02 March 2022
Analysis: Russian invasion of Ukraine to impact Pentagon budget
by Hamilton Cook
Janes GPS expects, at the time of writing, that there will be minimal-to-moderate impact on the US Department of Defense's (DoD) upcoming fiscal year (FY) 2023 budget request and the omnibus FY 2022 appropriations, but there will likely be additional supplemental appropriations alongside, or in combination, with it.
This is likely to begin during the approval of the FY 2022 omnibus appropriations bill, which is on track for passage in early March. Before Russia's invasion of Ukraine, the Democratic Appropriations Committee chairs and Republican Senate Appropriations ranking member Richard Shelby had agreed to a general ‘framework' for discussions on the omnibus, which would have seen approximate parity in increases for the defence and non-defence budgets.
However, the White House has already requested an additional USD6.4 billion, including USD3.5 billion for the DoD to fund the deployment of additional forces to Germany, that Democratic lawmakers hope to include in the omnibus bill.
From there, several potential avenues for increases may emerge. The first of these decisions will be driven by Shelby and Senate Minority Leader Mitch McConnell, who may press defence increases above parity to ensure sufficient Senate Republican votes to override a potential filibuster. While this would be fuelled by domestic political stances, it should also be noted that many states represented by Republicans in the Senate have disproportionally stronger ties to the US Army and its industrial base.
However, regardless of general agreement between the two parties, an attempted filibuster at some point during the approval process can be expected (likely from Republican Senator Rand Paul who has historically objected to what he views as excessive government spending).
Meanwhile, during the final rounds of Senate voting, Senators are also likely to offer a series of more targeted amendments. While many of these would focus on non-defence issues or be dead-on-arrival signalling votes to their respective political bases, some Senators are likely to focus on granting increases to local industry or military facilities.
These increases could range from the Arizona delegations seeking to further support Javelin missile provisions to Ukraine and other allies; support for US Army vehicle programmes in Pennsylvania, Ohio, and Michigan; or administrative amendments by Senators whose states (Texas, Kansas, Georgia, and Colorado) contain army bases housing armoured brigade combat teams likely to now see more deployments to Europe, which could notably affect the local economy and politics.
Similar dynamics are in play for the forthcoming FY 2023 budget request, but over a longer timeframe.
It is unlikely that much or any of the proposed DoD budget request will be updated by the time it is released because of delays already incurred from the recalculations necessary from outsized inflation. However, events in Ukraine are expected to result in a tightening of language in the US National Security Strategy and budget request around US presence in Europe, particularly for the US Army, and to see significant growth in the unfunded requirements lists released by the services and the combatant commands.
As committee hearings on the requests begin, it is likely significant chunks of these larger requests will be taken up, as both political parties look to boost local industry and score points in an election year.
There is also likely to be significant a impact to the five-year planning process (known as the Program Objective Memorandum: POM) and long-term planning strategy, particularly around the expected release of the army's force redesign, but also significant congressional inquiry into the permanent basing of additional US armoured forces in Europe.
The timeline for passage of the FY23 budget remains uncertain. The expiration of the Budget Control Act and no binding two-year agreement could lead to significant political manoeuvring that could result in the budget passed ahead of schedule – but more likely significantly delayed into calendar year 2023. This is likely to be dictated by senior Republican leaders and strategists who, like most opposition parties in a first term presidency's midterms, are expected to receive a windfall of congressional seats. This could lead Republican leaders to pass the budget earlier in order to release their own members for campaigning or seek to delay the budget (and the Biden administration's spending priorities) until it could be taken up under a likely Republican-led Congress.
As a result, it is expected that the US government will once again begin the fiscal year under a continuing resolution.
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Janes GPS expects, at the time of writing, that there will be minimal-to-moderate impact on the US D...
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