On March 28 the Department of Defense released the Fiscal Year 2023 Defense Budget. The request was for $773 billion. That included $56.5 billion for air power platforms and systems, more than $40.8 billion for sea power, and nearly $12.6 billion to modernize the Army and Marine Corps fighting vehicles. There was also a 4.6% pay raise for both the military and civilian personnel. The increases may seem like a good thing, but there is one thing rising faster than DoD budgets, and that’s inflation. The FY23 budget request is only a 4% increase over the FY22 enacted amount, and defense firms are worried the pay raise is not enough and are urging Congress to increase the budget.
The Aerospace Industries Association, a trade group for defense firms, sent a letter to leaders of the appropriations and armed services committees. In it, AIA president and CEO Eric Fanning argued a “three to five percent growth above the inflation rate is the level of investment required to support America’s global force, maintain our competitive edge over adversaries, and catch up technologically in areas where we are falling behind.” He also cited the 2018 National Defense Strategy, stating that with the current budget the military will be unable to meet its end goal of staying ahead of Russia and China.
But budget proposals are just that – proposals. Chairman of the Joint Chiefs of Staff Gen. Mark Milley, Defense Secretary Lloyd Austin, and Pentagon comptroller Mike McCord all acknowledged the budget does not adequately reflect the current inflation rate.
But House Armed Services Committee Chairman Adam Smith, D-Wash. said he supports the Biden administration’s top-line FY23 budget as it currently stands stating, “I am 100 percent confident that we can do an outstanding job of meeting our national security needs for $813 billion.”
According to Kathleen Hicks, Deputy Secretary of Defense, “We’re already in conversations around equitable adjustments. We have not seen a huge influx of those. We have to be both looking out [to ensure] we have a good contract base that wants to work with us, but also, again, looking out for taxpayers so that we’re not locking in rates, for example, that don’t make sense for long-term contracts.”
But Republicans and some centrist Democrats disagree. They are joining AIA in calling for a 5% increase to the DoD budget. Rep. Mike Rodgers, R-Ala., and Sen. James Inhofe, R-Okla., the ranking members of the Armed Services Committees in both chambers have stated, “Overall, we are concerned that the Department [of Defense] is not taking a proactive stance to mitigate the harmful effects of inflation. It doesn’t seem the Department has a good grasp on how inflation is hurting our service members and their families – and how this is, in turn, impacting recruiting and retention.”
These effects within the service also have a ripple effect in supporting the industrial base workforce. The AIA letter says, “Without these men and women and the critical skills they possess, our ability to deliver for our customers and America’s competitive edge will dull quickly. To foster those skills and continue attracting the best and brightest to the country’s defense, we must first address inflation and the outsized impact on our ability to attract and retain employees for important positions, including welders, pipefitters, machinists, and other skilled trades.”