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Budgets | Industry & Trends | Issues - Political | Other Corporation | USA

Grant Thorton: US Defense Budget Outlook for 2011 and Beyond

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(click to view full) Guest Article by Lou Crenshaw, Vice Admiral U.S. Navy (ret.) After a sustained period of sizable increases, growth in the DoD budget is expected to slow considerably starting in 2011. Defense discretionary spending is likely to be constrained by built-in budget pressures, both external and internal to the department. Mandatory non-military spending (such as Medicare, Medicaid and Social Security) as well as new administration initiatives, will limit the total amount of budgetary authority given to DoD by the Office of Management and Budget (OMB). Within the DoD, 3 principal factors will present continued budgetary challenges. First, the QDR will refocus the department’s spending priorities, adding additional requirements as well as questioning current investment strategies. Second, continued cost growth above inflation, particularly in acquisition, manpower and maintenance accounts, will continue to erode DoD discretionary spending. Finally, overseas contingency operations (OCO) will continue to age equipment, demand new equipment and stress operations accounts. Winners and losers will emerge as procurement spending is prioritized toward the most critical areas, including nontraditional warfare; high demand, low-density assets and cyber warfare; and away from large hardware programs associated with traditional operations. Recent legislation and policy changes will also affect the defense […]

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