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US Senate agrees to two-year budget deal, raising defence funding to USD700 billion

07 February 2018

US Senators have reached a two-year budget deal that would raise national defence discretionary funding to USD700 billion in fiscal year 2018 (FY 2018) and to USD716 billion in FY 2019, according to lawmakers.The Pentagon hopes added funding can add to training events and some significant procurement plans, such as a total modernisation of the nuclear force and building a 355-ship navy. (Republic of Korea Navy)The Pentagon hopes added funding can add to training events and some significant procurement plans, such as a total modernisation of the nuclear force and building a 355-ship navy. (Republic of Korea Navy)

Under the 2011 Budget Control Act, the national defence budget discretionary level is capped at USD549 billion in FY 2018 and USD562 billion in FY 2019. As of this writing, it was unclear how much of the increase would be in the base budget and how much would be in the uncapped overseas contingency operations (OCO) account.

Regardless, the deal marks a potentially significant breakthrough for the US Congress, which has struggled to manage budgets within the mandated caps and has long sought a bipartisan agreement for obviating those caps. In this case, as expected, the legislative change included adding both defence and non-defence funding.

The agreement does not appear to offset these increases with any cuts elsewhere and is highly unlikely to offset them with new revenues (such as taxes). It is expected to add hundreds of billions of dollars to the public debt, and therefore may run afoul of fiscal hawks in the House, where the agreement must also pass. Speaker of the House Paul Ryan appeared confident it would.

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