Defense spending

Defense budget cuts following the pandemic will be hard to swallow

Congress has appropriated more than $2.25 trillion to counter the impact of COVID-19 on American families and the economy. It is likely to spend even more once legislators return from their recess in early May. This unprecedented level of expenditure is resulting in a massive deficit and national debt levels that are likely to exceed 120 percent of the nation’s gross domestic product, especially as GDP growth itself is no longer a foregone conclusion. In turn, there will be renewed pressure on the defense budget, which already is forecast to have no real growth in fiscal year 2021.

Interest on the national debt, which at some point will begin to rise again, will create a massive burden on annual federal budgets. The demand for increases in domestic spending will be difficult to ignore in the aftermath of the pandemic. For these reasons, it is not beyond the realm of probability that defense budgets beginning in fiscal year 2022 will not even grow in nominal terms.