7/30/2019 Asne Radm Carnevale
1/31
Department of DefenseBudget Update for the
ASNE Flagship Section
RDML (ret) Joe CarnevaleSenior Defense Advisor
Shipbuilders Council of America5 December 2012
7/30/2019 Asne Radm Carnevale
2/31
DoD Budget Update
Budget Background
Sequestration Fiscal Year 2013 Shipbuilding &
Ship Depot Maintenance Budgets
7/30/2019 Asne Radm Carnevale
3/31
DoD Budget Update
Looking for the Peace Dividend
7/30/2019 Asne Radm Carnevale
4/31
DoD Budget Authority 1988-1996
240
250
260
270
280
290
300
1 9 8 8 1 9 8 9
1 9 9 0 1 9 9 1
1 9 9 2 1 9 9 3
1 9 9 4 1 9 9 5
1 9 9 6
B i l l i o n s o f d o l l a r s
DoD cut by $42B
7/30/2019 Asne Radm Carnevale
5/31
The Peace DividendDoD Budget Authority 1980-2010
0
100
200
300
400
500
600
700
800
1 9 8 0
1 9 8 1
1 9 8 2
1 9 8 3
1 9 8 4
1 9 8 5
1 9 8 6
1 9 8 7
1 9 8 8
1 9 8 9
1 9 9 0
1 9 9 1
1 9 9 2
1 9 9 3
1 9 9 4
1 9 9 5
1 9 9 6
1 9 9 7
1 9 9 8
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
B i l l i o n s o f D o l l a r s
1989:
Soviet troops withdrawfrom Afghanistan,
Poland & Hungary becomeindependent,
Berlin Wall falls,
Governments fall in
Czechoslovakia, Bulgaria,and Rumania;
Soviet empire ends
1991:
Warsaw Pact ends,
The Soviet Uniondissolves,
The Cold War Ends
1990: Germanyreunited
Total DoD (FY10$) 92%Defense Wide 89%
Army 187%Navy 51%
Air Force 56%
Increase in Budget FY98-08
7/30/2019 Asne Radm Carnevale
6/31
Total Federal Budget Authority1980-2011
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1 9 8 0
1 9 8 1
1 9 8 2
1 9 8 3
1 9 8 4
1 9 8 5
1 9 8 6
1 9 8 7
1 9 8 8
1 9 8 9
1 9 9 0
1 9 9 1
1 9 9 2
1 9 9 3
1 9 9 4
1 9 9 5
1 9 9 6
1 9 9 7
1 9 9 8
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
B i l l i o n s o f D o l l a r s
Total Federal Budget Authority National Defense
7/30/2019 Asne Radm Carnevale
7/31
Total Federal Budget Authorityand Receipts 1980-2011
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1 9 8 0
1 9 8 1
1 9 8 2
1 9 8 3
1 9 8 4
1 9 8 5
1 9 8 6
1 9 8 7
1 9 8 8
1 9 8 9
1 9 9 0
1 9 9 1
1 9 9 2
1 9 9 3
1 9 9 4
1 9 9 5
1 9 9 6
1 9 9 7
1 9 9 8
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
B i l l i o n s o f D o l l a r s
Total Federal Budget Authority Total Receipts National Defense
7/30/2019 Asne Radm Carnevale
8/31
The National Debt
Asia $3T:China $1T,Japan $900B
Europe: $1T
Middle East $292BNorth America $253BSouth America $245BRest of World $199B
Total foreign debt$5.2923 trillionas of June 2012
7/30/2019 Asne Radm Carnevale
9/31
Total Federal Budget Authorityand Receipts 1980-2011
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1 9 8 0
1 9 8 1
1 9 8 2
1 9 8 3
1 9 8 4
1 9 8 5
1 9 8 6
1 9 8 7
1 9 8 8
1 9 8 9
1 9 9 0
1 9 9 1
1 9 9 2
1 9 9 3
1 9 9 4
1 9 9 5
1 9 9 6
1 9 9 7
1 9 9 8
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
B i l l i o n s o f D o l l a r s
Total Federal Budget Authority Total Receipts National Defense
$100B per year reduction
$100B per year increase in receipts
7/30/2019 Asne Radm Carnevale
10/31
Entitlements (FY2011)
550 Health:
551 Health care services including Medicaid ($322B)552 Health research and training ($33B)554 Consumer and occupational health and safety ($4.5B)
570 Medicare ($502B)600 Income Security:
601 General retirement and disability insurance ($8.0B)
602 Federal employee retirement and disability ($123B)603 Unemployment compensation ($119B)604 Housing assistance ($44B)605 Food and nutrition assistance ($105B)609 Other income security ($184B)
650 Social Security ($732B)700 Veterans Benefits and Services:
701 Income security for veterans ($55B)702 Veterans education, training, and rehabilitation ($10B)703 Hospital and medical care for veterans ($50B)704 Veterans housing ($1.3B)705 Other veterans benefits and services ($6.1B)
7/30/2019 Asne Radm Carnevale
11/31
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1 9 8 0
1 9 8 1
1 9 8 2
1 9 8 3
1 9 8 4
1 9 8 5
1 9 8 6
1 9 8 7
1 9 8 8
1 9 8 9
1 9 9 0
1 9 9 1
1 9 9 2
1 9 9 3
1 9 9 4
1 9 9 5
1 9 9 6
1 9 9 7
1 9 9 8
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
B i l l i o n s o f D o l l a r s
Total Federal Budget Authority National Defense: Entitlements
Total Federal Budget AuthorityDefense and Entitlements 1980-2011
7/30/2019 Asne Radm Carnevale
12/31
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1 9 8 0
1 9 8 1
1 9 8 2
1 9 8 3
1 9 8 4
1 9 8 5
1 9 8 6
1 9 8 7
1 9 8 8
1 9 8 9
1 9 9 0
1 9 9 1
1 9 9 2
1 9 9 3
1 9 9 4
1 9 9 5
1 9 9 6
1 9 9 7
1 9 9 8
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
B i l l i o n s o f D o l l a r s
Total Federal Budget Authority Total Receipts National Defense: Entitlements
Total Federal Budget AuthorityDefense and Entitlements 1980-2011
$100B per year increase in receipts
$100B per year reduction
7/30/2019 Asne Radm Carnevale
13/31
Sequestration
7/30/2019 Asne Radm Carnevale
14/31
Budget Control Act of 2011
Security includes: DoD, DHS, VA, NationalNuclear Security Administration, and BudgetFunction 150 International Affairs
Implemented $917 billion in cuts over 10 yearsto increase debt limit by $900 billion.
Joint Select Committee on Deficit Reduction,the Super Committee, failed to produce debtreduction of at least $1.5 trillion over 10 years.
Sequestration of $1.2 trillion is now the law.
Goes into effect on January 2, 2013
7/30/2019 Asne Radm Carnevale
15/31
Impact of Budget Control Act and Sequestration onNational Defense Base Budget Topline
(Constant FY2012 $)
Source: House Armed Services Committee
7/30/2019 Asne Radm Carnevale
16/31
Impact of Budget Control Act and Sequestration onNational Defense Base Budget Topline
(Constant FY2012 $)
Source: House Armed Services Committee
FY13 Total = $585B
7/30/2019 Asne Radm Carnevale
17/31
Impact of Sequestration
Pre BCA FY 2013 budget was $585B. PRESBUDG cut $49B (8.4%). Sequestration cuts another $54B (9.2%). Total reduction of $103B (17.6%).
Post sequestration budget would be $482B. MILPERS exempt Funds already obligated cant be used. Overseas Contingency Operations a factor. Unobligated prior year balances can be used.
Approximately 9.2% of all operations,procurement, research and construction getcut from the PRESBUDG level.
7/30/2019 Asne Radm Carnevale
18/31
Mechanics of Sequestration
Percentage Cut = $54.7B
$525.4B + $88.5B + $105.7B + 25.1B - $149.4B= 9.2%
Base DODBudget
OCOBudget
UnobligatedBalances
MilPersExemption
RequiredDefenseCut
Approximate 9.2% Reduction AcrossInvestment and O&M Accounts
Reduction of roughly 12.3% in final 9 months of FY13 would beneeded to achieve a 9.2% reduction in FY13 budget authority
Non-DODDefense
* Function 050
7/30/2019 Asne Radm Carnevale
19/31
Peace Dividend 1988-1996
240
250
260
270
280
290
300
1 9 8 8 1 9 8 9
1 9 9 0 1 9 9 1
1 9 9 2 1 9 9 3
1 9 9 4 1 9 9 5
1 9 9 6
B i l l i o n s o f d o l l a r s
DoD cut by $42B
From 1990 to 1994:
458,000 leave military service166 ships retiredSCN cut by $7.4B
14.2% reduction over four years vs 17.6% reduction in one year.
7/30/2019 Asne Radm Carnevale
20/31
The term fiscal cliff describes several big fiscal events
set to occur at the end of this year and in early 2013:
The impact of all these actions taken together would be a fiscal
shock on the order of $300 billion to $600 billion in just one year
1. Expiration of the 2001 & 2003 tax cuts and the 2009 stimulus tax cuts
2. Expiration of the alternative minimum tax patch
3. Expiration of the payroll tax holiday
4. Expiration of the extenders
5. Scheduled tax increases under the Affordable Care Act
6. Sequestration
7. Expiration of expanded unemployment compensation
8. Expiration of the "doc fix"
9. Debt limit
The Fiscal Cliff
7/30/2019 Asne Radm Carnevale
21/31
Mar FebJanDecNovOct
Continuing Resolution
Election DayNov 6
Lame Duck CongressTreasury Reaches $16.4T Debt Ceiling
113 th CongressJan 3
Tax Cuts Expire
InaugurationJan 20
FY14 BudgetSubmitted to
Congress
FY13 CRExpires
March 27
FY13Begins
Calendar Key Dates
SequestrationJan 2
7/30/2019 Asne Radm Carnevale
22/31
Fiscal Year 2013
Shipbuilding &Ship Depot MaintenanceBudgets
7/30/2019 Asne Radm Carnevale
23/31
7/30/2019 Asne Radm Carnevale
24/31
FY 2013 Shipbuilding Plan
-1
+1
-1 +1-1
-1
-2
-1-1-1
-1 -2-2
7/30/2019 Asne Radm Carnevale
25/31
25
FY 2012 Maintenance &Modernization Budget
FY11 FY12 FY13 O&MN Base & OCO PRESBUDG PRESBUDG Ship Depot Maintenance $ 7,173,659 $ 6,026,107 $ 6,399,991Ship Depot Maintenance Base $ 4,532,935 $ 5,089,981
Ship Depot Maintenance OCO $ 1,493,172 $ 1,310,010Ship Depot MaintenanceReserve $ 88,590 $ 53,916 $ 49,522
OPN DDG Modernization $ 288,118 $ 117,522 $ 452,371CG Modernization $ 348,934 $ 573,349 $ 101,000Small Boats $ 72,665 $ 33,653 $ 30,131
7/30/2019 Asne Radm Carnevale
26/31
26
Maintenance Funding History
$0
$1,000$2,000
$3,000
$4,000$5,000
$6,000
$7,000
$8,000
F Y 0 4
F Y 0 5
F Y 0 6
F Y 0 7
F Y 0 8
F Y 0 9
F Y 1 0
F Y 1 1
F Y 1 2
F Y 1 3
Total Base Budget Adjustments
7/30/2019 Asne Radm Carnevale
27/31
Congressional Action
HASC retains 6 CGs and 2 LSDs Allows CG 73 to retire Adds $84M to CG Modernization ++ Adds $68M to Ship Depot Maintenance
HAC retains 3 CGs Adds $507M to CG Modernization Adds $68M to Ship Depot Maintenance
SAC retains 7 CGs and 2 LSDs Puts $2.4B into the Ship Modernization, Operations and
Sustainment Fund. Adds $150M to Ship Depot Maintenance for MIAMI
Navy announced it will retain four of thecruisers as a result of Congresss actions.
7/30/2019 Asne Radm Carnevale
28/31
CR funds Agencies at FY12 levels + .6% $4.56B CR level vs $5.09B in base budget. OCO funded at FY13 request of $1.31B. Base plus OCO CR Level is $5.87B.
8% lower then the $6.40B total in the budget. Operate at a minimal level
Scenario 1: No sequestration. CR ends with maintenance atbudget level.
$2.9B spent in 1st
half of year. $3.5B to spend in 2 nd half of year. $600M more in the last 6 months then the first 6 months. Adds for cruiser retention not included in the $600M.
The Continuing ResolutionApplied to Ship Depot Maintenance
7/30/2019 Asne Radm Carnevale
29/31
Factors for maintenance & modernization:
Deploying ships will get priority. Submarines and aircraft carriers will get priority. Naval shipyard workload is a sunk cost based on workforce.
Canceling surface ship availabilities is contractually easy.
Result 1: A disproportionate number of canceledand deferred availabilities will be of surface ships.
Result 2: The disruption of adding an additional$600M in the second half of the year will be bornmostly by the private sector.
The Continuing ResolutionApplied to Ship Depot Maintenance
7/30/2019 Asne Radm Carnevale
30/31
Approximate 9.5% Reduction AcrossInvestment and O&M Accounts
Reduction of 9.5% from budget levels means $5.8Btotal available for maintenance.
Scenario 2: CR ends with sequestration. Maintenance reduced by $600M . $2.9B spent in 1 st half of year. $2.9B spent in 2 nd half of year.
Adds for cruiser retention not likely.
Result: A disproportionate number of canceled anddeferred availabilities will be of surface ships.
SequestrationApplied to Ship Depot Maintenance
7/30/2019 Asne Radm Carnevale
31/31
Questions?Joe Carnevale
Senior Defense Advisor Shipbuilders Council of America
655 Fifteenth Street, NW, Suite 225 Washington, DC 20005
t 202.772.5578f 202.783.6947
https://shipbuilders.org/
mailto:[email protected]://shipbuilders.org/https://shipbuilders.org/mailto:[email protected]Top Related