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Department of Defense Budget Update to the Virginia Ship Repair Association. RDML (ret) Joe Carnevale Senior Defense Advisor 20 September 2011. DoD Budget Update. Budget Control Act of 2011 The Peace Dividend Fiscal Year 2012 Budget. Budget Control Act of 2011 What Does It Do?.

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Department of DefenseBudget Update to theVirginia Ship Repair Association

RDML (ret) Joe Carnevale

Senior Defense Advisor

20 September 2011


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DoD Budget Update

  • Budget Control Act of 2011

  • The Peace Dividend

  • Fiscal Year 2012 Budget


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Budget Control Act of 2011What Does It Do?

Increases the debt limit by $400B immediately.

Cuts $917B over 10 years with $21B in FY12.

President can request additional increase of $500B this year.

Congress may disapprove.

President may veto Congressional disapproval.

Congress may override veto with two-thirds majority.

President may request an additional $1.2-1.5T next year.

If matched by budget cuts generated by the “super committee” and enacted by Congress,

Or a Balanced Budget Amendment is passed by Congress and sent to the states.

Subject to the disapproval/veto/override provisions above.

Cuts generated by the Joint Select Committee on Deficit Reduction.

Goal of $1.5T over 10 years.

Propose by 23 Nov 11 and enact by 23 Dec 11.

Up or down vote, no amendments, no filibuster.

Balanced Budget Amendment

Congress must vote on it before 31 Dec 11.

Not required to pass to support debt limit increase.

Sequestration if cuts are less the $1.2T

Equal, across the board cuts to Security and Non-Security programs to get to $1.2T.

Cuts apply to Medicare but not Social Security.


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Budget Control Act of 2011

  • Security includes: DoD, DHS, VA, National Nuclear Security Administration, and Budget Function 150 International Affairs

  • Security Spending Caps

    • FY12 $684B

    • FY13 $686B

  • FY12 equals FY11 - $5B or a 0.7% cut from FY11 levels.

  • DoD budget for FY12 would be $525B if proportional cut.

  • President’s Budget (PB) has DoD = $553B vs that $525B

  • President’s Budget (PB) has DoD = $539B without MILCON

    Status: Proposed vs PB vs $525B Cap

  • HASC $539B $0B +$28B

  • SASC $533B -$6B +$22B

  • HAC $530B -$9B +$19B

  • SAC $513B -$26B +$0B

    Note: Give or take a billion or two.



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The Peace Dividend

Occurred in the early 90’s.

Last major cut in Defense spending.

Result of the collapse of the Soviet Union.

What was cut?

What can we learn from it?


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The Peace DividendDoD Budget Authority 1980-2010(Billions of Dollars)

1989:

Soviet troops withdraw from Afghanistan,

Poland & Hungary become independent,

Berlin Wall falls,

Governments fall in Czechoslovakia, Bulgaria, and Rumania;

Soviet empire ends

1991:

Warsaw Pact ends,

The Soviet Union dissolves,

The Cold War Ends

1990: Germany reunited




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Total Federal Budget Authority and Receipts 1980-2010 1980-2010 Bush Tax Cuts

Jobs and Growth Tax Relief Reconciliation Act of 2003

Economic Growth and Tax Relief Reconciliation Act of 2001


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DoD Budget Authority 1988-1996 1980-2010

DoD cut by $42B


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Military Personnel 1988-1996 1980-2010 (in thousands)

458,000 people leave the service from 1990 to 1994


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Navy Active Ship 1988-1996 1980-2010

166 fewer ships

in the Navy

from 1990 to 1994


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O&MN and SCN 1988-1996 1980-2010

O&MN cut by $4.0B

SCN cut by $7.4B







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FY 2012 Ship Procurement 1980-2010 (Continued)



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Conclusions 1980-2010

  • Significant actions taken in the early 90s to cut budgets can’t be repeated.

  • The dramatic increase in Defense Budget over a decade was not proportionate.

  • A proportionate allocation of future cuts will be disastrous to the Navy and the Nation.


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