WE HAVE BEEN PREDICTING A HUGE INCREASE in defense spending in fiscal 2023 — perhaps nearing $800 billion — but we were blown away yesterday by news that Congress may increase President Biden’s top line by $45 billion, which would bring outlays in this fiscal year to a stunning $847 billion.
ACCORDING TO REPORTS IN POLITICO and elsewhere, congressional negotiators have agreed on $847 billion to compensate for inflationary pressures — and the threat from Russia, China, Iran, etc. President Biden had proposed a mere $802 billion.
THE DEFENSE DEAL WILL MOVE in the next couple of weeks, but time is running short. Congress first has to resolve the threat of a railroad strike, but some Senators may balk at a House-passed deal.
CONGRESS PROBABLY WON’T MEET THE DEC. 16 DEADLINE to pass a new budget, so another short-term extension — probably until Christmas Eve — will be necessary. It’s possible this fight could drag into next year, but there’s no question that defense companies will get their funding; it’s only a question of when, not whether.
A FINAL DEFENSE APPROPRIATION of roughly $850 billion would maintain an enormous U.S. global advantage; total spending will be roughly 40% of all military outlays in the world. China is second at just under $250 billion, with Russia third at about $160 billion. No other country is close to spending $100 billion annually (Canada is 14th, spending about $25 billion).
AS A PERCENTAGE OF GDP, Saudi Arabia is by far the biggest world spender at about 6-1/2 percent of its economy; Russia spent about 4 percent of GDP last year, a figure that obviously is growing. The U.S. spends about 3-1/2% of GDP on defense, a figure that many hawks call too low.
THE HAWKS WILL PREVAIL, even though members of Congress on the far left and far right will object. There’s a solid majority that favors more spending — especially shipbuilding — as the Pentagon adds more fighter-class vessels that will be sailing to the South China Sea and the Persian Gulf.
EVEN THOUGH THE NEW REPUBLICAN LEADERS in the House may try to trim the $40-billion plus in new aid to Ukraine, there’s relatively muted opposition to the defense package. The overall sense on Capitol Hill is that $1 trillion in annual defense spending is only a couple of years away.
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