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The events of Sept. 11 could potentially have a profound effect on U.S. military spending. In assessing this impact, it is useful to look at the defense budget in three phases: immediate, near-term, and long-term.
Immediate Impact: The Emergency Supplemental Spending Package
In the immediate aftermath of the bombings, the White House sent to Congress a $20 billion emergency funding request for fiscal year 2001 (FY 01). Viewed widely by both administration officials and congressional leaders as merely a down payment, the amount of the supplemental was quickly doubled. Both the House and Senate approved the package unanimously on Sept. 14.
The $40 billion is broken down as follows:
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$10 billion is immediately available to the president for costs associated with a military response to the terrorist attacks, intelligence, transportation, security improvements and defense.
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$10 billion is to be used at the president's discretion, subject to his submission to Congress and its approval of an official request. Congress would have 15 days to respond to the request.
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The remaining $20 billion will be spent through the normal budgetary process as part of the FY 02 budget requests. It remains to be seen how much of this will go to defense or other federal disaster assistance programs.
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The supplemental legislation specifies that no less than $20 billion of the total will go to disaster assistance in New York and Washington, as well as in Pennsylvania. To see the actual language of the supplemental spending package, click here.
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Here's How it's being spentDefense Department: $2.548 billion
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$1.772 billion for increased readiness and improved intelligence and security.
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$776 million for responding to the Sept. 11 attack and repair of the Pentagon.
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Federal Emergency Management Agency (FEMA):$2 billion
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Emergency assistance in New York and other regions including search and rescue, emergency protective measures, family assistance and debris removal.
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Transportation Department: $141 million
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Improved airport security including air marshals, New York harbor patrols, and call-up of Coast Guard reservists.
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Department of Health and Human Services: $126.2 million
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Assistance to health care providers in effected communities, security improvements at federal facilities with stocks of pathogenic agents and toxins.
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State Department: $48.9 million
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Rewards for information concerning terrorists, improved emergency communications and evacuation of U.S. and overseas facilities.
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Treasury Department: $48.4 million
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Assisting Treasury Department employees in or near the World Trade Center; creation of a Foreign Terrorist Assets Tracking Center.
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Justice Department: $40.8 million
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FBI investigations and increased airport and courthouse security by the U.S. Marshals Service.
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Energy Department: $5 million
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Improved security at national laboratories.
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In addition to these specific items, Pentagon funds from the supplemental will be used to fund the buildup of U.S. military forces in Central and South Asia, and any combat operations. Funds will be expended from the Defense Department's Operations and Maintenance (O&M) accounts, as well as for spare parts and replacement of any ordinance - particularly "smart" bombs and cruise missiles. [Note: for comparison, see CDI's fact sheet on the costs of "Operation Desert Fox," the four-day air war conducted against Iraq in December 1998, at: http://www.cdi.org/issues/iraq/costs_Dec1998.html]
In a Sept. 24 speech, DoD Comptroller Dov Zakheim outlined the Pentagon's other intentions for its share of the remaining supplemental funds, and listed some of the specific weapons programs that will receive more money. These include the RC-135 "Rivet Joint" electronic surveillance aircraft, the EP-3E "Orion" signals intelligence aircraft, and the "Global Hawk" Unmanned Aerial Vehicle (UAV). According to Mr. Zakheim, the supplemental would also fully fund the conversion of two "Ohio" class ballistic missile submarines (SSBNs) currently equipped to deliver nuclear weapons to conventional munitions boat (SSGN), which could be capable of carrying up to 154 "Tomahawk" cruise missiles. Other specific programs mentioned included a number of precision munitions, both "smart" bombs — the Joint Standoff Weapon (JSOW) and the Joint Direct Attack Munition (JDAM) — and "Tomahawks."
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Near-term: FY 02 and FY 03
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In February 2001, as part of its proposed FY 02 budget, the Bush administration requested $324.8 billion for the Defense Department (including $14.3 billion for the defense functions of the Department of Energy). At that time the administration made clear that this was a "placeholder" figure, and that further funds would be requested later in the year, pending the outcome of a number of strategic reviews underway at the Pentagon. The FY 02 budget resolution, which sets overall spending caps used by Congress to determine the budgets for each federal department, included the $324.8 billion figure in setting defense funding levels.
In June, the Pentagon issued an amended budget request that included a further $18.4 billion in new defense spending. It was widely assumed that although this amount was in excess of the budget resolution, continued economic growth would provide sufficient surpluses to fund the new increases without dipping into the Social Security trust fund. Then, in late August, the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO), in their revised budget estimates, projected an "on-budget" (excluding excess Social Security revenues) of $2 billion or less, far below the levels needed to fully fund the Pentagon's request.
Congress returned from the August recess confronted with the problem of how to pay for the $18 billion in unbudgeted Pentagon spending. A brewing political dual pitted pro-defense politicians against fiscal conservatives and supporters of federal domestic programs. Options on the table included reducing the size of the Pentagon increase, dipping in to the Social Security and Medicare trust funds, or making across-the board cuts in other federal programs.
That debate ended on Sept. 11. In a spirit of unity absent from Capitol Hill in recent years, members of Congress agreed that the military would get whatever it needed to respond to the threat of terrorism, even if it meant going back on earlier pledges by both Democrats and Republicans not to tap the Social Security trust fund. Expressing the views of many members of Congress, Rep. Norm Dicks (D-Wash.) said the new security environment "makes the Social Security lockbox seem trivial."
It is unclear how much additional Pentagon funding the administration will seek this year and next, but it is likely to be a significant amount. When asked if the Defense Department would fund new anti-terrorism initiatives by shifting funds from current priorities, Deputy Defense Secretary Paul Wolfowitz said no. "I anticipate, and the indications from the Congress are that my anticipation is well founded, that we will have new additional resources to cover not only the damage that has been inflicted, but to start to begin to build the military capability we need for other options."
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