US Draft Budget for fiscal year 2014

On April 10, two months after the due date, the US Office of Management and Budget published the US draft budget for fiscal year 2014, in which it was proposed to reduce the US Department of Defense's expenses by $3.9bn (or 0.7%) to 526.6bn (3.1% of GDP) against the current ones.


Expenses on overseas military operations still remain uncertain, but on April 11 US Secretary of Defense Chuck Hagel reported to the US Congress that approx. $88.5bn (0.5% of GDP) were reserved for such operations, which is almost equal to the current allocations. In general, $648.9bn (3.8% of GDP) is expected to be allotted next year under the ‘National Defense' item of functional classification.

US President’s Message addressed to the US Congress was attached to the budget. In his message President Obama pointed out that a major objective of the executive authorities is to reduce the national debt and budget deficit, and in the proposed 10-year financial plan the country is expected to run a budget deficit less than 2% of GDP by 2023. It should be emphasized how determined the US Government is to reduce its military expenditure: Table S-6, p. 191 of the draft, shows that by 2023 the military component of the economy is expected to be reduced to 2.4% of GDP through unsecured part of national defense expenses, i.e. more than 1.5 times against current 4.0% of GDP.

It should be noted for comparison that “The Forecast of Long-Term Socio-Economic Development of the Russian Federation Through to 2030”, which was published by the Ministry of Economic Development and Trade of Russia on March 25, with regard to expenses on the national defense and security, for some reason rests in unmade political decisions and leaves military expenditure in 2020 at a level of 5.9% of GDP in 2012, assuming, probably, that intensive growth in military expenditure on rearmament can be compensated by reducing expenses on national security and law enforcement. According to some estimates, some expenses will have to be cut from 2.9% in 2012 to 1.7% in 2020 as a percent of GDP, i.e. more than 1 p.p., which seems to be unrealistic now.

In general, visible deviations of the option proposed by President Obama from the original are, as always, unlikely to receive an inconsiderate approval by US congressmen and senators. Both they and their electorate are to be envied.

The US Department of Defense 2014 Fiscal Year Budget Request is available here

Zatsepin V.B. – Ph.D. in Military Science, Head of Economics of the Military-Industrial Sector Department