2023 Defense BudgetUpdated: January 30, 2023
President Biden signed the National Defense Authorization Act into law on Dec. 23, 2022, approving the 2023 defense budget and allotting $816.7 billion to the Department of Defense.
The new budget increases military pay by 4.6 percent.
What is the Defense Budget for 2023?
In December 2022, the defense budget passed with a record topline value of $858 billion. However, the final budget was approved for $816.7 billion.
In March, the President sent his overall budget request to Congress, recommending $773 billion for defense programs, a $30.7 billion increase – a little over 4% – over the 2022 budget. Ultimately, the increase shakes out to 4.6 percent.
That means the U.S. military budget’s percentage amounts to nearly half of President Biden’s $1.6 trillion request. When signed into law, defense spending will have increased by 10% in just two years.
Earlier this year, the House appropriations committee’s draft budget proposal was set to keep funding at $761.681 billion, increasing the president’s requested amount for research and development while slightly decreasing his proposed spending on operations and maintenance, procurement and military personnel end strength.
Overview of Defense-Related Funding
The 2023 increase in U.S. military spending is meant to accomplish the following goals, according to a DOD news release:
- Support service members and families
- Strengthen foreign alliances and partnerships
- Preserve our technological edge over other countries
- Implement the National Defense Strategy (NDS)
- Account for inflation driven by COVID-19 and supply chain disruption
- Deal with the effects of Russia’s invasion of Ukraine
Supporting these goals, the 2023 U.S. military budget funds a number of initiatives to keep the force healthy and increase defense capability.
It also includes a 4.6% inflation-based raise for military and civilian employees, plus increased investment in science and technology.
Here are some other big changes in the proposed budget:
- More on- and off-base childcare options for service members and DOD civilians, including income-based fee assistance.
- $15 per hour minimum wage for all federal employees
- $55 billion to improve medical care at military facilities
- $9.2 billion for military support programs
- $500 million to implement reforms and improvements in programs combatting sexual assault and extremism, plus building programs to enhance accessibility (DEIA) programs
- Increased partnerships with historically black colleges, including recruitment opportunities for internships and jobs
- The bill provides $1 billion to remediate and improve Hawaii’s Red Hill Bulk Fuel Storage Facility.
- The budget would prohibit using DOD funds to support the Guantanamo Bay detention center after September 2023.
The Cost of Inflation on the 2023 Defense Budget
The 4.6% military pay increase in this year’s spending bill is the largest in two decades. But, inflation rates reached 8.6% in June 2022, according to the Consumer Price Index, published by the Bureau of Labor Statistics.
2023 basic allowances for housing (BAH) and subsistence (BAS) and the GI Bill’s monthly housing allowance (MHA) might not increase at the same rate as this year’s historic inflation either. While individual locations determine BAH and MHA according to a formula, the budget requests an average increase of 4.2% to counter inflation.
The budget requests an average 3.2% increase in BAS rates for the same reason.
New BAH rates will go into effect in January 2023. If you’re using the GI Bill to pay some of your housing expenses, you won’t see the 2023 MHA increase until the new school year begins in August 2023.
U.S. Defense Budget Process
Passing a budget is a complicated process involving multiple government departments and agencies, as well as the executive and legislative branches of the government. The U.S. military budget approval process is no exception.
Each year, the Departments of the Army, Navy, Air Force, Marines and Space Force submit spending requests to the Department of Defense. Once Defense Secretary Lloyd Austin approves these, the DOD submits its draft budget request to the White House’s Office of Budget and Management (OBM).
The president uses budget requests from DOD and the other 11 federal departments to craft his overall budget request.
Then, the White House sends its recommendation to Capitol Hill.
The Senate and the House of Representatives consider the president’s request, and each pass their budget resolutions, including overall spending limits.
Next, they reconcile their two bills until they agree and pass a final budget resolution.
Once that happens, the House and the Senate appropriations committees set the individual spending limits for each federal agency and forward them to their respective subcommittees to designate individual program limits.
The subcommittees conduct hearings with agency heads, including representatives of the Secretary of Defense, then set a funding amount and pass a budget request.
All 12 requests go to the president for signature, who signs the individual bills. If Congress can’t agree on the 1separatea bills, they might present an omnibus bill to the President that combines funding for more than one area. In either case, we have a defense budget for the following year.
Or do we?
Sometimes the president and Congress can’t agree on the budget, resulting in a series of continuing resolutions (CR) to keep the government functioning until the budget passes. CRs allow the government to keep spending at last year’s rates until a designated date. In years that see many conflicts about the budget, Congress might pass more than one CR.
When continuing resolutions run out, government funding ends. This is called a government shutdown and results in closed government offices, federal employee furloughs and other service disruptions.
U.S. Defense Budget Release Date 2023
The U.S. defense budget went into effect on Dec. 23, 2022 when President Joe Biden signed the Fiscal Year 2023 National Defense Authorization Act into law.
In a perfect world, the Defense budget would go into effect by the start of the new fiscal year, Oct. 1, but Congress and the President have not completed appropriations before the beginning of the fiscal year in any of the past 10 years, according to Congressional data.
The Biden Administration sent the 2023 Budget Request to Congress on March 28, 2022, initiating Congress’s role in the budget process. The House passed the NDAA on Dec. 8, 2022. The Senate passed the bill on Dec. 15, 2022.
U.S. Defense Budget Summary for FY 2023
While the NDAA has already been approved, here is a breakdown of what goes into the 2023 defense budget:
The House Appropriations Committee recommended $173.1 billion for military personnel, about $802 million below the president’s 2023 request. Still, it’s a $6.2 billion increase from DOD’s 2022 spending on military personnel.
The House kept the president’s 4.6% military pay raise and funds sexual assault program reform. The House version supports a total military personnel strength of 1,328,300, a 0.3% decrease from 2022 levels.
Operation and Maintenance
The draft bill decreases the president’s Operation and Maintenance budget request by roughly $848 million, for a total of $269.3 billion to support key readiness programs, spare parts, base operations,
However, it’s still $13 billion over 2022 levels.
The House bill provides $143.9 billion for defense procurement, which allows the military to acquire new weapons, vehicles and systems. This spending includes 61 new F-35 Joint Strike Fighters, eight new Navy ships and funding associated with B-21 raider bombers, still under development.
The house procurement funding cap is about $960 million lower than the Biden administration’s proposal, which means fewer weapons and systems than DOD requested. Among the most significant cuts is the F-15 E/X fighter. While President Biden requested funding for 24 F-15s, the House draft bill funds only 15.
Research and Development
The House recommends a total of $131.7 billion for research, development, test and evaluation (RDT&E) programs in 2023, a $1.6 billion increase from Biden’s 2023 budget request and a $12.5 billion increase over 2022.
RDT&E spending highlights:
- $4.06 billion to the Defense Advanced Research Project Agency (DARPA)
- $2.2 billion to continue F-35 modernization of the F-35 fighter jet
- $849 million for the Army’s long-range hypersonic weapon (LHRS).
Areas where the draft House bill recommends higher spending limits include additional money spent on environmental remediation and disposal of hazardous chemicals.
Revolving and Management Funds
The House appropriations committee’s draft budget supports Biden’s request for $1.33 billion to fund the Defense Commissary Agency, which oversees the network of commissaries that provide low-cost groceries to military members and retirees worldwide.
According to a Congressional press release, the appropriations committee approved the spending “to ensure service members and their families receive continued savings for food and household goods as part of the military pay and benefits package.”
Other Department of Defense Programs
The House Committee recommended $40.47 billion for other DOD programs, including health programs, cyber activities, humanitarian aid and security cooperation programs.
U.S. Department of Defense Budget Breakdown
Much of the DOD’s FY2023 budget focuses on the Indo-Pacific and European regions.
That’s because the DOD views China as the “key strategic competitor and pacing challenge,” according to the 2023 budget request. The proposal cited Russia as DOD’s second most crucial concern, representing “an acute threat to the interests of the U.S. and our allies.”
To support the National Defense Strategy (NDS), this year’s U.S. annual defense budget divides expenses into these three areas:
- Integrated deterrence
- Building enduring advantages
Distribution of Funds in FY 2023 for the Department of Defense (DOD)
While it’s ultimately up to Congress how much funding each budget area receives, below are some of DOD’s critical funding plans and requested dollar amounts.
Integrated deterrence includes strategic nuclear programs, programs to deter non-nuclear attacks and major weapons programs.
These are some of the most important (and expensive) programs for strategic national defense.
Biden’s FY 2023 budget request allocates a record $276 billion toward integrated deterrence.
According to the Program Acquisition Cost Per Weapons System, here’s how that funding breaks down:
- $56.5 billion on aircraft and related systems, including F-35 and F-15EX fighter jets, B-21 bombers, KC-46A transport and refueling aircraft, specialized support seacraft and drones.
- $40.8 billion for shipbuilding and maritime systems, nine new battle force fleet ships, two Columbia class nuclear-powered submarines and continued work on Ford-class nuclear red aircraft carriers.
- $12.6 billion for multi-purpose, amphibious and optionally-manned fighting vehicles (OMFV) for the Army and Marine Corps.
- $24.7 billion for missiles and munitions, including $892 million to defend Guam from Chinese missiles, plus upgrades to Terminal High Altitude Area Defense (THAAD) and Patriot missile defense systems.
- $16.5 billion for scientific and engineering programs, including cybersecurity, artificial intelligence (AI), machine learning, hypersonic weapons, laser defense systems, 5G telecommunications technology, space programs and more.
- $12.3 billion for tactical and ballistic missile defense programs, including missile warning programs.
- $12.8 billion for command, control, communications, computers and intelligence (C4I) systems, including cybersecurity and cyberspace operations
- $21.7 billion for satellites and other space systems
- $78.1 billion for mission-support activities, including miscellaneous equipment, live-fire tests, Defense Production Act industrial base support and classified programs.
- $34.4 billion to modernize nuclear weapons and ground and missile systems that will expire in the next ten years.
Campaigning refers to the U.S. military’s ability to project power across the regions where our competitors operate. The 2023 budget focuses campaigning efforts on building a more strategically ready force to counter China and Russia.
To that end, the FY 2023 budget requested $134.7 billion to support readiness. Here’s how DOD wants to portion out campaigning money to each branch, according to DOD’s budget documents:
- The U.S. Army budget would receive $29.4 billion to support ground and aviation training, including $4.4 billion for the National Guard.
- The Navy would receive $47.4 billion for aviation, ship, and combat support readiness activities.
- The Marine Corps would receive $4.1 billion to enhance ground combat readiness and maritime pre-positioning.
- The U.S. Air Force budget would include $35.5 billion for core readiness and enabler activities, including $5.4 billion for the Air National Guard.
- The U.S. Space Force budget would include $3 billion to fund readiness.
The U.S. Special Operations Command (USSOCOM) would get $9.7 billion to support operational readiness and training of special operating forces.
DOD would spend the remaining $5.6 billion to fund joint force capabilities across combatant commands, including inter-service exercises.
Building Enduring Advantages
Building enduring advantages means investing in DOD’s civilian and military workforce while modernizing other force capabilities.
In addition to supporting the workforce with raises, child care and medical care, this pillar of America’s defense budget includes:
- $479 million to reform military sexual assault programs
- $3 billion to combat climate change by making infrastructure more durable and developing new technologies
- Investments to build and enhance the supply chain and defense industrial base, including $605 million for hypersonic missiles and directed energy weapons.
- $2.7 billion to retire aging and “vulnerable” systems, including the beloved A-10 Thunderbolt II, affectionately dubbed the A-10 “Warthog.”
- Multiple investments in “building resilience and readiness,” including $2 billion to maintain family housing and $17 billion to maintain military facilities.
Overseas Contingency Operations
Due to the 2022 military withdrawal from Afghanistan, DOD’s overseas contingency operations (OCO) budget for 2023 is zero, according to the budget request.
The 2023 budget request and House draft bill set aside no money for OCO, but they include $27.3 billion to fund Operation Inherent Resolve (OIR) and other CENTCOM theater missions. The president’s budget request includes OCO expenses under “campaigning” allocations.
This year’s budget for OIR and related missions is $7 billion less than in 2022 and $39 billion less than the $66.4 billion spent on these missions in 2020.
Factors Influencing the OCO Budget
The president’s budget request cites two reasons for the $7 billion decrease in OIR and other CENTCOM theater-level requirements.
First, OIR is losing $1.5 billion as they shift to an “advise and assist” role in the fight against ISIS.
This shift from direct military support means regional partners are taking over operations against ISIS in the Middle East, with some help from the U.S. military.
Reserve and National Guard mobilizations will also decrease, further reducing theater support costs by $5.5 billion.
Defense Budget Frequently Asked Questions (FAQs)
Here are answers to your frequently asked questions about the U.S. defense budget.
How Does Covid-19 Affect Future U.S. Defense Spending?
The U.S. military might spend more on medical care and other costs associated with Covid-19 and its evolving variants. For example, if a new Covid-19 variant outbreak forces military members and civilian employees to quarantine after travel, the Defense Department will absorb that expense.
In its 2023 budget request, DOD cited inflation caused by COVID-19 to justify some of this year’s $30.7 billion increase over last year’s budget.
How Much Will the US Spend on Defense in 2023?
Congress approves only the discretionary part of the defense budget, which is spending Congress appropriates annually to keep the DOD mission-ready. Most DOD expenses are discretionary, but there are also non-discretionary expenses.
According to the Defense Department Comptroller, this mandatory funding falls outside the routine budget approval process and includes programs like military retiree pay and certain retiree health programs,
According to the Comptroller’s FY22 Green Book, DOD’s discretionary spending will total $717 billion in 2022. Mandatory spending will total just $11.8 billion.
On top of that, atomic energy defense activities and other national defense activities will add another $42 billion to the defense budget.
Altogether, the comptroller projects the U.S. will spend $770.6 billion in 2022 on defense, including U.S. mandatory spending and discretionary expenses.
DOD is on track to spend over $800 billion on defense in FY 2023.
What Percentage of the U.S. Budget do We Spend on Defense?
According to the Congressional Budget Office (CBO), we spend about one-sixth of our federal budget on defense.
This includes the discretionary defense budget and mandatory defense expenses. It also includes non-military defense activities like certain Department of Energy operations.
How Much is the Department of Defense (DOD) Spending on Contracts and Financial Assistance?
The DOD spends money on contracts and financial assistance to contractors providing services and equipment.
As of June 11, 2022, this year’s obligated funding for contracts, financial assistance, grants and loans totaled $159.55 billion, according to the Treasury Department’s fiscal service bureau.
What is the Biggest Expense of the US government?
According to the Treasury Department, here are the U.S. government’s top expenses in 2021:
- $1.6 trillion for income security programs, including $569.5 billion in Covid-19 stimulus payments, federal retirement and unemployment compensation programs.
- $1.1 trillion for Social Security
- $796.8 billion for health expenses
- $755.8 billion for national defense programs
- $696.5 billion for Medicare
Without factoring in the Covid-19 stimulus payments, Social Security would have been the government’s top expense, according to 2021’s enacted spending levels. Enacted spending includes the approved budget request plus any additional spending Congress approved during the fiscal year.
Social Security is a mandatory expense. The Defense budget is the largest discretionary expense.
Defense spending may represent 48% of all discretionary spending for the entire government in 2023.
What is the Cost of the Iraq and Afghanistan Wars?
The U.S. government calculates the costs of the wars at $1.5 trillion as of 2020. That total includes an estimated $771 billion for warfighting operations in Iraq and Syria, plus $776 billion for Afghanistan operations.
Together, the cost of the wars breaks down to an estimated $7,863 per taxpayer based on this estimate. However, it doesn’t include the cost of medical care and disability benefits for wounded veterans.
These related expenses make the overall cost of the wars in Iraq and Afghanistan challenging to determine, as we’ll continue to incur new costs for Veterans’ disability and medical expenses.
According to Brown University’s Costs of War project, the post-9/11 wars, which included contingency operations in Iraq and Afghanistan, cost more than $8 trillion. This number includes projected expenses for veteran health care through 2052.
Based on this projection, the wars cost an estimated $41,936 per taxpayer.
Why Does the US Spend So Much on the Military?
The United States military develops and maintains some of the best military equipment in the world and provides each military member with world-class training, support and benefits.
The cost of U.S. defense spending also reflects the multifaceted mission of our military and
According to the 2022 National Defense Strategy, that mission includes:
- Defending the U.S. from multi-domain threats coming from China
- Deterring strategic attacks against the U.S., our partners and our allies
- Being able to adequately respond to China’s aggression in the Indo-Pacific and Russia’s threat in Europe
- Managing threats persistent threats from Iran, North Korea and terrorists
The American defense budget also helps shield our allies by deterring aggressive actions by enemy regimes due to our weapons and military superiority.
How Has National Defense Spending Changed Over Time?
In real numbers, the discretionary defense budget tends to rise over time due to inflation.
But as a percentage of our gross domestic product (GDP), which represents the total economic output of our country, our military expenses have been mostly declining since the 1950s.
U.S. Defense Budget Percentage of GDP
According to DOD, military spending equaled 11.3% of our GDP during the Korean War in 1953. In 2024, DOD estimates military spending will equal 2.7% of GDP.
Proportionately, that’s a considerable decrease of 76%, which is why some argue the U.S. national defense budget should be even bigger.
How Big Is the U.S. Military Budget Compared to Other Countries?
It makes sense to consider each country’s GDP when looking at U.S. defense spending compared to other countries.
GDP is useful for comparing the relative spending of differently sized countries. As the largest economy in the world, the U.S. spends more than any other country on defense in absolute terms. As a percentage of GDP, we spend more than many but not all countries.
U.S. Defense Budget Compared to Other Countries
According to the World Bank, the United States’ defense expenses as a percentage of GDP equaled 3.7% in 2020.
For comparison, here is the percentage of GDP spent on defense for a few other countries, according to the World Bank:
- Algeria’s military expenses were 6.7% of GDP
- Canada’s military expenses were 1.4% of GDP
- China’s military expenses were 1.7% of GDP
- Israel’s military expenses were 5.6% of GDP
- Russia’s military expenses were 4.3% of GDP