WASHINGTON — Top Pentagon officials said Tuesday the Defense Department used an inaccurately low inflation rate when formulating the fiscal 2023 budget proposal.
Chairman of the Joint Chiefs of Staff Gen. Mark Milley, Defense Secretary Lloyd Austin and Pentagon comptroller Mike McCord all acknowledged the budget does not adequately reflect the current rate of inflation during their testimony on the budget before the House Armed Services Committee.
“This budget assumes an inflation rate of 2.2%, which is obviously incorrect because it’s almost 8%,” said Milley. “Because the budget was produced quite a while ago, those calculations were made prior to the current inflation rate.”
Republicans and some centrist Democrats have criticized the low inflation rate, arguing the defense budget topline should be higher than the $813 billion the Pentagon is seeking. The FY23 budget is $30 billion, or 4%, over the $783 billion Congress appropriated for the Defense Department this fiscal year.
“Nearly every dollar of increase in this budget will be eaten by inflation,” Rep. Mike Rogers, R-Ala., the top Republican on the House Armed Services Committee, said at the hearing. “Very little, if anything, will be left over to modernize and grow capability.”
Austin too said the Pentagon underestimated the rapid rate of inflation, which has reached a record 40-year high.
“Clearly when we snapped the chalk line when we built the budget; inflation was at a different point,” said Austin. “But I think this budget gives us the capability to go after the types of things that we believe that we need to support our strategy and give us the warfighting capabilities that we need.”
And McCord noted the military used a projected inflation rate of 4% for defense-related acquisitions in the budget proposal.
At the hearing, Rep. Mo Brooks, R-Ala., noted the price of crude oil rose 137% between January 2020 and January 2022.
“If we don’t know what the inflation rate is for national defense-procured products, then we can’t really know whether the president’s budget strengthens or weakens America’s national security,” said Brooks.
Asked by Rep. Elissa Slotkin, D-Mich., whether the Pentagon would work with Congress to “key the budget to the rate of inflation,” McCord said, “Yes.”
”We’re going to need to work with the committees, I believe, going forward to look at what’s actually happening on the ground,” said McCord. “We normally revisit our situation internally, which generates reprogrammings that we send to you. We’ll do that as soon as possible this year as well.”
But that may not satisfy some defense hawks in Congress, who have repeatedly called on the Defense Department to annually increase its budget well above the rate of inflation.
“We need 3 [%] to 5% real growth over inflation,” Rep. Elaine Luria, D-Va., told Defense News. “Obviously that is not reflected in the budget.”
However, she said her “biggest concern focuses a lot around the Navy and lack of investment in the fleet and building the fleet.”
She cited the “consistent threat from China against Taiwan” as a reason not to allow the Pentagon’s request to decommission 24 ships and only build nine — one of which Congress already authorized.
“The Navy for two decades supported ground wars in Iraq and Afghanistan, and we didn’t build that capacity for competing with a near-peer competitor,” said Luria. “It’s not the fault of any particular person in leadership in the Pentagon today. They’ve inherited decades of bad decisions.”
Bryant Harris is the Congress reporter for Defense News. He has covered the intersection of U.S. foreign policy and national security in Washington since 2014. He previously wrote for Foreign Policy, Al-Monitor, Al Jazeera English and IPS News.