U.S. Military Budget

Of the two biggest expenses incurred each year by the federal government, Social Security and defense spending are the largest. The U.S. military budget is set annually and stretches across a wide range of fiscal responsibilities, including funding for daily military operations, investing in infrastructure, research and development, establishing strategic partnerships, and much more.

See the latest update on the 2023 Defense Budget and the impact on 2023 military pay.

Establishing and passing the U.S. military budget has a specific set of procedures. How does it work? Let’s look at a real-world example.

On March 28, 2022, the President, joined by the defense secretary, sent Congress a military budget proposal that included $773 billion for national security, most of which is set aside for the Department of Defense.

Similar to past budget proposals, the FY2023 defense budget included 4 focus areas. This particular proposal’s goals included the following:

• Reinforce U.S. commitment to the concept of integrated deterrence
• Better sequence and conduct operations around the globe
• Modernize the Joint Force
• Deliver meaningful support for our dedicated workforce and their families

Every year’s budget proposal differs to meet the immediate needs of our nation. In 2023, for example, the secretary of defense and President Biden requested more than $130 billion for research and development to “sharpen our readiness in advanced technology, cyber, space and artificial intelligence.” This proposed research and development budget marks an all-time high.

After review and revisions, Congress passed the FY2023 defense budget through the National Defense Authorization Act in December 2022. The final total? $858 billion — $85 billion more than the original proposal in March.

The Problem With Military Budgets

The military budget is passed each year via the annual National Defense Authorization Act (NDAA) and covers funding across the whole of DoD operations.

But the elephant in the room is sustainability. Multiple sources point out that DoD spending each year on maintenance and people runs toward roughly one-third of the entire defense budget. At least one source reports that it could rise to 100% by 2024.

The culprits? Military benefits including medical care and military retirement pay. How does the DoD pay for the rest of its expenses in this scenario?

Some have proposed lowering pay and benefits for troops, but the DoD is increasing them instead. The military must find ways to save money, but the most direct ways are complicated.

For example, closing under-utilized military bases could save DoD funds, but there hasn’t been a Base Realignment and Closure Commission (BRAC) authorized in many years. This, despite elected officials discussing the need to examine closing some facilities to save money. The spending and budget problems faced by DoD officials aren’t going away anytime soon, and it won’t surprise anyone to find a new round of BRAC closures in the years to come.

What The Military Budget Includes

Before we further explore the timeline of the proposal and approval of a military budget, let’s examine some of the areas it specifically covers. The numbers provided here aren’t necessarily an indication that the same levels of funding will occur next year. They are here to provide a sense of scale for this incredibly large amount of money.

Agencies Included in the Defense Budget:

• Department of Defense
• Department of Veteran Affairs
• Homeland Security
• National Nuclear Security Administration in the Department of Energy
• State Department
• FBI
• Cybersecurity in the Department of Justice

The 2023 military budget includes, but is not limited to, the following:

• 4.6% pay raise for military service members and DOD civilian workforce
• $70 million for Impact Aid
• $12.6 billion for inflation impacts on purchases
• $3.8 billion for inflation impacts on construction projects
• $2.5 billion for inflation impacts on fuel
• $2.7 billion for additional munitions production
• $32 billion for Navy shipbuilding, including the procurement of 11 battle force ships
• $800 million to extend the Ukraine Security Assistance Initiative
• $710 million in missile defense

What Happens After A Defense Budget Is Proposed

The House and Senate vote or make a counterproposal. In this particular case, the series of events that led to a final, approved budget looked like this:

• March 28, 2022 – President Biden proposes initial budget
• July 14, 2022 – House of Representatives pass an adjusted version of NDAA
• Dec. 8, 2022 – House approved a reconciled NDAA for 2023; Senate Armed Services Committee moves directly into reconciliation phase
• Dec. 15, 2022 – Senate approved FY2023 NDAA
• Dec. 23, 2022 – President Biden signs 2023 NDAA into law