The increased danger of military threats from China and Russia is driving bipartisan support for a surge in Pentagon spending, which should set up another boom for weapons makers.
Congress has been on time in the last hour to provide the military funds for this month’s budget for the upcoming fiscal year. The initial funding was $858 billion, which is expected to reach $45 billion above what President Obama requested.
If the Pentagon budget grows at 4.3 percent per year over the last two years, it will increase in real dollars by more than three times as much between 2015 and 2021 as it did since 1985 after inflation, according to a recent report by Bloomberg Government.
This year, funding for procurement has increased almost across the board. For example, spending is projected to jump from $82 billion in 2017 to $119 billion next year, with a 55 percent bump going to the Army for missiles and a 47 percent increase for the Navy for weapons.
The war in Ukraine has exposed the weaknesses of our nation’s defense industrial base, and it has to be addressed to ensure we’re ready to support Ukraine and deal with contingencies globally.
The U.S. has given contracts to military contractors and weapons companies to help ensure that enough weapons are available in the event of a wider conflict with Russia.
The nation’s munitions industry posted gross profits of $1.7 billion in 3Q, according to the Federal Business Research Service. That figure is expected to rise as defense budgets soar next year.
But now, military spending is the leading edge of what’s shaping up to be a big defense buildup.
Military spending next year is on the path to reaching its highest level in inflation-adjusted terms since the peaks in prices of weapons during the Iraq and Afghanistan wars between 2008 and 2011, and also the second highest in inflation-adjusted terms since World War II.
So far, military spending has cost more than 10 cabinet agencies combined!
U.S. military contractors are fully accepting potential new orders for weapons and technology from U.S. allies in Europe and Asia as they’ve determined that global threats require more defense, too.
Japan has just announced a massive plan to double defense spending over the next five years, essentially moving away from the pacifist stance it’s followed since 1945.
The Ukraine war and the increasing consensus about the new era of superpower confrontation are prompting efforts to ensure that our military-industrial base can respond quickly to surges in demand.
This issue has become urgent in some cases as the U.S. and its NATO allies seek to keep weapons flowing without being concerned about their own levels.
The Senate just passed the annual military authorization bill, which includes billions of dollars in extra money for Navy shipbuilding, but prohibits the Air Force or Navy from retiring certain weapons systems.