The Obama Administration has requested a total of $668 billion for the Department of Defense (DoD) in the FY 2010 budget. The “base” budget for the Department includes $534 billion in discretionary funding and an additional $4 billion in mandatory funding. The budget also includes, for the first time, full-year funding for the wars in Iraq and  Afghanistan—now termed Overseas Contingency Operations (OCO). The cost of the wars is estimated at $130 billion for FY 2010. In real terms, the base DoD budget is an $18 billion increase over last year’s budget, while the funding for the wars in Iraq and Afghanistan is a $17 billion decrease from FY 2009.

From FY 2001 to FY 2009 the base defense budget grew at an average real rate of 4.4 percent annually. The FY 2010 budget request slows the real rate of growth to 3.4 percent and projects a future rate of growth in the base budget of just 0.2 percent per year. Total DoD spending grew by 73 percent in real terms from FY 2001 to FY 2009, much of which was due to the cost of the wars in Iraq and Afghanistan. The FY 2010  budget request proposes a 1 percent decrease in total DoD spending, due primarily to reductions in the war-related funding.

From an historical perspective, the Obama Administration’s defense budget remains near record levels. The previous peak in defense spending occurred in 1985 under the Reagan Administration. At $538 billion, the FY 2010 base defense budget, not including the added cost of the wars, exceeds the Reagan peak of $517 billion in 2010 dollars. Top-line projections for the base defense budget show that while defense spending will not continue to increase at the same rate as before, the Obama Administration intends to maintain a high level of funding in the coming years. The base defense budget proposed for the administration’s first four years (FY 2010 – FY 2013) puts the president on pace to spend more on defense, in real dollars, than any other president has in one term of office since World War II.