A Closer Look at Defense Spending Increase

A publication called the Stock Strategist Industry Reports took a closer look at President Trump's 10% defense spending increase in an email article of March 3, 2017. The administration's initial statement coupled with the budget and political environment confirm the stock strategist's forecast of around $650 billion in defense spending for FY 2018, of which $625 billion will go to the Department of Defense.

Confusion has set in about the actual increase the trump administration is looking for and what it means for the industry. There have been reports of a $54 billion increase; Sen John McCain complaining about only getting a 3% increase; and others reports mentioning a 10% increase.

Here is how the Stock Strategist Industry Reports article dissects the situation: "The Obama administration requested $552.8 billion in defense spending for fiscal 2017 and planned $586.2 billion for fiscal 2018. Comparing that plan for fiscal 2018 with $603 billion yields a 2.9% increase, hence McCain's complaint. The $54 billion figure compares the $603 billion figure with the Budget Control Act of 2011, which caps defense at $549 billion for fiscal 2018. The 10% increase --assuming some rounding -- may be referring to either the Trump administration's defense budget increase versus the fiscal 2017 request of the Budget Control Act caps for fiscal 2018, or both."

There is a budgetary category called Overseas Contingency Operations (OCO), which was requested at $58.8 billion for FY 2017, and the article finds it highly likely will add about $30 billion to this amount in a defense supplemental spending bill. Thus the article forecasts a FY 2018 total defense budget request of well over $650 billion.

Although determining a measuring point for the proposed defense spending increase causes confusion, what is known about specific increases, such as an increase of 90,000 to 100,000 military personnel, an augmented Marine Corps, increased warships and war planes, the $54 billion figure is the best available estimate.

The National Priorities Project, which does a pie chart of each FY budget, concluded that the Pentagon would consume a 54% chunk of the FY 2017 budgetary pie. The Trump defense spending proposal would likely mean that the Pentagon share of the pie would increase to over 60% of the total congressional discretionary budget in future fiscal years. For comparison, the National Institutes of Health budget, which funds biomedical research on all the diseases that afflict tens of millions of Americans, is about $33 billion, less that 3% of the congressional budget. By FY 2022, defense appropriations could reach $800 billion.

In addition to increasing the national debt, further bloating of the Pentagon will require cutting every sector of the civilian side of the budget -- housing, transportation, environmental protection, biomedical research, education and health care. For many years, caps on these programs have continued to weaken them.The current proposal will essentially bankrupt the federal contribution to the civilian side of the economy.

President Trump has bought into the further modernization of the nuclear weapons triad. Great damage can be done with conventional weapons to people and their communities. But the increased investment in nuclear weapons increases the chances of inadvertent or intentional nuclear war.

Rutgers climate scientist Alan Robock and his colleagues have shown that even a limited exchange -- for example, between India and Pakistan -- would generate firestorms throwing enough soot and particles into the upper atmosphere to generate a nuclear winter, lowering the Earth's temperature and creating worldwide famine for decades following.