After months of political negotiation and the looming threat of budget sequestration, American lawmakers agreed on a bipartisan budget act that was signed by President Trump on August 2, clearing the way for a record high FY20 defense budget that will secure top ongoing military programs, says GlobalData, a leading data and analytics company.
Things started to get sour last March when the White House requested US$750bn for the FY20 national defense budget, with US$165bn falling under Overseas Contingency Operations (OCO) in order to escape spending limits. The bill always had few chances to pass Congress approval, especially since the mid-term elections saw the Democrats taking over the House.
Nicolas Jouan, Defense Analyst at GlobalData, comments: “The perspective of budget sequestration in the midst of great power competition was dreaded by everyone. Cuts and uncertainty in budget approval would have had negative consequences on current R&D including hypersonic weapons, artificial intelligence, big data, fleet renewal, the establishment of a new Space Force, and general readiness, jeopardizing America’s position in the world.”
The Bipartisan Budget Act of 2019 (BBA19) resolved the gridlock by raising the budget caps initially established by the 2011 Budget Control Act. The resolution was welcomed on both sides of the aisle in order to accommodate increasing defense related expenditure requirements while maintaining congressional watch over the budget.
Jouan continues: “The budget cap, in practice a floor more than a ceiling – since OCO allows additional discretionary expenses – was raised from US$576.2bn to US$666.5bn for FY20, establishing the new Department of Defense budget deal at US$718bn. Within this, new platforms procurements are set to account for more than US$57bn, according to GlobalData.
“BBA19 also agreed on a US$671.5bn base budget for FY21, giving hope for two consecutive years of timely budget appropriation. In both cases, acquisitions including procurement and R&D are expected to reach 35% of expenditure, enough to keep all major programs on track including, but not limited to, new F-35 deliveries, Ford class carriers, and the Columbia class SSBN.”
The Appropriation Act is now set to pass before the official start of FY20 at the beginning of October 2019, which would allow the White House and the Pentagon to expedite apportionment and allocation, and to deliver on time the largest national defense budget in history.