Apr 6, 2022
Press Release
Top general says Biden budget’s low inflation assumption is wrong
By John M. Donnelly
April 5, 2022
The president’s new budget would increase Pentagon spending by 2 percent over the fiscal 2022 level, which is itself a 7 percent increase over fiscal 2021. But with inflation running at nearly 8 percent now, worries abound in Congress that the fiscal 2023 defense budget — even if it would be one of the costliest since World War II — could amount to a cut after inflation is factored in.
If inflation does not subside significantly, even the president’s proposed 4.6 percent across-the-board pay increase for military personnel could leave troops with less buying power.
Army Gen. Mark Milley, the chairman of the Joint Chiefs of Staff, told the House Armed Services Committee Tuesday that the budget was built on a flawed assumption about prices.
“This budget assumes an inflation rate of 2.2 percent, which is obviously incorrect, because it's almost 8 percent,” Milley said. “It might go up, it might go down, but most forecasts indicate it's going to go up and it could level out at 9 or 10 percent. Who knows, but it's clearly higher than what the assumption was in this budget.”
Milley’s assessment could strengthen the hand of defense hawks as they seek to boost the Pentagon’s fiscal 2023 appropriations above President Joe Biden's request when members write defense spending legislation later this year.
Mike McCord, the Pentagon’s comptroller, testified Tuesday that, while inflation is raging now, no one knows what prices will be like in six months, when fiscal 2023 starts, or in 18 months, when it ends.
But Mike D. Rogers of Alabama, the committee’s top Republican, in his opening statement, said it is a safe bet that inflation in fiscal 2023 will be higher than 2.2 percent and military spending would effectively go down as a result.
“To get an average of 2.2 percent next year would require months of unprecedented low inflation,” Rogers said. “Everyone here knows that's not going to happen. That means every dollar of increase in this budget will be eaten by inflation. Very little if anything will be left over to modernize or grow capability.”
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Still, lawmakers from both parties expressed concerns since the budget was submitted on March 28 about not just the overall level of spending and inflation’s effect on it, but also particular aspects of the request.
These include a reduction in the overall number of servicemembers — so-called end strength — plus retirements of large numbers of aircraft and ships and proposed cancellation of a nuclear armed cruise missile for the Navy, a system that Milley said Tuesday he supports continuing.
Of all these issues, the Navy’s budget to build and maintain warships appears to be the biggest concern for members from both parties.
The fiscal 2023 Navy budget would subtract a net 15 ships from the fleet, because the budget proposal would add nine major battle force vessels but would retire 24 ships that Austin said are too costly to operate for what they deliver in combat capability.
“At no point in the next five years does the size of the Navy increase” under the Biden plan, Rogers said.
Rob Wittman of Virginia, the top Republican on the Seapower and Projection Forces Subcommittee, said the budget for new vessels is “grossly irresponsible.”