What a difference a year makes. With the new administration taking office last year, a shift in focus from military power to diplomacy was widely expected to usher in an era of flat, or even declining, defense budgets. These reductions were expected to fall most heavily on the Army, with large potential cuts to force structure used to fund modernization investments elsewhere in the Department of Defense. As the saying goes—when executing a plan, the enemy gets a vote. The Russian invasion of Ukraine has decisively placed the U.S., and our European allies, on a new budget trajectory for the foreseeable future.
In fact, these expectations may never have been realistic in today’s security environment. Increasingly capable near-peer adversaries (China and Russia) took note of the sharp budget reductions that followed the wars in Iraq and Afghanistan. Their increasing aggressiveness led to the 2018 National Defense Strategy realignment from counterterrorism/counterinsurgency to near-peer competition. The administration’s first budget submission last summer—$715 billion for 2022, a flattish $11 billion in growth from 2021 that was well under inflation—was quickly increased by Congress to an authorized level of $740 billion in the 2022 defense policy bill.
When Russia invaded Ukraine on Feb. 24, Congress still had not passed the actual 2022 appropriation for DoD. With war in Europe, Congress got serious and passed a bill in March that further increased DoD’s budget to $743 billion, an almost $40 billion increase over 2021. A few weeks later, the administration released its 2023 budget request with $773 billion for DoD. Some are now speculating that Congress may increase that by $10 billion–$20 billion during the congressional budget process.
Moving from $704 billion in 2021 to $773 billion in 2023, when the expectation was for flat defense spending, is an amazing turnaround. And the U.S. is not the only country experiencing such a change; the turnaround in Europe may be even more dramatic. After resisting pressure to meet NATO targets of spending 2% of gross domestic product on defense for years, Germany is significantly increasing defense spending, as are other European allies.
This does not mean that there is no risk in the DoD budget. These increases barely cover inflation and do not come near the 2%–3% real growth required to fully implement the National Defense Strategy. But it does mean we have avoided another readiness and modernization crisis like we experienced during the worst of the sequester era from 2012 to 2016.
For the Army, it is no surprise that as military operations in Iraq and Afghanistan wound down, the Army saw the largest budget reduction, falling from $239 billion in 2011 to $151 billion in 2015. That 36% decline in the Army budget compared to a 9% decline for the Navy (which includes the Marine Corps), an 8% decrease in the Air Force and a 6% decrease in defensewide overhead accounts.
What may be surprising is that when readiness rebuilding and National Defense Strategy modernization investments began to push defense spending back up, growth for the Army lagged behind the other military departments. By 2021, the Army’s budget had grown to $177 billion, or about a 15% increase from the low of 2015. This compares to a 23% increase for the Navy and a 25% increase for the Air Force.
Some of this was because there continued to be offsetting Iraq and Afghanistan reductions, but a major factor was that the Army received significantly less modernization investment than the rest of DoD (Army modernization grew $15 billion per year from 2015 to 2021, while Navy modernization grew $24 billion and Air Force modernization grew $34 billion).
For historians, this is not surprising at all. The U.S. has a long history of believing after each war we have fought that the next war will be different; that the horrors of ground combat will be replaced by high-technology warfare; and if we just invest enough in that technology, we can win the next war without the agony of a ground campaign. The end of World War II offers a classic example—nuclear weapons were going to make conventional war obsolete—and the bloody Korean War fought with a shrunken and ill-prepared Army was the result.
The Russian invasion of Ukraine is providing a reminder that we have a bad track record of predicting the nature of future wars, and a core tenet of defense planning is flexibility to be able to handle the unexpected. The next fight, like those that have come before it, will likely be an all-domain fight, and failing to prepare for that will not only make it more bloody—it also will make it more likely.
It is not clear yet, however, if this reminder will lead to better budget decisions.
Two key areas to watch in the Army budget are force structure levels and modernization funding. The Army has not yet seen the large-scale reductions to force structure some were forecasting a year ago. The 2023 budget submission includes a reduction of 12,000 active-duty soldiers (from 485,000 to 473,000) because of recruiting challenges. DoD emphasized in the budget rollout that this was not a policy reduction, and that DoD intends to restore end strength over time as recruiting recovers.
Safe for Now
With the Army providing about 35% of the active force (47% of the total force) but constituting over 50% of combatant command forces and two-thirds of readiness requirements for war plans, large-scale Army force structure cuts would have to come from training, reset and readiness production, i.e., taking risk against the next war. The Russian invasion of Ukraine may have driven sufficient recognition of this by policymakers that large-scale Army force cuts are off the table for now.
With respect to modernization, as seen above, the Army is receiving lower prioritization of its modernization needs within DoD. This is particularly challenging for the Army now because its modernization tends be more episodic than the rest of DoD. The past century has seen the Army modernize about every 40 years, with the 1980s being its last major effort. The current 2020s effort with its 31 plus four modernization priorities will drive a larger increase for Army modernization than the rest of DoD, which receives significantly more modernization funding. The Army is receiving the bulk of the supplemental funding for Ukraine, but it remains to be seen if those events will drive a reconsideration of prioritizing modernization of the rest of DoD over Army modernization.
The Russian invasion of Ukraine appears to have revised the thinking of many. It has cemented an increasing defense budget for the foreseeable future when a flat budget was expected. It may have definitively taken large-scale Army force structure cuts off the table for now. We don’t know yet if it will increase the prioritization of Army modernization.
Despite our history of hoping otherwise, the next war will likely be an all-domain conflict against a potential near-peer adversary. Army modernization is now more important than at any other time in the post-Cold War defense era.
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John Whitley served as the acting secretary of the Army during the most recent presidential transition. Previously, he served as the Army’s chief financial officer, and led the Cost Assessment and Program Evaluation office in the Office of the Secretary of Defense. He served in the Army from 1988 to 1992, including two years in the 2nd Ranger Battalion. He holds a doctorate in economics from the University of Chicago.