Defense Department Fiscal 2016 Budget Are Happy Days Here ......Source: Defense Comptroller fiscal 2016 briefing slides » Fiscal 2016 Future Years Defense Program (FYDP) is a slight
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Transcript
copy 2015 Bloomberg Finance LP wwwbgovcom | BGOV
Defense Department Fiscal 2016
Budget ndash Are Happy Days Here Again
FEB 10 2015
Director of Government Sales Research
KEVIN BRANCATO
ROBERT LEVINSON Senior Defense Analyst
DUNCAN AMOS Quantitative Analyst
CAMERON LEUTHY Senior Budget Analyst
2
copy 2015 Bloomberg Finance LP
2
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
MORE BLOOMBERG GOVERNMENT BUDGET EVENTS
Feb 19 webinar ndash Digging Deeper on the Civilian Budget Request
raquo BGOV analysts will discuss the budget request for nondefense agencies
including what to expect as the budget and appropriations debates unfold
March 4 webinar ndash Defense 20 An Off-the-Shelf Military
raquo BGOV analysts will discuss whatrsquos ahead for the military in 2015 in light of
international developments and budget constraints
For more on these and other events visit aboutbgovcom
3
copy 2015 Bloomberg Finance LP
3
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
AGENDA
Overview of the fiscal 2016 request
A look at the $534 billion proposal for DOD programs including
raquo Funding categories
raquo Service breakout
raquo Major weapons systems
raquo Future Years Defense Program
Energy Department defense activities
Whatrsquos next in the process
QampA
4
copy 2015 Bloomberg Finance LP
4
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
SUMMARY BUDGET FIGHTS CONTINUE
DONrsquoT COUNT ON REQUESTED INCREASE YET
Presidentrsquos fiscal 2016 budget would total
+$35 trillion in receipts
-$40 trillion in outlays
$474 billion deficit about 25 percent of GDP
Presidentrsquos fiscal 2016 budget would change tax code spending levels
raquo Discretionary spending would increase by a net of nearly $71 billion or 7 percent
more than spending caps in current law
bull Defense discretionary spending across all agencies would be boosted
by $38 billion
bull DOD spending would increase by about $35 billion boosting every major
category
Defense spending depends upon resolution of larger fiscal debate on taxes
spending deficit and debt
raquo Compromise will be needed on cuts to entitlement programs increases in
revenue or increases in the deficit
raquo Much of the debate will be between Republican ldquobudget hawksrdquo and
ldquodefense hawksrdquo
5
copy 2015 Bloomberg Finance LP
5
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
REQUEST SEEKS SPENDING CAP INCREASES OFFSET
BY CUTS TO MANDATORY PROGRAMS TAX INCREASES
Defense discretionary base budget
fiscal 2016 budget request
Nondefense discretionary base budget
fiscal 2016 request
Notes Excludes Overseas Contingency Operations (OCO) disaster relief wildfire suppression and program integrity funds all of which arenrsquot subject to budget caps
Because the Department of Homeland Security has not received full-year fiscal 2015 appropriations ldquoenactedrdquo figures reflect the fiscal 2015 request for DHS and enacted
levels for all other agencies
Source Office of Management and Budget
raquo The fiscal 2016 request would exceed the budget caps
bull $38 billion more for defense spending category
bull $33 billion more for nondefense spending category
raquo Last yearrsquos request sought extra money and a cap increase Congress rejected it
Current dollars in billions Current dollars in billions
Fiscal 2016 discretionary budget request will face challenges in Congress
$0
$100
$200
$300
$400
$500
$600
$700
2015 2016 2017 2018 2019 2020
Enacted Budgetrequest
Budget cap(current law)
$0
$100
$200
$300
$400
$500
$600
$700
2015 2016 2017 2018 2019 2020
Enacted Budgetrequest
Budget cap(current law)
6
copy 2015 Bloomberg Finance LP
6
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
IF FUNDED THE $534 BILLION FISCAL 2016 DOD BASE
REQUEST WOULD EXCEED ALL PAST APPROPRIATIONS
Notes The statutory cap applies to all defense activities across the government BGOV has computed the DOD share at 955 percent of the overall defense cap
Sources Historical data from Defense Comptroller DOD budget cap estimates are from Congressional Research Service and the Congressional Budget Office
raquo Defense Department base funding peaked in fiscal 2012 with $5304 billion in budget authority
raquo Despite continuing requirements the $51 billion Overseas Contingency Operations request is
Note NNSA ndash National Nuclear Security Administration
Source Office of Management and Budget
NNSA would seek 10 percent increase
raquo Increases of more than $650 million for Weapons
Activities to support the execution of the ldquo3+2rdquo
strategy which would consolidate the stockpile to
three ballistic missile warheads and two
air-delivered systems
raquo Increases investments to arrest the growth in
deferred maintenance across NNSArsquos facilities
raquo Increases investments in critical plutonium
capabilities
Defense nuclear nonproliferation efforts would be
funded at $19 billion
raquo Funding level looks like a large increase but in
reality it is only $75 million more than fiscal 2015
enacted levels after adjusting for budget structure
changes that movedcounterterrorism efforts out of
weapons activities
Atomic energy defense activities
Current dollars in billions by fiscal year
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
2015enacted
2016request
2017 2018 2019 2020
NNSA Environmental and other defense activities
13
copy 2015 Bloomberg Finance LP
13
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
FATE OF COMPENSATION COMMISSIONrsquoS RECOMMENDED
CHANGES IS UNCERTAIN
Source Military Compensation and Retirement Modernization Commission final report
raquo Military Compensation and Retirement Modernization Commission released
15 recommendations on Jan 29
raquo If implemented recommendations would reduce Department of Defense spending by
$318 billion during FYDP period (fiscal 2016 through fiscal 2020) with $48 billion saved
in FY 2016
raquo Two most significant proposed changes would eliminate Tricare and create blended retirement
plan with defined-benefit and defined-contribution components
raquo Recommendations face uncertain future in Congress and it is unclear whether any will be
addressed in fiscal 2016 authorization and appropriation process
bull Both House and Senate Armed Services committees have held hearings
raquo Current budget pressure may make adoption of some recommendations more likely than in the
past
Commission recommendations not built into fiscal 2016 budget request
14
copy 2015 Bloomberg Finance LP
14
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
WHATrsquoS NEXT IN THE FEDERAL BUDGET PROCESS
PRESIDENTrsquoS REQUEST First Monday in February by law
President submits budget request to Congress often late
includes funding requests for each department and agency
reorganization proposals and revenue proposals
CONGRESSIONAL HEARINGS Under way
Agency officials testify before authorizing and appropriating
committees to justify requests
BUDGET RESOLUTION April 15 by law
The House and Senate Budget committees are supposed to
produce budget resolutions called a ldquoblueprintrdquo that set
revenue and spending targets for legislation not always
completed (no penalty) and donrsquot have the force of law
APPROPRIATIONS BILLS May and beyond
Subcommittee members and staff draft spending bills which
are generally considered by the subcommittee then full
committee before going to the full chambers
FISCAL YEAR BEGINS Oct 1
Bills are supposed to be done If not a continuing resolution
is enacted to fund departments and agencies as House and
Senate try to reconcile bills If appropriations arenrsquot in place
therersquos a partial government shutdown
15
copy 2015 Bloomberg Finance LP
15
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
DEFENSE FUNDING REMAINS DEPENDENT ON
OUTCOME OF LARGER FISCAL BATTLE
Republicans control Congress for first time during Obama presidency
raquo Leaders have criticized the budget request
raquo Budget resolution will reflect their policies and agenda
raquo Still need Democratic support at least in Senate to pass bills
bull Reconciliation process could be used to advance proposals with simple majority
Debate about spending caps will have to be joined
raquo White House has proposed ways to pay for it
raquo Republicans may propose more for defense cuts to nondefense
raquo Consensus that further cap increases should be deficit-neutral will prompt offset fight
bull Entitlement cuts or revenue increases could pay for more defense but neither side
wants to budge on these issues
bull Nondefense discretionary spending approaching historic lows as percentage
of GDP ndash tough to find more savings here
Events to watch
raquo Debt limit comes back into effect March 16 action needed by late summerfall
raquo Defense appropriations and authorization hearings
Source Bloomberg Government Debt Ceiling Shutdown Deadlines Converge Setting Up Fall Fights Congressional Budget Office
16
copy 2015 Bloomberg Finance LP
16
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
WHATrsquoS NEXT FOR DEFENSE SPENDING FIGHT
No ldquoeasy outsrdquo for Congress
Note Milcon ndash Military Construction and Family Housing
Defense Department seeks increases to every component of every servicersquos
budget
raquo Increase in Milcon could be deliberately designed to increase pressure on
Congress
bull Could make Base Realignment and Closure (BRAC) more palatable
raquo Defense discretionary increases larger than domestic puts additional pressure
on Congress
Pentagon says that leaving current spending caps in place will require changes
in its strategy
Will Republicans recommend defense spending levels less than the presidentrsquos
request in their budget resolutions
17
copy 2015 Bloomberg Finance LP
17
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
VISIT BGOVCOM FOR MORE BUDGET COVERAGE
BGOV Fiscal 2016 Budget
Special Report page includes
raquo Presentations on proposed budget
changes at the largest agencies
raquo Easy-to-navigate links to budget
source documents
raquo Federal budget tables
(updated Feb 2)
raquo A crash course on the federal
budget process
raquo Content from Bloomberg News
Bloomberg Politics and
Bloomberg BNA
18
copy 2015 Bloomberg Finance LP
18
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
QampA Follow us on Twitter BGOV
19
copy 2015 Bloomberg Finance LP
19
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
ABOUT THE ANALYSTS
rlevinson5bloombergnet
+1 202 416 3380
levinsor
Robert Levinson is a Senior Defense Analyst with Bloomberg Government He is a
retired lieutenant colonel in the United States Air Force Prior to joining Bloomberg
Government Levinson worked for Booz Allen Hamilton as a strategic communications
consultant He has a bachelorrsquos degree from the US Air Force Academy and a
masterrsquos from the University of California San Diego He is also a graduate of
Harvardrsquos program for Senior Executives in National and International Security
Duncan Amos is a Quantitative Analyst with Bloomberg Government Previously he
was a quantitative research assistant at the RAND Corporation where he focused
on defense mobility finance and international development research He has a
masters degree in applied economics from Johns Hopkins University and
bachelors degrees in political science and economics from Duke University
damos2bloombergnet
+1 202 416 3401
duncan_amos
Cameron Leuthy is a senior budget analyst with Bloomberg Government He has
more than 20 years of experience in analyzing budgets and legislation at the Office of
Management and Budget the Department of Defense and at Booz Allen Hamilton
His expertise includes the federal budget and the nexus of national security policy
operational requirements and funding He has a bachelors degree from Western
Washington University and an MPA from the University of Washington
cleuthy2bloombergnet
+1 202 416 3662
CLeuthy
20
copy 2015 Bloomberg Finance LP
20
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
ABOUT BLOOMBERG GOVERNMENT
Bloomberg Government is the single most comprehensive web-based information
service for professionals who interact with or are impacted by the federal government
For more information visit wwwbgovcom or call +1-202-416-3450
Follow us on Twitter BGOV
DISCLAIMER
Copyright 2015 Bloomberg Finance LP
Not for redistribution except by an authorized BGOV user
and only as expressly permitted in the Bloomberg
Government terms of service All permitted uses shall cite
BGOV as a source
ON BGOVCOM
raquo BGOV Special Report FY 2016 Budget
raquo The Pentagonrsquos Fiscal 2016 Future Years
Defense Program Database
raquo Contracts Search
raquo Awards and Opportunities
raquo Contracts Intelligence Tool
RELATED ANALYSIS
raquo Will Obama Make the Budget Easier for
Congress
raquo BGOV Guide Crash Course on the Federal
Budget Process
raquo Conflict or Compromise in Obamarsquos FY 2016
Budget
raquo FY 2016 Budget Early Defense Winners
2
copy 2015 Bloomberg Finance LP
2
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
MORE BLOOMBERG GOVERNMENT BUDGET EVENTS
Feb 19 webinar ndash Digging Deeper on the Civilian Budget Request
raquo BGOV analysts will discuss the budget request for nondefense agencies
including what to expect as the budget and appropriations debates unfold
March 4 webinar ndash Defense 20 An Off-the-Shelf Military
raquo BGOV analysts will discuss whatrsquos ahead for the military in 2015 in light of
international developments and budget constraints
For more on these and other events visit aboutbgovcom
3
copy 2015 Bloomberg Finance LP
3
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
AGENDA
Overview of the fiscal 2016 request
A look at the $534 billion proposal for DOD programs including
raquo Funding categories
raquo Service breakout
raquo Major weapons systems
raquo Future Years Defense Program
Energy Department defense activities
Whatrsquos next in the process
QampA
4
copy 2015 Bloomberg Finance LP
4
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
SUMMARY BUDGET FIGHTS CONTINUE
DONrsquoT COUNT ON REQUESTED INCREASE YET
Presidentrsquos fiscal 2016 budget would total
+$35 trillion in receipts
-$40 trillion in outlays
$474 billion deficit about 25 percent of GDP
Presidentrsquos fiscal 2016 budget would change tax code spending levels
raquo Discretionary spending would increase by a net of nearly $71 billion or 7 percent
more than spending caps in current law
bull Defense discretionary spending across all agencies would be boosted
by $38 billion
bull DOD spending would increase by about $35 billion boosting every major
category
Defense spending depends upon resolution of larger fiscal debate on taxes
spending deficit and debt
raquo Compromise will be needed on cuts to entitlement programs increases in
revenue or increases in the deficit
raquo Much of the debate will be between Republican ldquobudget hawksrdquo and
ldquodefense hawksrdquo
5
copy 2015 Bloomberg Finance LP
5
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
REQUEST SEEKS SPENDING CAP INCREASES OFFSET
BY CUTS TO MANDATORY PROGRAMS TAX INCREASES
Defense discretionary base budget
fiscal 2016 budget request
Nondefense discretionary base budget
fiscal 2016 request
Notes Excludes Overseas Contingency Operations (OCO) disaster relief wildfire suppression and program integrity funds all of which arenrsquot subject to budget caps
Because the Department of Homeland Security has not received full-year fiscal 2015 appropriations ldquoenactedrdquo figures reflect the fiscal 2015 request for DHS and enacted
levels for all other agencies
Source Office of Management and Budget
raquo The fiscal 2016 request would exceed the budget caps
bull $38 billion more for defense spending category
bull $33 billion more for nondefense spending category
raquo Last yearrsquos request sought extra money and a cap increase Congress rejected it
Current dollars in billions Current dollars in billions
Fiscal 2016 discretionary budget request will face challenges in Congress
$0
$100
$200
$300
$400
$500
$600
$700
2015 2016 2017 2018 2019 2020
Enacted Budgetrequest
Budget cap(current law)
$0
$100
$200
$300
$400
$500
$600
$700
2015 2016 2017 2018 2019 2020
Enacted Budgetrequest
Budget cap(current law)
6
copy 2015 Bloomberg Finance LP
6
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
IF FUNDED THE $534 BILLION FISCAL 2016 DOD BASE
REQUEST WOULD EXCEED ALL PAST APPROPRIATIONS
Notes The statutory cap applies to all defense activities across the government BGOV has computed the DOD share at 955 percent of the overall defense cap
Sources Historical data from Defense Comptroller DOD budget cap estimates are from Congressional Research Service and the Congressional Budget Office
raquo Defense Department base funding peaked in fiscal 2012 with $5304 billion in budget authority
raquo Despite continuing requirements the $51 billion Overseas Contingency Operations request is
Note NNSA ndash National Nuclear Security Administration
Source Office of Management and Budget
NNSA would seek 10 percent increase
raquo Increases of more than $650 million for Weapons
Activities to support the execution of the ldquo3+2rdquo
strategy which would consolidate the stockpile to
three ballistic missile warheads and two
air-delivered systems
raquo Increases investments to arrest the growth in
deferred maintenance across NNSArsquos facilities
raquo Increases investments in critical plutonium
capabilities
Defense nuclear nonproliferation efforts would be
funded at $19 billion
raquo Funding level looks like a large increase but in
reality it is only $75 million more than fiscal 2015
enacted levels after adjusting for budget structure
changes that movedcounterterrorism efforts out of
weapons activities
Atomic energy defense activities
Current dollars in billions by fiscal year
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
2015enacted
2016request
2017 2018 2019 2020
NNSA Environmental and other defense activities
13
copy 2015 Bloomberg Finance LP
13
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
FATE OF COMPENSATION COMMISSIONrsquoS RECOMMENDED
CHANGES IS UNCERTAIN
Source Military Compensation and Retirement Modernization Commission final report
raquo Military Compensation and Retirement Modernization Commission released
15 recommendations on Jan 29
raquo If implemented recommendations would reduce Department of Defense spending by
$318 billion during FYDP period (fiscal 2016 through fiscal 2020) with $48 billion saved
in FY 2016
raquo Two most significant proposed changes would eliminate Tricare and create blended retirement
plan with defined-benefit and defined-contribution components
raquo Recommendations face uncertain future in Congress and it is unclear whether any will be
addressed in fiscal 2016 authorization and appropriation process
bull Both House and Senate Armed Services committees have held hearings
raquo Current budget pressure may make adoption of some recommendations more likely than in the
past
Commission recommendations not built into fiscal 2016 budget request
14
copy 2015 Bloomberg Finance LP
14
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
WHATrsquoS NEXT IN THE FEDERAL BUDGET PROCESS
PRESIDENTrsquoS REQUEST First Monday in February by law
President submits budget request to Congress often late
includes funding requests for each department and agency
reorganization proposals and revenue proposals
CONGRESSIONAL HEARINGS Under way
Agency officials testify before authorizing and appropriating
committees to justify requests
BUDGET RESOLUTION April 15 by law
The House and Senate Budget committees are supposed to
produce budget resolutions called a ldquoblueprintrdquo that set
revenue and spending targets for legislation not always
completed (no penalty) and donrsquot have the force of law
APPROPRIATIONS BILLS May and beyond
Subcommittee members and staff draft spending bills which
are generally considered by the subcommittee then full
committee before going to the full chambers
FISCAL YEAR BEGINS Oct 1
Bills are supposed to be done If not a continuing resolution
is enacted to fund departments and agencies as House and
Senate try to reconcile bills If appropriations arenrsquot in place
therersquos a partial government shutdown
15
copy 2015 Bloomberg Finance LP
15
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
DEFENSE FUNDING REMAINS DEPENDENT ON
OUTCOME OF LARGER FISCAL BATTLE
Republicans control Congress for first time during Obama presidency
raquo Leaders have criticized the budget request
raquo Budget resolution will reflect their policies and agenda
raquo Still need Democratic support at least in Senate to pass bills
bull Reconciliation process could be used to advance proposals with simple majority
Debate about spending caps will have to be joined
raquo White House has proposed ways to pay for it
raquo Republicans may propose more for defense cuts to nondefense
raquo Consensus that further cap increases should be deficit-neutral will prompt offset fight
bull Entitlement cuts or revenue increases could pay for more defense but neither side
wants to budge on these issues
bull Nondefense discretionary spending approaching historic lows as percentage
of GDP ndash tough to find more savings here
Events to watch
raquo Debt limit comes back into effect March 16 action needed by late summerfall
raquo Defense appropriations and authorization hearings
Source Bloomberg Government Debt Ceiling Shutdown Deadlines Converge Setting Up Fall Fights Congressional Budget Office
16
copy 2015 Bloomberg Finance LP
16
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
WHATrsquoS NEXT FOR DEFENSE SPENDING FIGHT
No ldquoeasy outsrdquo for Congress
Note Milcon ndash Military Construction and Family Housing
Defense Department seeks increases to every component of every servicersquos
budget
raquo Increase in Milcon could be deliberately designed to increase pressure on
Congress
bull Could make Base Realignment and Closure (BRAC) more palatable
raquo Defense discretionary increases larger than domestic puts additional pressure
on Congress
Pentagon says that leaving current spending caps in place will require changes
in its strategy
Will Republicans recommend defense spending levels less than the presidentrsquos
request in their budget resolutions
17
copy 2015 Bloomberg Finance LP
17
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
VISIT BGOVCOM FOR MORE BUDGET COVERAGE
BGOV Fiscal 2016 Budget
Special Report page includes
raquo Presentations on proposed budget
changes at the largest agencies
raquo Easy-to-navigate links to budget
source documents
raquo Federal budget tables
(updated Feb 2)
raquo A crash course on the federal
budget process
raquo Content from Bloomberg News
Bloomberg Politics and
Bloomberg BNA
18
copy 2015 Bloomberg Finance LP
18
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
QampA Follow us on Twitter BGOV
19
copy 2015 Bloomberg Finance LP
19
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
ABOUT THE ANALYSTS
rlevinson5bloombergnet
+1 202 416 3380
levinsor
Robert Levinson is a Senior Defense Analyst with Bloomberg Government He is a
retired lieutenant colonel in the United States Air Force Prior to joining Bloomberg
Government Levinson worked for Booz Allen Hamilton as a strategic communications
consultant He has a bachelorrsquos degree from the US Air Force Academy and a
masterrsquos from the University of California San Diego He is also a graduate of
Harvardrsquos program for Senior Executives in National and International Security
Duncan Amos is a Quantitative Analyst with Bloomberg Government Previously he
was a quantitative research assistant at the RAND Corporation where he focused
on defense mobility finance and international development research He has a
masters degree in applied economics from Johns Hopkins University and
bachelors degrees in political science and economics from Duke University
damos2bloombergnet
+1 202 416 3401
duncan_amos
Cameron Leuthy is a senior budget analyst with Bloomberg Government He has
more than 20 years of experience in analyzing budgets and legislation at the Office of
Management and Budget the Department of Defense and at Booz Allen Hamilton
His expertise includes the federal budget and the nexus of national security policy
operational requirements and funding He has a bachelors degree from Western
Washington University and an MPA from the University of Washington
cleuthy2bloombergnet
+1 202 416 3662
CLeuthy
20
copy 2015 Bloomberg Finance LP
20
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
ABOUT BLOOMBERG GOVERNMENT
Bloomberg Government is the single most comprehensive web-based information
service for professionals who interact with or are impacted by the federal government
For more information visit wwwbgovcom or call +1-202-416-3450
Follow us on Twitter BGOV
DISCLAIMER
Copyright 2015 Bloomberg Finance LP
Not for redistribution except by an authorized BGOV user
and only as expressly permitted in the Bloomberg
Government terms of service All permitted uses shall cite
BGOV as a source
ON BGOVCOM
raquo BGOV Special Report FY 2016 Budget
raquo The Pentagonrsquos Fiscal 2016 Future Years
Defense Program Database
raquo Contracts Search
raquo Awards and Opportunities
raquo Contracts Intelligence Tool
RELATED ANALYSIS
raquo Will Obama Make the Budget Easier for
Congress
raquo BGOV Guide Crash Course on the Federal
Budget Process
raquo Conflict or Compromise in Obamarsquos FY 2016
Budget
raquo FY 2016 Budget Early Defense Winners
3
copy 2015 Bloomberg Finance LP
3
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
AGENDA
Overview of the fiscal 2016 request
A look at the $534 billion proposal for DOD programs including
raquo Funding categories
raquo Service breakout
raquo Major weapons systems
raquo Future Years Defense Program
Energy Department defense activities
Whatrsquos next in the process
QampA
4
copy 2015 Bloomberg Finance LP
4
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
SUMMARY BUDGET FIGHTS CONTINUE
DONrsquoT COUNT ON REQUESTED INCREASE YET
Presidentrsquos fiscal 2016 budget would total
+$35 trillion in receipts
-$40 trillion in outlays
$474 billion deficit about 25 percent of GDP
Presidentrsquos fiscal 2016 budget would change tax code spending levels
raquo Discretionary spending would increase by a net of nearly $71 billion or 7 percent
more than spending caps in current law
bull Defense discretionary spending across all agencies would be boosted
by $38 billion
bull DOD spending would increase by about $35 billion boosting every major
category
Defense spending depends upon resolution of larger fiscal debate on taxes
spending deficit and debt
raquo Compromise will be needed on cuts to entitlement programs increases in
revenue or increases in the deficit
raquo Much of the debate will be between Republican ldquobudget hawksrdquo and
ldquodefense hawksrdquo
5
copy 2015 Bloomberg Finance LP
5
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
REQUEST SEEKS SPENDING CAP INCREASES OFFSET
BY CUTS TO MANDATORY PROGRAMS TAX INCREASES
Defense discretionary base budget
fiscal 2016 budget request
Nondefense discretionary base budget
fiscal 2016 request
Notes Excludes Overseas Contingency Operations (OCO) disaster relief wildfire suppression and program integrity funds all of which arenrsquot subject to budget caps
Because the Department of Homeland Security has not received full-year fiscal 2015 appropriations ldquoenactedrdquo figures reflect the fiscal 2015 request for DHS and enacted
levels for all other agencies
Source Office of Management and Budget
raquo The fiscal 2016 request would exceed the budget caps
bull $38 billion more for defense spending category
bull $33 billion more for nondefense spending category
raquo Last yearrsquos request sought extra money and a cap increase Congress rejected it
Current dollars in billions Current dollars in billions
Fiscal 2016 discretionary budget request will face challenges in Congress
$0
$100
$200
$300
$400
$500
$600
$700
2015 2016 2017 2018 2019 2020
Enacted Budgetrequest
Budget cap(current law)
$0
$100
$200
$300
$400
$500
$600
$700
2015 2016 2017 2018 2019 2020
Enacted Budgetrequest
Budget cap(current law)
6
copy 2015 Bloomberg Finance LP
6
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
IF FUNDED THE $534 BILLION FISCAL 2016 DOD BASE
REQUEST WOULD EXCEED ALL PAST APPROPRIATIONS
Notes The statutory cap applies to all defense activities across the government BGOV has computed the DOD share at 955 percent of the overall defense cap
Sources Historical data from Defense Comptroller DOD budget cap estimates are from Congressional Research Service and the Congressional Budget Office
raquo Defense Department base funding peaked in fiscal 2012 with $5304 billion in budget authority
raquo Despite continuing requirements the $51 billion Overseas Contingency Operations request is
Note NNSA ndash National Nuclear Security Administration
Source Office of Management and Budget
NNSA would seek 10 percent increase
raquo Increases of more than $650 million for Weapons
Activities to support the execution of the ldquo3+2rdquo
strategy which would consolidate the stockpile to
three ballistic missile warheads and two
air-delivered systems
raquo Increases investments to arrest the growth in
deferred maintenance across NNSArsquos facilities
raquo Increases investments in critical plutonium
capabilities
Defense nuclear nonproliferation efforts would be
funded at $19 billion
raquo Funding level looks like a large increase but in
reality it is only $75 million more than fiscal 2015
enacted levels after adjusting for budget structure
changes that movedcounterterrorism efforts out of
weapons activities
Atomic energy defense activities
Current dollars in billions by fiscal year
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
2015enacted
2016request
2017 2018 2019 2020
NNSA Environmental and other defense activities
13
copy 2015 Bloomberg Finance LP
13
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
FATE OF COMPENSATION COMMISSIONrsquoS RECOMMENDED
CHANGES IS UNCERTAIN
Source Military Compensation and Retirement Modernization Commission final report
raquo Military Compensation and Retirement Modernization Commission released
15 recommendations on Jan 29
raquo If implemented recommendations would reduce Department of Defense spending by
$318 billion during FYDP period (fiscal 2016 through fiscal 2020) with $48 billion saved
in FY 2016
raquo Two most significant proposed changes would eliminate Tricare and create blended retirement
plan with defined-benefit and defined-contribution components
raquo Recommendations face uncertain future in Congress and it is unclear whether any will be
addressed in fiscal 2016 authorization and appropriation process
bull Both House and Senate Armed Services committees have held hearings
raquo Current budget pressure may make adoption of some recommendations more likely than in the
past
Commission recommendations not built into fiscal 2016 budget request
14
copy 2015 Bloomberg Finance LP
14
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
WHATrsquoS NEXT IN THE FEDERAL BUDGET PROCESS
PRESIDENTrsquoS REQUEST First Monday in February by law
President submits budget request to Congress often late
includes funding requests for each department and agency
reorganization proposals and revenue proposals
CONGRESSIONAL HEARINGS Under way
Agency officials testify before authorizing and appropriating
committees to justify requests
BUDGET RESOLUTION April 15 by law
The House and Senate Budget committees are supposed to
produce budget resolutions called a ldquoblueprintrdquo that set
revenue and spending targets for legislation not always
completed (no penalty) and donrsquot have the force of law
APPROPRIATIONS BILLS May and beyond
Subcommittee members and staff draft spending bills which
are generally considered by the subcommittee then full
committee before going to the full chambers
FISCAL YEAR BEGINS Oct 1
Bills are supposed to be done If not a continuing resolution
is enacted to fund departments and agencies as House and
Senate try to reconcile bills If appropriations arenrsquot in place
therersquos a partial government shutdown
15
copy 2015 Bloomberg Finance LP
15
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
DEFENSE FUNDING REMAINS DEPENDENT ON
OUTCOME OF LARGER FISCAL BATTLE
Republicans control Congress for first time during Obama presidency
raquo Leaders have criticized the budget request
raquo Budget resolution will reflect their policies and agenda
raquo Still need Democratic support at least in Senate to pass bills
bull Reconciliation process could be used to advance proposals with simple majority
Debate about spending caps will have to be joined
raquo White House has proposed ways to pay for it
raquo Republicans may propose more for defense cuts to nondefense
raquo Consensus that further cap increases should be deficit-neutral will prompt offset fight
bull Entitlement cuts or revenue increases could pay for more defense but neither side
wants to budge on these issues
bull Nondefense discretionary spending approaching historic lows as percentage
of GDP ndash tough to find more savings here
Events to watch
raquo Debt limit comes back into effect March 16 action needed by late summerfall
raquo Defense appropriations and authorization hearings
Source Bloomberg Government Debt Ceiling Shutdown Deadlines Converge Setting Up Fall Fights Congressional Budget Office
16
copy 2015 Bloomberg Finance LP
16
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
WHATrsquoS NEXT FOR DEFENSE SPENDING FIGHT
No ldquoeasy outsrdquo for Congress
Note Milcon ndash Military Construction and Family Housing
Defense Department seeks increases to every component of every servicersquos
budget
raquo Increase in Milcon could be deliberately designed to increase pressure on
Congress
bull Could make Base Realignment and Closure (BRAC) more palatable
raquo Defense discretionary increases larger than domestic puts additional pressure
on Congress
Pentagon says that leaving current spending caps in place will require changes
in its strategy
Will Republicans recommend defense spending levels less than the presidentrsquos
request in their budget resolutions
17
copy 2015 Bloomberg Finance LP
17
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
VISIT BGOVCOM FOR MORE BUDGET COVERAGE
BGOV Fiscal 2016 Budget
Special Report page includes
raquo Presentations on proposed budget
changes at the largest agencies
raquo Easy-to-navigate links to budget
source documents
raquo Federal budget tables
(updated Feb 2)
raquo A crash course on the federal
budget process
raquo Content from Bloomberg News
Bloomberg Politics and
Bloomberg BNA
18
copy 2015 Bloomberg Finance LP
18
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
QampA Follow us on Twitter BGOV
19
copy 2015 Bloomberg Finance LP
19
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
ABOUT THE ANALYSTS
rlevinson5bloombergnet
+1 202 416 3380
levinsor
Robert Levinson is a Senior Defense Analyst with Bloomberg Government He is a
retired lieutenant colonel in the United States Air Force Prior to joining Bloomberg
Government Levinson worked for Booz Allen Hamilton as a strategic communications
consultant He has a bachelorrsquos degree from the US Air Force Academy and a
masterrsquos from the University of California San Diego He is also a graduate of
Harvardrsquos program for Senior Executives in National and International Security
Duncan Amos is a Quantitative Analyst with Bloomberg Government Previously he
was a quantitative research assistant at the RAND Corporation where he focused
on defense mobility finance and international development research He has a
masters degree in applied economics from Johns Hopkins University and
bachelors degrees in political science and economics from Duke University
damos2bloombergnet
+1 202 416 3401
duncan_amos
Cameron Leuthy is a senior budget analyst with Bloomberg Government He has
more than 20 years of experience in analyzing budgets and legislation at the Office of
Management and Budget the Department of Defense and at Booz Allen Hamilton
His expertise includes the federal budget and the nexus of national security policy
operational requirements and funding He has a bachelors degree from Western
Washington University and an MPA from the University of Washington
cleuthy2bloombergnet
+1 202 416 3662
CLeuthy
20
copy 2015 Bloomberg Finance LP
20
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
ABOUT BLOOMBERG GOVERNMENT
Bloomberg Government is the single most comprehensive web-based information
service for professionals who interact with or are impacted by the federal government
For more information visit wwwbgovcom or call +1-202-416-3450
Follow us on Twitter BGOV
DISCLAIMER
Copyright 2015 Bloomberg Finance LP
Not for redistribution except by an authorized BGOV user
and only as expressly permitted in the Bloomberg
Government terms of service All permitted uses shall cite
BGOV as a source
ON BGOVCOM
raquo BGOV Special Report FY 2016 Budget
raquo The Pentagonrsquos Fiscal 2016 Future Years
Defense Program Database
raquo Contracts Search
raquo Awards and Opportunities
raquo Contracts Intelligence Tool
RELATED ANALYSIS
raquo Will Obama Make the Budget Easier for
Congress
raquo BGOV Guide Crash Course on the Federal
Budget Process
raquo Conflict or Compromise in Obamarsquos FY 2016
Budget
raquo FY 2016 Budget Early Defense Winners
4
copy 2015 Bloomberg Finance LP
4
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
SUMMARY BUDGET FIGHTS CONTINUE
DONrsquoT COUNT ON REQUESTED INCREASE YET
Presidentrsquos fiscal 2016 budget would total
+$35 trillion in receipts
-$40 trillion in outlays
$474 billion deficit about 25 percent of GDP
Presidentrsquos fiscal 2016 budget would change tax code spending levels
raquo Discretionary spending would increase by a net of nearly $71 billion or 7 percent
more than spending caps in current law
bull Defense discretionary spending across all agencies would be boosted
by $38 billion
bull DOD spending would increase by about $35 billion boosting every major
category
Defense spending depends upon resolution of larger fiscal debate on taxes
spending deficit and debt
raquo Compromise will be needed on cuts to entitlement programs increases in
revenue or increases in the deficit
raquo Much of the debate will be between Republican ldquobudget hawksrdquo and
ldquodefense hawksrdquo
5
copy 2015 Bloomberg Finance LP
5
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
REQUEST SEEKS SPENDING CAP INCREASES OFFSET
BY CUTS TO MANDATORY PROGRAMS TAX INCREASES
Defense discretionary base budget
fiscal 2016 budget request
Nondefense discretionary base budget
fiscal 2016 request
Notes Excludes Overseas Contingency Operations (OCO) disaster relief wildfire suppression and program integrity funds all of which arenrsquot subject to budget caps
Because the Department of Homeland Security has not received full-year fiscal 2015 appropriations ldquoenactedrdquo figures reflect the fiscal 2015 request for DHS and enacted
levels for all other agencies
Source Office of Management and Budget
raquo The fiscal 2016 request would exceed the budget caps
bull $38 billion more for defense spending category
bull $33 billion more for nondefense spending category
raquo Last yearrsquos request sought extra money and a cap increase Congress rejected it
Current dollars in billions Current dollars in billions
Fiscal 2016 discretionary budget request will face challenges in Congress
$0
$100
$200
$300
$400
$500
$600
$700
2015 2016 2017 2018 2019 2020
Enacted Budgetrequest
Budget cap(current law)
$0
$100
$200
$300
$400
$500
$600
$700
2015 2016 2017 2018 2019 2020
Enacted Budgetrequest
Budget cap(current law)
6
copy 2015 Bloomberg Finance LP
6
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
IF FUNDED THE $534 BILLION FISCAL 2016 DOD BASE
REQUEST WOULD EXCEED ALL PAST APPROPRIATIONS
Notes The statutory cap applies to all defense activities across the government BGOV has computed the DOD share at 955 percent of the overall defense cap
Sources Historical data from Defense Comptroller DOD budget cap estimates are from Congressional Research Service and the Congressional Budget Office
raquo Defense Department base funding peaked in fiscal 2012 with $5304 billion in budget authority
raquo Despite continuing requirements the $51 billion Overseas Contingency Operations request is
Note NNSA ndash National Nuclear Security Administration
Source Office of Management and Budget
NNSA would seek 10 percent increase
raquo Increases of more than $650 million for Weapons
Activities to support the execution of the ldquo3+2rdquo
strategy which would consolidate the stockpile to
three ballistic missile warheads and two
air-delivered systems
raquo Increases investments to arrest the growth in
deferred maintenance across NNSArsquos facilities
raquo Increases investments in critical plutonium
capabilities
Defense nuclear nonproliferation efforts would be
funded at $19 billion
raquo Funding level looks like a large increase but in
reality it is only $75 million more than fiscal 2015
enacted levels after adjusting for budget structure
changes that movedcounterterrorism efforts out of
weapons activities
Atomic energy defense activities
Current dollars in billions by fiscal year
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
2015enacted
2016request
2017 2018 2019 2020
NNSA Environmental and other defense activities
13
copy 2015 Bloomberg Finance LP
13
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
FATE OF COMPENSATION COMMISSIONrsquoS RECOMMENDED
CHANGES IS UNCERTAIN
Source Military Compensation and Retirement Modernization Commission final report
raquo Military Compensation and Retirement Modernization Commission released
15 recommendations on Jan 29
raquo If implemented recommendations would reduce Department of Defense spending by
$318 billion during FYDP period (fiscal 2016 through fiscal 2020) with $48 billion saved
in FY 2016
raquo Two most significant proposed changes would eliminate Tricare and create blended retirement
plan with defined-benefit and defined-contribution components
raquo Recommendations face uncertain future in Congress and it is unclear whether any will be
addressed in fiscal 2016 authorization and appropriation process
bull Both House and Senate Armed Services committees have held hearings
raquo Current budget pressure may make adoption of some recommendations more likely than in the
past
Commission recommendations not built into fiscal 2016 budget request
14
copy 2015 Bloomberg Finance LP
14
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
WHATrsquoS NEXT IN THE FEDERAL BUDGET PROCESS
PRESIDENTrsquoS REQUEST First Monday in February by law
President submits budget request to Congress often late
includes funding requests for each department and agency
reorganization proposals and revenue proposals
CONGRESSIONAL HEARINGS Under way
Agency officials testify before authorizing and appropriating
committees to justify requests
BUDGET RESOLUTION April 15 by law
The House and Senate Budget committees are supposed to
produce budget resolutions called a ldquoblueprintrdquo that set
revenue and spending targets for legislation not always
completed (no penalty) and donrsquot have the force of law
APPROPRIATIONS BILLS May and beyond
Subcommittee members and staff draft spending bills which
are generally considered by the subcommittee then full
committee before going to the full chambers
FISCAL YEAR BEGINS Oct 1
Bills are supposed to be done If not a continuing resolution
is enacted to fund departments and agencies as House and
Senate try to reconcile bills If appropriations arenrsquot in place
therersquos a partial government shutdown
15
copy 2015 Bloomberg Finance LP
15
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
DEFENSE FUNDING REMAINS DEPENDENT ON
OUTCOME OF LARGER FISCAL BATTLE
Republicans control Congress for first time during Obama presidency
raquo Leaders have criticized the budget request
raquo Budget resolution will reflect their policies and agenda
raquo Still need Democratic support at least in Senate to pass bills
bull Reconciliation process could be used to advance proposals with simple majority
Debate about spending caps will have to be joined
raquo White House has proposed ways to pay for it
raquo Republicans may propose more for defense cuts to nondefense
raquo Consensus that further cap increases should be deficit-neutral will prompt offset fight
bull Entitlement cuts or revenue increases could pay for more defense but neither side
wants to budge on these issues
bull Nondefense discretionary spending approaching historic lows as percentage
of GDP ndash tough to find more savings here
Events to watch
raquo Debt limit comes back into effect March 16 action needed by late summerfall
raquo Defense appropriations and authorization hearings
Source Bloomberg Government Debt Ceiling Shutdown Deadlines Converge Setting Up Fall Fights Congressional Budget Office
16
copy 2015 Bloomberg Finance LP
16
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
WHATrsquoS NEXT FOR DEFENSE SPENDING FIGHT
No ldquoeasy outsrdquo for Congress
Note Milcon ndash Military Construction and Family Housing
Defense Department seeks increases to every component of every servicersquos
budget
raquo Increase in Milcon could be deliberately designed to increase pressure on
Congress
bull Could make Base Realignment and Closure (BRAC) more palatable
raquo Defense discretionary increases larger than domestic puts additional pressure
on Congress
Pentagon says that leaving current spending caps in place will require changes
in its strategy
Will Republicans recommend defense spending levels less than the presidentrsquos
request in their budget resolutions
17
copy 2015 Bloomberg Finance LP
17
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
VISIT BGOVCOM FOR MORE BUDGET COVERAGE
BGOV Fiscal 2016 Budget
Special Report page includes
raquo Presentations on proposed budget
changes at the largest agencies
raquo Easy-to-navigate links to budget
source documents
raquo Federal budget tables
(updated Feb 2)
raquo A crash course on the federal
budget process
raquo Content from Bloomberg News
Bloomberg Politics and
Bloomberg BNA
18
copy 2015 Bloomberg Finance LP
18
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
QampA Follow us on Twitter BGOV
19
copy 2015 Bloomberg Finance LP
19
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
ABOUT THE ANALYSTS
rlevinson5bloombergnet
+1 202 416 3380
levinsor
Robert Levinson is a Senior Defense Analyst with Bloomberg Government He is a
retired lieutenant colonel in the United States Air Force Prior to joining Bloomberg
Government Levinson worked for Booz Allen Hamilton as a strategic communications
consultant He has a bachelorrsquos degree from the US Air Force Academy and a
masterrsquos from the University of California San Diego He is also a graduate of
Harvardrsquos program for Senior Executives in National and International Security
Duncan Amos is a Quantitative Analyst with Bloomberg Government Previously he
was a quantitative research assistant at the RAND Corporation where he focused
on defense mobility finance and international development research He has a
masters degree in applied economics from Johns Hopkins University and
bachelors degrees in political science and economics from Duke University
damos2bloombergnet
+1 202 416 3401
duncan_amos
Cameron Leuthy is a senior budget analyst with Bloomberg Government He has
more than 20 years of experience in analyzing budgets and legislation at the Office of
Management and Budget the Department of Defense and at Booz Allen Hamilton
His expertise includes the federal budget and the nexus of national security policy
operational requirements and funding He has a bachelors degree from Western
Washington University and an MPA from the University of Washington
cleuthy2bloombergnet
+1 202 416 3662
CLeuthy
20
copy 2015 Bloomberg Finance LP
20
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
ABOUT BLOOMBERG GOVERNMENT
Bloomberg Government is the single most comprehensive web-based information
service for professionals who interact with or are impacted by the federal government
For more information visit wwwbgovcom or call +1-202-416-3450
Follow us on Twitter BGOV
DISCLAIMER
Copyright 2015 Bloomberg Finance LP
Not for redistribution except by an authorized BGOV user
and only as expressly permitted in the Bloomberg
Government terms of service All permitted uses shall cite
BGOV as a source
ON BGOVCOM
raquo BGOV Special Report FY 2016 Budget
raquo The Pentagonrsquos Fiscal 2016 Future Years
Defense Program Database
raquo Contracts Search
raquo Awards and Opportunities
raquo Contracts Intelligence Tool
RELATED ANALYSIS
raquo Will Obama Make the Budget Easier for
Congress
raquo BGOV Guide Crash Course on the Federal
Budget Process
raquo Conflict or Compromise in Obamarsquos FY 2016
Budget
raquo FY 2016 Budget Early Defense Winners
5
copy 2015 Bloomberg Finance LP
5
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
REQUEST SEEKS SPENDING CAP INCREASES OFFSET
BY CUTS TO MANDATORY PROGRAMS TAX INCREASES
Defense discretionary base budget
fiscal 2016 budget request
Nondefense discretionary base budget
fiscal 2016 request
Notes Excludes Overseas Contingency Operations (OCO) disaster relief wildfire suppression and program integrity funds all of which arenrsquot subject to budget caps
Because the Department of Homeland Security has not received full-year fiscal 2015 appropriations ldquoenactedrdquo figures reflect the fiscal 2015 request for DHS and enacted
levels for all other agencies
Source Office of Management and Budget
raquo The fiscal 2016 request would exceed the budget caps
bull $38 billion more for defense spending category
bull $33 billion more for nondefense spending category
raquo Last yearrsquos request sought extra money and a cap increase Congress rejected it
Current dollars in billions Current dollars in billions
Fiscal 2016 discretionary budget request will face challenges in Congress
$0
$100
$200
$300
$400
$500
$600
$700
2015 2016 2017 2018 2019 2020
Enacted Budgetrequest
Budget cap(current law)
$0
$100
$200
$300
$400
$500
$600
$700
2015 2016 2017 2018 2019 2020
Enacted Budgetrequest
Budget cap(current law)
6
copy 2015 Bloomberg Finance LP
6
DE
FE
NS
E D
EP
AR
TM
EN
T 2
01
6 B
UD
GE
T mdash
AR
E H
AP
PY
DA
YS
HE
RE
AG
AIN
IF FUNDED THE $534 BILLION FISCAL 2016 DOD BASE
REQUEST WOULD EXCEED ALL PAST APPROPRIATIONS
Notes The statutory cap applies to all defense activities across the government BGOV has computed the DOD share at 955 percent of the overall defense cap
Sources Historical data from Defense Comptroller DOD budget cap estimates are from Congressional Research Service and the Congressional Budget Office
raquo Defense Department base funding peaked in fiscal 2012 with $5304 billion in budget authority
raquo Despite continuing requirements the $51 billion Overseas Contingency Operations request is
Note NNSA ndash National Nuclear Security Administration
Source Office of Management and Budget
NNSA would seek 10 percent increase
raquo Increases of more than $650 million for Weapons
Activities to support the execution of the ldquo3+2rdquo
strategy which would consolidate the stockpile to
three ballistic missile warheads and two
air-delivered systems
raquo Increases investments to arrest the growth in
deferred maintenance across NNSArsquos facilities
raquo Increases investments in critical plutonium
capabilities
Defense nuclear nonproliferation efforts would be
funded at $19 billion
raquo Funding level looks like a large increase but in
reality it is only $75 million more than fiscal 2015
enacted levels after adjusting for budget structure
changes that movedcounterterrorism efforts out of
weapons activities
Atomic energy defense activities
Current dollars in billions by fiscal year
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
2015enacted
2016request
2017 2018 2019 2020
NNSA Environmental and other defense activities
13
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FATE OF COMPENSATION COMMISSIONrsquoS RECOMMENDED
CHANGES IS UNCERTAIN
Source Military Compensation and Retirement Modernization Commission final report
raquo Military Compensation and Retirement Modernization Commission released
15 recommendations on Jan 29
raquo If implemented recommendations would reduce Department of Defense spending by
$318 billion during FYDP period (fiscal 2016 through fiscal 2020) with $48 billion saved
in FY 2016
raquo Two most significant proposed changes would eliminate Tricare and create blended retirement
plan with defined-benefit and defined-contribution components
raquo Recommendations face uncertain future in Congress and it is unclear whether any will be
addressed in fiscal 2016 authorization and appropriation process
bull Both House and Senate Armed Services committees have held hearings
raquo Current budget pressure may make adoption of some recommendations more likely than in the
past
Commission recommendations not built into fiscal 2016 budget request
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14
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WHATrsquoS NEXT IN THE FEDERAL BUDGET PROCESS
PRESIDENTrsquoS REQUEST First Monday in February by law
President submits budget request to Congress often late
includes funding requests for each department and agency
reorganization proposals and revenue proposals
CONGRESSIONAL HEARINGS Under way
Agency officials testify before authorizing and appropriating
committees to justify requests
BUDGET RESOLUTION April 15 by law
The House and Senate Budget committees are supposed to
produce budget resolutions called a ldquoblueprintrdquo that set
revenue and spending targets for legislation not always
completed (no penalty) and donrsquot have the force of law
APPROPRIATIONS BILLS May and beyond
Subcommittee members and staff draft spending bills which
are generally considered by the subcommittee then full
committee before going to the full chambers
FISCAL YEAR BEGINS Oct 1
Bills are supposed to be done If not a continuing resolution
is enacted to fund departments and agencies as House and
Senate try to reconcile bills If appropriations arenrsquot in place
therersquos a partial government shutdown
15
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DEFENSE FUNDING REMAINS DEPENDENT ON
OUTCOME OF LARGER FISCAL BATTLE
Republicans control Congress for first time during Obama presidency
raquo Leaders have criticized the budget request
raquo Budget resolution will reflect their policies and agenda
raquo Still need Democratic support at least in Senate to pass bills
bull Reconciliation process could be used to advance proposals with simple majority
Debate about spending caps will have to be joined
raquo White House has proposed ways to pay for it
raquo Republicans may propose more for defense cuts to nondefense
raquo Consensus that further cap increases should be deficit-neutral will prompt offset fight
bull Entitlement cuts or revenue increases could pay for more defense but neither side
wants to budge on these issues
bull Nondefense discretionary spending approaching historic lows as percentage
of GDP ndash tough to find more savings here
Events to watch
raquo Debt limit comes back into effect March 16 action needed by late summerfall
raquo Defense appropriations and authorization hearings
Source Bloomberg Government Debt Ceiling Shutdown Deadlines Converge Setting Up Fall Fights Congressional Budget Office
16
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WHATrsquoS NEXT FOR DEFENSE SPENDING FIGHT
No ldquoeasy outsrdquo for Congress
Note Milcon ndash Military Construction and Family Housing
Defense Department seeks increases to every component of every servicersquos
budget
raquo Increase in Milcon could be deliberately designed to increase pressure on
Congress
bull Could make Base Realignment and Closure (BRAC) more palatable
raquo Defense discretionary increases larger than domestic puts additional pressure
on Congress
Pentagon says that leaving current spending caps in place will require changes
in its strategy
Will Republicans recommend defense spending levels less than the presidentrsquos
request in their budget resolutions
17
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DE
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HE
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VISIT BGOVCOM FOR MORE BUDGET COVERAGE
BGOV Fiscal 2016 Budget
Special Report page includes
raquo Presentations on proposed budget
changes at the largest agencies
raquo Easy-to-navigate links to budget
source documents
raquo Federal budget tables
(updated Feb 2)
raquo A crash course on the federal
budget process
raquo Content from Bloomberg News
Bloomberg Politics and
Bloomberg BNA
18
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QampA Follow us on Twitter BGOV
19
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ABOUT THE ANALYSTS
rlevinson5bloombergnet
+1 202 416 3380
levinsor
Robert Levinson is a Senior Defense Analyst with Bloomberg Government He is a
retired lieutenant colonel in the United States Air Force Prior to joining Bloomberg
Government Levinson worked for Booz Allen Hamilton as a strategic communications
consultant He has a bachelorrsquos degree from the US Air Force Academy and a
masterrsquos from the University of California San Diego He is also a graduate of
Harvardrsquos program for Senior Executives in National and International Security
Duncan Amos is a Quantitative Analyst with Bloomberg Government Previously he
was a quantitative research assistant at the RAND Corporation where he focused
on defense mobility finance and international development research He has a
masters degree in applied economics from Johns Hopkins University and
bachelors degrees in political science and economics from Duke University
damos2bloombergnet
+1 202 416 3401
duncan_amos
Cameron Leuthy is a senior budget analyst with Bloomberg Government He has
more than 20 years of experience in analyzing budgets and legislation at the Office of
Management and Budget the Department of Defense and at Booz Allen Hamilton
His expertise includes the federal budget and the nexus of national security policy
operational requirements and funding He has a bachelors degree from Western
Washington University and an MPA from the University of Washington
cleuthy2bloombergnet
+1 202 416 3662
CLeuthy
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ABOUT BLOOMBERG GOVERNMENT
Bloomberg Government is the single most comprehensive web-based information
service for professionals who interact with or are impacted by the federal government
For more information visit wwwbgovcom or call +1-202-416-3450
Follow us on Twitter BGOV
DISCLAIMER
Copyright 2015 Bloomberg Finance LP
Not for redistribution except by an authorized BGOV user
and only as expressly permitted in the Bloomberg
Government terms of service All permitted uses shall cite
BGOV as a source
ON BGOVCOM
raquo BGOV Special Report FY 2016 Budget
raquo The Pentagonrsquos Fiscal 2016 Future Years
Defense Program Database
raquo Contracts Search
raquo Awards and Opportunities
raquo Contracts Intelligence Tool
RELATED ANALYSIS
raquo Will Obama Make the Budget Easier for
Congress
raquo BGOV Guide Crash Course on the Federal
Budget Process
raquo Conflict or Compromise in Obamarsquos FY 2016
Budget
raquo FY 2016 Budget Early Defense Winners
6
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IF FUNDED THE $534 BILLION FISCAL 2016 DOD BASE
REQUEST WOULD EXCEED ALL PAST APPROPRIATIONS
Notes The statutory cap applies to all defense activities across the government BGOV has computed the DOD share at 955 percent of the overall defense cap
Sources Historical data from Defense Comptroller DOD budget cap estimates are from Congressional Research Service and the Congressional Budget Office
raquo Defense Department base funding peaked in fiscal 2012 with $5304 billion in budget authority
raquo Despite continuing requirements the $51 billion Overseas Contingency Operations request is