1. Trends and Uncertainty in the Defense Budget Todd Harrison

2. Delays in Defense Appropriations Bills 2 Average Delay FY77-FY13: 43 days Average Delay FY10-FY13: 134 days

3. Budgetary Uncertainty 3

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7. DoD Budget Cycles 7

8. Trends in Modernization Accounts 8 Timing of procurement cycles follow overall budget. Past two cycles returned to a floor of ~$62B in FY14 dollars. RDT&E budget has already fallen as much as in prior drawdowns

9. Trends in O&S Accounts 9 Cost per person has grown faster during previous drawdowns. Excluding OCO, O&M per person has grown steadily at 2.8% annually.

10. Trends by Service 10 Base + OCO Base Only Air Force’s average budget share from FY55-FY67 was 42%. Navy averaged 33% of the budget from FY72-FY03. Defense-wide accounts have grown even during downturns.

11. FY13 Sequester 11 % Cut from FY13 Sequester by TitleUse of Prior Year Unobligated Funds for Cuts Exempted Various Exceptions Meant Percentages Were Not Uniform Disproportionately Cut Unobligated Funds from Procurement and RDT&E

12. FY13 Reprogramming 12 Proposed Reprogramming by TitleProposed Reprogramming by Service Except for the Navy, Services Generally Rebalanced Internally Net Flow of Funds from Procurement and RDT&E to O&M Majority of MILPERS Cuts Due to Faster Than Expected Army End Strength Reductions

13. Think Tank Strategic Choices Exercise In May CSBA held a joint think tank strategic choices exercise Teams used CSBA-developed rebalancing tool – Database includes more than 650 pre-costed budget options – Options are organized by major capability areas instead of Service Intent was to look across major capability portfolios (air, sea, land, missile defense, strategic deterrence, etc.) instead of Service stovepipes

14. Comparison of Think Tank and SCMR Results Army Active End Strength412K417K420K327K380K420K USMC Active End Strength135K155K177K182K150K170K Carriers889789 LHA/LHDs9111111811 TACAIR Legacy-630-170-300-240?? Next-Gen+60-300-380-20 No Change Cancel JSF Bombers Legacy Retire all B-1s and some B-52s No Change Retire all B-1s Next-GenAccelerateAccelerateAccelerateCancel No Change Cancel LRS-B Readiness -$32B-$62B-$132B-$36B Fully Funded DoD Civilians-10%-33%-27%-19%?? SCMR: Preserve Capability SCMR: Preserve Capacity Note: Where specific force levels were not provided in Sec. Hagel’s speech, the figures used for the two SCMR options are inferred based on additional commentary and CSBA analysis.