FY25 Defense Budget Analysis
A deeper dive into the defense budget.
The President released the FY25 defense budget request a few weeks ago. We provided you a quick summary and headline charts the next morning. This is a deeper analysis of the budget request.
Strategic Perspective
Budget numbers rounded to billions for simplicity.
The $849.8B request is less than a 1% increase over DoD’s FY24 request. The additional funds went to O&M and MILPERS, while RDT&E and Procurement accounts were cut.
The defense budget the last two years increased by 4.1% while inflation over the last two years was 9.7%. If the defense budget was tied to match inflation the last two years, it would be $870B. The shortfall is a $20B loss of buying power for the DoD.
Service Rivalries: Our beloved Air Force benefited the most with an additional $3.4B over the FY24 request, while the other Services received less of an increase. Historically the three Services had roughly equal shares of the pie, yet the Air Force and Navy have a considerably larger slice than the Army of late.
Production Woes: At a time when the DoD needs to produce at scale and accelerate deliveries of critical weapon systems to INDOPACOM and other CCMDs, it’s deeply saddening to see a $3.3B cut to Procurement funds. A $5.7B increase would have simply kept pace with inflation which was 3.4% last year. This is a $9B or 5.3% net loss in buying power. Add in the costs and risks of endless CRs and fragile global supply chains and the situation worsens.
Operations and Maintenance commands 40% of the DoD budget, double those for people or procurement. Even without active U.S. conflicts, the DoD still maintains a high ops tempo globally. Maintaining the 20th century weapon systems for 30+ years is increasingly costly.
MILPERS continues to increase with a 4.5% pay raise for military service members. While the following doesn’t include the total cost of military personnel, it is interesting to see the MILPERS totals compared to number of Service members.
Army has a MILPERS budget of $71B for 943,100 Soldiers @ $75K/Soldier.
Navy has $62B for 594,800 Sailors and Marines @ $104K/Sailor/Marine
Air Force has $49B for 504,500 Airman and Guardians @ $98K/Airman/Guardian
The rest of our detailed analysis is reserved for paid subscribers. It includes:
Investments by capability area and five year trends.
RDT&E budget activities by Services.
Budget breakouts by critical technology areas (e.g., AI, autonomy, cyber).
Budget breakouts by capability areas (e.g., aircraft, ships, munitions, C-UAS).
Budget breakouts within the Services.
Unfunded priorities.
…and much more!