Pentagon costs rising fast, CBO warns

June 30, 2011

The Congressional Budget Office on Thursday projected that higher costs for weapons systems and health care will increase the Pentagon budget by $40 billion over the next five years at a time when President Obama and many lawmakers are looking to cut military spending.

The new projection, of $594 billion in spending for 2016, is $25 billion higher than the Pentagon’s estimates.

The report notes that health-care costs for the Defense Department have outpaced those elsewhere. It also says that “the costs of developing and buying weapons have historically been, on average, 20 percent to 30 percent higher” than Pentagon estimates.

Defense officials already were concerned about the rapid growth of the Military Health Care System. Next year’s request for $51 billion represents about 9 percent of the overall Defense Department base budget.

If no steps are taken to halt the growth of the health-care program, the nonpartisan CBO projects that costs would grow to $92 billion by 2030, nearly double the amount requested for fiscal 2012. The CBO report notes that spending on drugs in the defense health program grew by an average of 2.2 percent a year from 2006 to 2010, while the national average growth was only 1.2 percent.

The CBO cautioned that its estimates are based on historical trends and reflect how rapidly defense budgets “would have to grow” to execute the Pentagon’s plans. The report points out that Congress or the White House could change those plans, noting Obama’s intention to seek $400 billion in reductions from spending on national security in the next 12 years.

The report projects that military personnel costs over the five-year period will grow by $5 billion and that procurement costs will grow by $36 billion. Operation and maintenance, which includes a majority of the Defense Department health-care program, would increase by $26 billion.

The CBO projections assume that civilian employee pay in the Defense Department, which has been frozen for two years, will increase in 2014 at a pace similar to raises for military personnel.

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