In last night's address to Congress, President Bush reaffirmed his decision to complete a review of defense strategy and plans before deciding how much needs to be spent on defense over the next decade. "Our defense vision will drive our defense budget," remarked the president, "not the other way around."

Consistent with this approach, the president's budget request includes essentially a "placeholder" for defense. Under the proposal, $325 billion would be provided for national defense in FY 2002, including about $310 billion for the Department of Defense (DoD). For the FY 2003-11 period, the proposal appears to assume that funding for defense would be increased at the rate of inflation-i.e., kept flat in real (inflation-adjusted) terms.

The president's decision to "put strategy first, then spending" clearly makes sense and should be commended. However, the approach also appears to be in tension with the president's desire to pass legislation this year that would cut taxes by some $1.6 trillion over the next decade. The paradox is that the administration is asking for enactment of a large tax cut before it has determined how much will need to be provided to implement its new defense strategy.

This discrepancy may not be important if, upon completion of its ongoing review, the new administration decides to substantially reshape US defense strategy and plans. The essentially flat placeholder budgets assumed for defense in the president's submission might be sufficient to pay for a plan that, for example, would: place less emphasis on the need to be prepared to fight two major theater wars nearly simultaneously; make some cuts in the number of Army divisions, Navy carrier battle groups, and Air Force fighter wings; scale back some next-generation weapon systems; and focus transformation efforts largely on R&D and experimentation.¹

On other hand, if the outcome of the administration's ongoing review is to essentially reaffirm DoD's commitment to the strategy, plans and programs laid out in the 1997 Quadrennial Defense Review (QDR) and, on top of that, expand funding for national missile defense and some other new initiatives, the placeholder budgets assumed in the recent budget submission would fall woefully short of actual requirements. In that case, funding requirements for defense could exceed the placeholder estimates included in Bush Administration's budget submission by a total of some $200 billion or more over the coming decade.² It might be possible to draw some of this additional funding from the $842 billion reserve for "contingencies" included in the president's budget submission. However, given other priorities of the administration and Congress (e.g., domestic spending, entitlement expansion and reform, and further debt reduction), and the inherent uncertainty surrounding the size of future budget surpluses, relying on this reserve to fully fund a large increase in defense spending might not be prudent or realistic.

1. For a discussion of such an approach, see Steven Kosiak, Andrew Krepinevich and Michael Vickers, A Strategy for a Long Peace (Washington, DC: CSBA, 2001). For the executive summary, click here.

2. The vast majority of this additional funding would be needed just to cover the current QDR defense plan, which suffers from a significant plans/funding mismatch. By contrast, the new administration's proprosal to accelerate the transformation of the US military need not necessarily require a substantial funding increase, even if these efforts were not offset by cuts in more traditional defense forces and programs.