The Cost of Trump's Defense Plan

This week Donald Trump released his defense policy plan that includes proposals to increase the size of the active-duty force of the Armed Services and to expand the naval fleet and size of the Air Force. His proposals would increase spending by at least $16 billion per year. However there is uncertainty regarding elements of his plan that could drive up the ultimate price tag. For example, Trump called for a total of 36 Marine Corps infantry battalions, currently the Corps has 24 active and eight reserve battalions. Adding four active battalions could cost up to $10 billion over the next five years. The total cost would be significantly higher if Trump intends to establish 36 active Battalions. In additional, there insufficient information to determine the cost of his plan to “build a state of the art missile defense system.”

In a related speech, Trump said he will “ask Congress to fully offset the costs of increased military spending.” He outlined six proposals to offset the cost of the defense build-up, but the savings that could be quantified would only cover a portion of the increases. On an annual basis, reducing the size of the federal workforce through attrition would cut spending by $3.7 billion and opening additional public lands to energy leasing would boost offsetting receipts by $170 million. Trump’s proposals to reduce improper payments and recover unpaid taxes could generate additional savings and tax receipts over the long-term, but would require additional spending in the short-term.

A detailed line-by-line analysis of each his proposals is listed below.

 

Defense Proposals:

Air Force – Aircraft: “Mr. Trump will build an Air Force of at least 1,200 fighter aircraft ... .” (source)

Cost per Year: Indeterminate

Notes: According to the Military Times, the Air Force’s 2016 fighter/attack inventory includes 1,971 aircraft. Of these, 1,141 are available for missions and the remaining are for training, research and development, and backup. The cost of adding 59 fighters would depend on the scheduled roll out of aircraft under current contracts, whether additional aircraft are procured, or the disposition of aircraft currently scheduled to be retired are restored. The Air Force spent $15.8 billion for aircraft procurement in 2016 and requested $13.9 billion for FY 2017.

Army – End Strength: “Mr. Trump will build an active Army of around 540,000 … .” (source)

Cost per Year: $6.389 billion ($38.333 billion over six years)

Notes: NTUF estimates that Trump would increase the Army’s end strength by 65,000 soldiers, and assumes it would be increased over a period of six years. This past March, the Army Times reported that the Army’s active duty force was comprised of around 479,000 soldiers and is budgeted to be drawn down to 475,000 by the end of Fiscal Year 2016 in September. The Department of Defense projects that the average cost per active-duty service member will increase by $1,500 per year, from $162,000 in 2016 to $168,000 in 2020.

 

Defense Sequester Repeal: “Mr. Trump will ask Congress to fully eliminate the defense sequester and will submit a new budget to rebuild our military as soon as he assumes office.” (source)

Cost per Year: $13.489 billion* ($53.955 billion over four years*)

Notes: Before Trump released a specific defense plan on September 7, NTUF had assumed that Trump would support repealing the sequester cuts. According to the Congressional Budget Office’s Final Sequestration Report for Fiscal Year 2016, the sequester for Fiscal Years 2018 through 2021 are scheduled to reduce defense spending by $53.955 billion.

* Because the annualized costs of Trump’s specific defense-related proposals exceed the annualized cost of repealing the defense sequester, this will not be counted as additional spending.

Marine Infantry Battalions: “Mr. Trump will build a Marine Corps based on 36 battalions … .” (source)

Cost per Year: $2.072 billion ($10.065 billion over five years)

Notes: The Marine Corps intends to field 24 active duty and eight reserve battalions through the next five years. The Congressional Budget Office reports that in FY 2016, the cost per battalion is $740 million. NTUF assumes that Trump would add four active battalions over the next five years. If Trump intends to increase the number of active battalions to from 24 to 36, the total cost would be significantly higher.

Missile Defense: “Mr. Trump will seek to develop a state of the art missile defense system.” (source)

Cost per Year: Indeterminate

Notes: The Missile Defense Agency was appropriated $8.3 billion in FY 2016 and the President’s FY 2017 budget proposal requests an average of $7.5 billion per year through 2021. It is unclear what budget level Trump would propose in order to “develop a state of the art” system.

Navy – Increase Size of Fleet: “Mr. Trump will build a Navy approaching 350 surface ships and submarines … .” (source)

Cost per Year: $7.5 billion ($37.5 billion over five years)

Notes: In an op-ed published in the in the Wall Street Journal in January this year, Seth Cropsey of the Hudson Institute estimated that boosting the Navy’s fleet size to 350 ships would increase the shipbuilding budget by $7.5 billion per year through 2045. There would be additional costs to increase the number of active-duty service members that would depend on the scheduled roll out and type of ships to be added to the fleet.

Navy – Modernize Cruisers to Provide Ballistic Missile Defense (BMD): “Mr. Trump will modernize our nation’s naval cruisers to provide Ballistic Missile Defense capabilities.” (source)

Cost per Year: $28 million ($141 million over five years)

Notes: The Aegis Ballistic Missile Defense is carried out by the Navy with the Missile Defense Agency (MDA). According to the Congressional Research Service, “the number of BMD-capable Navy Aegis ships is scheduled to grow from 33 at the end of FY 2016 to 49 at the end of FY 2021.” In FY 2016, the MDA spent $1.86 billion on for Aegis BMD procurement and research and development, and projects to spend $9.437 billion over the next five years. NTUF assumes that Trump would, at a minimum, support these funding levels to increase spending by an average of $28 million per year.

 

Offset Proposals:

Energy Development: “ … [W]e will have at our disposal additional revenues from unleashing American energy.” (source)

Cost per Year: -$170 million (-$1.7 billion over ten years)

Notes: Touting the economic benefits that could result from expanding the development of energy, Trump cites a 2015 report from the Institute for Energy Research based on a 2012 Congressional Budget Office (CBO) report, Potential Budgetary Effects of Immediately Opening Most Federal Lands to Oil and Gas Leasing. CBO estimated that opening additional federal lands to oil and gas leasing would increase gross offsetting receipts over a ten-year period to the federal government by $5 billion from the Arctic National Wildlife Reserve, with up to 90 percent going to Alaska. An additional $2 billion in offsetting receipts would come from areas including Outer Continental Shelf regions of the Atlantic and Pacific Oceans, the eastern Gulf of Mexico, and additional onshore areas. In a separate report, CBO estimates that, on average, the state share of offshore receipts has been 40 percent from 2005 and 2014.

Federal Workforce Attrition: “We can also reduce the size of the federal bureaucracy through responsible workforce attrition – that is, when employees retire, they can be replaced by a smaller number of new employees.” (source)

Cost per Year: -$3.74 billion (-18.7 billion over five years)

Notes: In 2013, the Congressional Budget Office produced a cost estimate for a related proposal to reduce the size of the federal workforce through attrition. For every three federal employees that retire, only one would be hired, for a savings of $18.7 billion over five years. A more recent estimate is unavailable.

Improper Payments: “I will ask that savings be accomplished through common sense reforms that eliminate government waste and budget gimmicks … . … Government-wide, improper government payments are estimated to exceed $135 billion per year … .” (source)

Cost per Year: Indeterminate

Notes: Efforts to reduce improper payments through entitlement programs could be successful, but would require initial spending increases to claw back savings over the long-term. For example, in the latest budget, the Social Security Administration (SSA) requested $1.8 billion for program integrity efforts to reduce improper payments that occur as a result of waste, fraud, and abuse. SSA estimates that proposed integrity reforms, such as conducting full medical continuing disability reviews would yield from $3 to $8 over ten years for each $1 spent.

Military Bureaucracy: “The military will not be exempt either – the military bureaucracy will have to be trimmed as well.” (source)

Cost per Year: Indeterminate

Notes: It is unclear how Trump would trim the military bureaucracy.

Tax Gap: “I will ask that savings be accomplished through common sense reforms that eliminate government waste and budget gimmicks … . … [T]he amount of unpaid taxes is estimated to be as high as $385 billion.” (source)

Cost per Year: Indeterminate

Notes: It is unclear how Trump would propose to collect unpaid taxes. Such efforts could require additional audits and increasing the budget of the Internal Revenue Service (IRS). For FY 2016, the IRS’s budget included $4.9 billion for enforcement.

Unauthorized Programs: “We can also stop funding programs that are not authorized in law. Congress spent $320 billion last year on 256 expired laws. Removing just 5 percent of that will reduce spending by almost $200 billion over 10 years.” (source)

Cost per Year: Indeterminate

Notes: The CBO produces an annual report on expiring budget authorizations and unauthorized appropriations. In FY 2016, CBO identified “a total of $310 billion – about one-quarter of discretionary appropriations in that year – was provided for programs and activities whose explicit authorization of appropriations had expired and whose appropriations could be identified. More than half of those unauthorized appropriations were provided for programs whose explicit authorization expired more than a decade ago.” Any savings would depend on Congressional action.