Iraq drawdown

  8. Need to Continue To Seek Savings and Efficiencies • Operational efficiencies • Overhead/Support • Insourcing • Healthcare • Logistics • Energy savings • Others? • End unneeded or poorly performing programs • Reform how we do business • Acquisition reform • Cost consciousness

  9. FY 2010 Budget Execution Challenges • Operation and Maintenance Shortfalls • Cash flowing contingency operations • Increased fuel costs • Congressional reductions • OPTEMPO demands • Spouse Tuition Assistance • Demand far exceeds budget • Military Personnel • Reserve mobilization up • War Fighter Needs • Haiti Support

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