The bulk of the funding in the administration’s request is for personnel-related costs (e.g., pay, housing and health care) and costs associated with maintaining the day-to-day readiness of US forces (e.g., flying hours, depot maintenance and base operations activities). The request also includes some funding for weapons acquisition and classified programs.

Some observers believe that the administration’s supplemental request provides too little additional funding for defense. However, the request is large by historical standards and appears to represent a reasonable estimate of DoD’s FY 2001 funding requirements. Arguably, somewhat more might be needed to fully cover the Services’ near-term readiness requirements. But a case can also be made that the request includes funding for a number of programs that should more appropriately be included in the upcoming FY 2002 amended budget request.

Historical Comparisons: At $5.6 billion, the FY 2001 supplemental request is substantially larger than most previous requests for defense supplemental appropriations. Over the FY 1995-2000 period, for example, the Clinton Administration submitted a half dozen supplemental funding requests for defense, with average costs of under $2 billion. Over this same period, Congress approved an average of about $5 billion a year in supplemental appropriations for defense. The use of supplemental appropriations peaked in the spring of 1999, when the Clinton Administration submitted a $5.4 billion supplemental request for defense and Congress subsequently approved about $10.9 billion in funding. However, whereas nearly all of the $5.6 billion included in the Bush Administration’s FY 2001 request is intended to cover extra costs associated with normal peacetime operations, only about half of the funding included in the FY 1999 supplemental was available for such requirements. The remainder was needed to cover the costs of the war in Kosovo and FY 2000 military pay and retirement costs.

Is the Supplemental Big Enough? The fact that the administration’s FY 2001 supplemental request is relatively large by historical standards does not, of course, mean that the proposed amount is necessarily sufficient. Given the considerable uncertainty surrounding operations and support costs, it is impossible to state with certainty that the request will indeed prove adequate. It would appear, however, that the request represents at least a reasonable estimate of likely funding requirements. Perhaps most importantly, the supplemental request would increase FY 2001 operations and maintenance (O&M) funding to some $81,000 per active duty troop.² This is roughly 40 percent more in real (inflation-adjusted) terms than DoD provided per troop in FY 1990, the year the United States began sending forces to the Persian Gulf in preparation for Operation Desert Storm. It is also far more than DoD provided in FY 1990, even after subtracting out that portion of the O&M budget allocated to tasks which some observers have argued are not closely related to traditional military missions, such as environmental clean up at military bases and drug interdiction. On the other hand, even with the extra funding, compared to FY 2000, O&M funding per troop would remain essentially flat in real terms. By contrast, historically, per troop O&M costs have risen at an average annual rate of about 2.5 percent in real terms.

Is the Supplemental Too Big? In submitting its FY 2001 supplemental request for defense, the administration emphasized that it intended to use the supplemental only to fund urgent and unanticipated requirements that were not adequately funded in the regular FY 2001 defense appropriations bill. Among other things, Dov Zackheim, Undersecretary of Defense (Comptroller), argued that, while ballistic missile defense and military transformation were both important priorities of the administration, a supplemental is not the appropriate place to fund such efforts. Instead, he indicated that the administration would request additional funding for these and other programs in the upcoming FY 2002 amended budget request, which is expected to be submitted sometime this summer. Notwithstanding these comments, however, the supplemental request does propose funding for some programs that might more appropriately be included in the amended FY 2002 budget request. This may be particularly true of the $424 million requested to cover “contractual obligations and cost growth” in various weapons acquisition programs, and the $238 million included for “transformation capabilities.” The question is not simply whether funding should be provided for these programs, but whether they represent urgent requirements that cannot be handled in a sufficiently timely manner through the regular FY 2002 authorization and appropriations process. Generally speaking, the annual budget process allows Congress to take a broader perspective and more thoroughly assess DoD’s requests than does the process of approving supplemental appropriations.³

Spending Caps: Under the 1997 balance budget agreement, the amount of spending that can be provided for discretionary programs (which includes defense and many non-defense programs) was capped for each year through FY 2002.⁴Appropriated funding for FY 2001 is currently about $6.5 billion below the ceiling specified for budget authority in the budget agreement. The administration’s FY 2001 supplemental budget request (which includes roughly $900 million for a variety of non-defense programs, as well as $5.6 billion for defense) would fit within that cap, but would leave essentially no room to spare. This means that Congress could add more funding to the administration’s request only if the caps are raised or the funding is designated as “emergency” funding. Either approach would require the acquiescence of the president, and raising the caps would, in addition, require garnering 60 votes in the Senate.

Lateness of the Supplemental: The wisdom and necessity of adding more funding to the administration’s supplemental request may also be affected by the fact that it was submitted relatively late in the fiscal year (which ends on September 30th). As Dov Zakheim noted, “the real question is how much of those requests can really be executed in ’01 . . . . when is the money really going to be available? Sometime in July? So we’re talking July—half of July perhaps, just for arguments sake—August and September: two and a half months. You’ve got two and a half months to execute billions of dollars.”⁵ This may provide an especially strong argument against adding money for acquisition programs, since it typically takes a number of years to obligate and spend the funding appropriated for such programs.

Breakdown of Supplemental Funding Request
The administration’s request includes $6.1 billion in additional funding for defense and $505 million in rescissions (i.e., reductions to previously funded defense programs), resulting in a supplemental request net of rescissions of $5.6 billion. Below is a brief description of the major funding categories included in the request.

Pay and Other Benefits ($482 million): Additional funds are needed to cover the cost of some pay raises and other benefit improvements which were authorized by Congress last year, but which were not adequately funded. The request also includes funding for improved housing and a number of other “quality-of-life” benefits.

Health Care ($1.4 billion): As in the civilian sector, the cost of providing health care to military personnel, retirees and their families has increased substantially over the past year. This funding is needed in part to cover improved benefits legislated in FY 2001, such as a pharmacy benefit for Medicare-eligible military retirees and their dependents, as well as increased costs associated with providing existing benefits. Whether these costs were entirely unanticipated, or were to some extent deliberately underfunded in the regular FY 2001 defense appropriations bill, is unclear. As the new DoD Comptroller, Dov Zakheim, has noted, in recent years some programs and activities have been deliberately underfunded in the regular appropriations bills, under the assumption that the shortfalls would be made good in a subsequent supplemental. Supplemental appropriations were similarly used to cover about $1.3 billion in health care costs in FY 2000.

Rising Energy Costs ($734 million): This funding is needed to offset cost growth in the price of electricity and natural gas at US defense facilities, which have increased by as much as 158 percent since last year. Supplemental appropriations of $1.6 billion were likewise approved to cover fuel cost growth in FY 2000.

Readiness and Other ($2.5 billion): The request includes $970 million to fully fund the flying hour requirements of US Navy and Air Force pilots, $414 million for base operations costs, $186 million for real property maintenance, and $476 million for aircraft and ship depot maintenance. The supplemental includes only $36 million to cover costs associated with US involvement in unanticipated contingency operations (specifically, US assistance to the UN mission in Sierra Leone). By contrast, funding for such operations (e.g., in Haiti, Bosnia and Kosovo) has been the centerpiece of most supplemental requests submitted over the past decade.

Weapons System Cost Growth ($424 million): This funding includes $222 million to cover cost growth in a number of shipbuilding contracts, as well as costs related to the C-17 ($49 million) and Airborne Laser ($153 million) programs.

Transformation Capabilities ($238 million): The supplemental would provide additional funding for a number of transformation-oriented programs, including development of the Global Hawk UAV, miniature munitions, information warfare capabilities, and joint experimentation.

Classified Programs ($297 million): Details concerning the allocation of this funding are unavailable.

Rescissions (-$505 million): The administration has proposed cutting $475 million in funding previously approved for the V-22 program, reflecting the need to restructure and slow this program in light of recent developmental problems. It also recommends a reduction of $30 million in funding previously approved for various modifications to the B-52 bomber.