Building Defense Budgets: The Role of the White House Office of Management and Budget

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• Building Defense Budgets The Role of the White
  House Office of Management and Budget

Eric Hansen National Security Division, OMB
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Agenda

• About OMB Who We Are, What We Do
• Economic and Budget Context
• Challenges and Trends in National Security
• QA

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(No Transcript)
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OMB Who We Are and What We Do

• Small agency with just under 500 People
• Culture is non-partisan neutral competence
• Serves as institutional memory for the Executive
  Office of the President
• Budget, legislative, management, and regulatory
  roles
• Central coordinator in conflict resolution and
  policy development

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OMBs Role in Management

• Develop, implement, and track Presidents
  management priorities.
• Recent History
• Presidents Management Agenda
• Program Assessment Rating Tool
• A Solid Baseline for Going Forward . . .
• The Future
• Under Development, but will likely include
• More intense focus on a smaller set of priority
  issues.

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OMBs Role in the Budget

• Created in 1921 to provide coherent, coordinated
  Budget request.
• Develop guidance, develop numbers, coordinate
  legislation, integrate into single budget
  document.
• Inform budget decisions with management and
  policy information.
• Work with Agencies to Track and Facilitate Budget
  Execution.

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OMBs Role in Coordination and Policy Development

• Central Coordinator for Administration Message.
• Integrate Budget Information with Policy Guidance
  from Policy Councils.
• Facilitate Interagency Discussion and Dispute
  Resolution.
• Quality Control.

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Economic and Budget Context

• Long-term Trends
• Spending vs. Revenues
• National Debt
• Outlay Trends Entitlement Reform
• Foreign Holdings of U.S. Securities

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Current value of total unfunded liabilities
56.4 Trillion
Source The Peterson Foundation based on OMB,
CBO, and GAO
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Source The Peterson Foundation based on
Treasury Department, BEA, OMB, CBO, and GAO
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Outlay Trends
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Major Holdings of US Securities
Foreign Holdings of U.S. debt 1990 19 2009 49
Total Debt held by the Public - 6.6 Trillion
Source February, 2009 Treasury data
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Challenges and Trends in National Security

• Paying for National Security
• Reorienting Defense Priorities
• Rising Costs of Healthcare / Personnel
• Transparency in War Funding

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As a Percent of GDP, Defense Spending is Below
Average
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In Constant Dollars, Defense Spending is Higher
than WWII
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Sources Population - UN Population Database,
2005 data, http//esa.un.org/unpp/index.asp
Military Expenditures - GlobalSecurity.org FY
2004 / FY 2005, http//www.globalsecurity.org/mili
tary/world/spending.htm
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Reorienting Defense Priorities FY 2010 Budget

• Secretary Gates Need to balance between wars
  we are in today while hedging against other risks
• Cuts to F-22, FCS, missile defense, aircraft
  carriers, Presidential helicopter
• Increases ISR, end-strength, family support,
  JSF, LCS, helicopters, airlift, building
  partnership capacity, theater missile defense
• 50 conventional war, 10 irregular war, 40
  dual-purpose

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Military Pay and Benefits
2007
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2008 Will Likely be the High-Water Mark for
Overseas Contingency Operations
Requests Enacted in 2001-2009 796.0 billion
Pending Requests in 2009 and 2010 209.2 billion

• New Requests the President has announced
  additional 2009 and 2010 requests
• 2009 Supplemental Request of 75.5 billion for
  Defense and 3.7 billion for State, which would
  bring the total 2009 costs of the wars to 146.8
  billion.
• 2010 Request in the Presidents budget for 130
  billion for Defense (State costs have been folded
  into the base budget).
• If these requests were enacted, the total
  appropriated for the war through the end of 2010
  would be 1 Trillion.

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Summary

• OMB integrates policy, management and budget
  information in the context of long- and
  short-term constraints.
• Makes recommendations based on a variety of
  criteria.
• Economic and budget constraints will force
  difficult prioritization.
• Entitlement spending trends will mean that
  discretionary spending will need to shrink.
• As the largest piece of the pie, Defense spending
  could be heavily impacted.
• Long-term national security trends and
  constraints should be integrated into annual
  budgeting process.
• Need to plan for current and future conflicts
  with finite resources.
• Increasing personnel cots will constrain
  resources in other areas, such as procurement.