November 17, 2022

Precision and Posture: Defense Spending Trends and the FY23 Budget Request

By Stacie Pettyjohn and Hannah Dennis

Executive Summary

This report examines the fiscal year (FY) 2023 defense budget request and assesses whether it sufficiently resources what was known of the Biden administration’s national defense strategy when the budget was released. Because of the delay of the full, unclassified version of the strategy, the analysis focuses on two factors—high-end munitions stockpiles and overseas posture—that past studies have indicated are critical for strengthening deterrence against China and Russia in the near term. This report concludes that while the FY23 request makes some strides on both issues, more must be done today to improve the United States’ chances of deterring and, if necessary, defeating the adversary tomorrow.

The ongoing war in Ukraine has elevated the issue of munitions stockpiles to front-page news as both Ukrainian and Russian forces continue to consume high volumes of key weapons. We examine the sufficiency of existing critical conventional munitions stockpiles and the future procurement plans to meet the threats posed by China and Russia. We find that while the services have shifted to investing in longer-range weapons, they are still underinvesting in the specific capabilities, in particular anti-ship and area-effects weapons, that would be needed to counter China in a variety of scenarios. Moreover, the Department of Defense (DoD) is not buying enough of these weapons to blunt and defeat an initial invasion, and it certainly is not stockpiling enough precision-guided munitions (PGMs) for a protracted war.

While the services have shifted to investing in longer-range weapons, they are still underinvesting in the specific capabilities that would be needed to counter China in a variety of scenarios.

Through an assessment of munitions procurement over the past 15 years, comparing buys year over year and planned vs. actual buys, we conclude that munitions procurement is volatile and that projections vary widely in their reliability. Thus, the DoD’s procurement practices have contributed to the weakness of the PGM industrial base. Stabilizing U.S. and allied and partner nation demand and increasing predictability by improving consistency and follow-through will support a healthier industrial base. Viewing munitions as “bill payers” or as lesser priorities that can be cut from the budget when funds are tight runs in the face of these objectives. Employing multiyear munitions buys and improving pathways for co-production and co-development with allies and partners are two additional potential stabilizing solutions being discussed. Each potential co-development or co-production opportunity needs to be examined for its risks and merits individually, but in general this seems like a promising way to strengthen the PGM defense industrial base, shore up supply chains, and potentially create shared stockpiles of critical PGMs in priority theaters. We also recommend that the DoD examine the viability of multiyear procurement contracts and alternatives to traditional full funding to determine whether deviations from default funding and contracting practices could strengthen the munitions and missiles industrial base and meet the combined U.S. and allied military demand.

Investing in a distributed and resilient posture will be another critical piece in in this puzzle. To deter China, U.S. forces in the Indo-Pacific must be able to effectively project power while under attack. In assessing investments in posture in the Indo-Pacific region since the 2011 pivot to Asia, we find again that the services have not been doing enough. While U.S. military construction in the Pacific does exceed that in Europe in the FY23 request, the portion of that spending going toward improving the survivability of U.S. forces is insufficient.

In the event of a war with China, deep stockpiles of the right munitions and a distributed and resilient posture will be necessary to deny a quick victory and to then sustain combat operations should the war become protracted. On both accounts, the Department of Defense has urgent work to do.

Introduction

The Department of Defense (DoD) submitted its fiscal year (FY) 2023 budget request to Congress in March 2022, asking for $773 billion. Although this is President Joe Biden’s second defense budget, it is the first budget this administration built that includes the Future Years Defense Program (FYDP), which projects spending for the next five years (through FY27).

Most of the debate about the DoD’s FY23 budget request has revolved around whether the top line is sufficient to support the defense strategy, given inflation and the war in Ukraine. Additionally, the delay of the full, unclassified version of the 2022 National Defense Strategy (NDS) made the task of evaluating the budget’s alignment with the DoD’s concept of “integrated deterrence” even more difficult. The NDS released in October 2022 presents China as the “most comprehensive and serious challenge to U.S. national security,” while Russia remains an “acute threat.” According to Deputy Secretary of Defense Kathleen Hicks, “the cornerstone of integrated deterrence” and the key to achieving these goals is “combat credibility” or the ability of “the U.S. military to fight and win.”

Our analysis of the FY23 budget request focuses on two factors—high-end munitions stockpiles and overseas posture—that past studies have indicated are critical for strengthening deterrence against China and Russia in the near term. The war in Ukraine has highlighted how quickly key munitions can be consumed, outstripping existing stockpiles and the ability of the defense industrial base to meet surges in demand. To supply Ukrainian forces, the American military has depleted its own weapons caches, leading House authorizers to insert a provision in their version of the National Defense Authorization Act (NDAA) obliging the Pentagon to establish a critical munitions reserve. Meanwhile, long-running calls to bolster the resilience of American military posture in the Indo-Pacific region remain unanswered. Some have decried the amount of American funding used to reinforce the U.S. military’s posture in Europe through the European Reassurance and then Deterrence initiatives while the Pacific Deterrence Initiative (PDI), only established in 2020, still lacks dedicated appropriations.

If the goal is to create a combat credible posture to defeat great-power aggression (that is, deterrence by denial), American forces need a distributed and hardened network of bases to support operations in a highly contested environment.

Our analysis develops tailored metrics to supplement those the DoD uses to paint a fuller picture of high-end munitions procurement and overseas posture in the two priority regions. The DoD’s “missiles and munitions” reporting category consists of all weapons, ranging from individual bullets fired by handguns to nuclear-armed intercontinental ballistic missiles. To better assess whether the Pentagon is buying enough of the right types of conventional weapons that it would need to defeat China and Russia in a war, we created the metric key conventional precision-guided munitions (PGMs) and further differentiated these PGMs by their range. We also developed two metrics—consistency and follow-through—to assess whether the DoD has been buying a stable and predictable number of PGMs over time.

Similarly, under the rubric of the European Deterrence Initiative (EDI) and the PDI, the Pentagon reports funding for a wide range of activities, including security cooperation, presence, exercises, new capabilities, and infrastructure improvements. Although all of these can contribute to posture, which is defined as forces, footprint, and agreements, to enable comparison, we collapse the existing categories into either funding for forces or funding for facilities. Because the PDI was created in 2020, the data are quite limited and likely exclude infrastructural investments that could have been made since then-President Barack Obama announced that the United States was pivoting or rebalancing toward the Pacific in the fall of 2011. To supplement the PDI and EDI data, we compiled spending on military construction for infrastructure to support military operations in Europe and the Pacific from FY12–FY23. We focused on military construction in part due to practicality and in part due to its importance. Practically, military construction funds are one of the few items in the defense budget differentiated by region, making them amenable to regionally focused comparisons. But we also focused on military construction because it is the part of the posture that requires the longest lead times and that critics have argued has been the most neglected. Temporarily rotating forces overseas for exercises, for security cooperation activities, or on a presence mission can be changed annually as a part of the Pentagon’s global force management process and thus can be relatively quickly adapted. But if the goal is to create a combat credible posture to defeat great-power aggression (that is, deterrence by denial), American forces need a distributed and hardened network of bases to support operations in a highly contested environment.

The remainder of this report is divided into four sections. The first section provides an overview of the defense budget top line and how those resources are allocated across the major accounts. The second section focuses on historical and projected trends in precision-guided weapons investment. The third section examines posture investments in the two major theaters—the Indo-Pacific and Europe—since the pivot to the Pacific. The final section offers conclusions.

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  2. Valerie Insinna, “House authorizers pass $839B defense budget, adding money for ships, aircraft, Ukraine,” Breaking Defense, June 23, 2022, https://www.breakingdefense.com/2022/06/house-authorizers-pass-839b-defense-budget-adding-money-for-ships-aircraft-ukraine/; Bryant Harris and Leo Shane III, “Senators back $45 billion boost in defense spending for FY23,” Military Times, June 16, 2022, https://www.militarytimes.com/news/pentagon-congress/2022/06/16/senators-back-45-billion-boost-in-defense-spending-for-fy23/; Connor O’Brien, “The push to supersize Pentagon spending ratchets up,” Politico, June 4, 2022, https://www.politico.com/news/2022/06/04/push-to-supersize-pentagon-budget-ratchets-up-00036987; and Breaking Defense Staff, “Senate appropriators seek $850 billion for defense, largest total of 4 key committees,” Breaking Defense, July 28, 2022, https://www.breakingdefense.com/2022/07/senate-appropriators-seek-850-billion-for-defense-largest-total-of-4-key-committees.
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  6. DOD News, “Within FY23 Budget Request, Three Approaches Help DOD Meet Defense Strategy.”
  7. Stacie Pettyjohn, Becca Wasser, and Jennie Matuschak, “Risky Business: Future Strategy and Force Options for the Defense Department” (Center for a New American Security, July 2021), https://www.cnas.org/publications/reports/risky-business-future-strategy-and-force-options-for-the-defense-department; and David Ochmanek et al., “U.S. Military Capabilities and Forces for a Dangerous World: Rethinking the U.S. Approach to Force Planning,” RR-1782-1-RC (RAND Corporation, 2017), 96–97, https://www.rand.org/pubs/research_reports/RR1782-1.html.
  8. Alex Vershinin, “The Return of Industrial Warfare,” RUSI, June 17, 2022, https://www.rusi.org/explore-our-research/publications/commentary/return-industrial-warfare.
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  10. Dustin Walker, “Show Me the Money: Boost the Pacific Deterrence Initiative,” War on the Rocks, June 29, 2022, https://www.warontherocks.com/2022/06/show-me-the-money-boost-the-pacific-deterrence-initiative/; and Randy Schriver and Eric Sayers, “The Case for a Pacific Deterrence Initiative,” War on the Rocks, March 10, 2020, https://www.warontherocks.com/2020/03/the-case-for-a-pacific-deterrence-initiative.
  11. Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer, Program Acquisition Cost By Weapon System, ix, https://comptroller.defense.gov/Portals/45/Documents/defbudget/FY2023/FY2023_Weapons.pdf.
  12. U.S. Department of Defense, Management of U.S. Global Defense Posture (GDP), DoD Instruction 3000.12 (May 8, 2017), 6, https://www.esd.whs.mil/Portals/54/Documents/DD/issuances/dodi/300012p.pdf
  13. President Barack Obama, “Remarks by President Obama to the Australian Parliament,” November 17, 2011, Parliament House, Canberra, Australia, https://obamawhitehouse.archives.gov/the-press-office/2011/11/17/remarks-president-obama-australian-parliament; and Mark E. Manyin et al., “Pivot to the Pacific? The Obama Administration’s Rebalancing’ Toward Asia,” R42448 (Congressional Research Service, March 28, 2012), https://sgp.fas.org/crs/natsec/R42448.pdf.
  14. Our data was focused on new infrastructure to enable operations. We excluded family housing and construction that was not needed directly for operations.
  15. Stacie Pettyjohn, “Spiking the Problem: Developing a Resilient Posture in the Indo-Pacific with Passive Defenses,” War on the Rocks, January 10, 2022, https://www.warontherocks.com/2022/01/spiking-the-problem-developing-a-resilient-posture-in-the-indo-pacific-with-passive-defenses.

Authors

  • Stacie Pettyjohn

    Senior Fellow and Director, Defense Program

    Stacie Pettyjohn is a Senior Fellow and Director of the Defense Program at CNAS. Her areas of expertise include defense strategy, posture, force planning, the defense budget, ...

  • Hannah Dennis

    Research Assistant, Defense Program

    Hannah Dennis is a Research Assistant for the Defense Program at CNAS where she also supports the CNAS Gaming Lab. Her research focuses on the future of warfare, defense acqui...

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