How House Budget Committee Bill Raising Funding Caps Would Affect Defense

Some seemingly contradictory information is circulating about how the House Budget Committee (HBC)-approved bill to avert the deep sequestration budget cuts scheduled for fiscal years 2020 and 2021 would affect defense funding. That’s largely because there are different ways to measure the bill’s changes in overall funding for both defense and non-defense discretionary (NDD) programs.

The bill would set new, higher funding caps for 2020 and 2021 for both defense and NDD programs, replacing the caps imposed by the 2011 Budget Control Act (BCA) and lowered by sequestration.

In fiscal year 2019, funding for defense (which is about a sixth of all federal spending) equals $716 billion: $647 billion in regular defense appropriations — the amount allowed under the BCA defense cap for 2019 — and $69 billion in Overseas Contingency Operations (OCO) funding, a separate defense category that is outside the cap.

The HBC proposal would raise defense to $733 billion in 2020: $663 billion in regular defense appropriations and $69 billion in OCO funding. That’s a 2.4 percent increase over the 2019 funding level without adjusting for inflation, and essentially flat funding after adjusting for inflation. (The Congressional Budget Office projects that the Consumer Price Index will rise 2.45 percent between fiscal years 2019 and 2020.) So the bill’s defense level in 2020 represents — relative to the 2019 level — either a modest increase or essentially flat funding, depending on whether one adjusts for inflation.

Some have described the HBC plan as a large, even massive, defense increase. That’s based on comparing the HBC’s defense level for 2020 to what defense would receive in 2020 if the BCA’s full sequestration cuts — which would reduce both defense and NDD funding well below the 2019 levels — take effect. That’s another way to measure the changes in funding levels. The HBC’s 2020 caps for defense and NDD programs are each $88 billion higher than the sequestration levels, reflecting the concept of “parity” by raising the caps for both defense and NDD programs by equal dollar amounts.

To promote dialogue on these issues, it would be helpful if those characterizing the HBC plan’s changes in defense funding are clear on (1) whether they are starting from the current funding level or the levels that would take effect under sequestration, and (2) whether they are adjusting funding levels for inflation. Ultimately, the question for policymakers during this year’s budget deliberations will be whether proposed defense and NDD funding levels are too high or too low, and how those levels and the changes they represent compare to each other.