Exclusive: US Debt Ceiling Deal Strands $16 Billion of Defense Side-projects

WASHINGTON – A $16 billion list of lower-priority defense items, like tanks, upgrades to helicopters, and a ship, that would usually be paid for out of the defense budget might not get paid for now that the U.S. has passed a landmark bill that raises the debt ceiling but cuts government spending.

The deal to avoid default left lawmakers, the Department of Defense, and other agencies wondering how to pay for projects that in the past were added at the last minute to must-pass defense policy and appropriations bills, which are usually passed with little discussion.

As U.S. President Joe Biden asked for, the debt deal capped national defense spending in fiscal year 2024 at $886 billion.

There are Abrams tanks made by General Dynamics (GD.N), an airplane made by Lockheed Martin (LMT.N), and a ship for the Marines made by Huntington Ingalls Industries (HII.N) on the “unfunded priorities” lists of the military forces.

Each service makes its own list, and this year’s included new buildings, ship upgrades, weapons, and long-range radars to protect the U.S.

Usually, some of the $16 billion in unfunded goals and the billions of dollars in initiatives by lawmakers would be added on. In the end, advisers said that an extra $30 billion to $40 billion could have been added to the defense budget.

In recent years, Congress has raised spending on defense by tens of billions of dollars, which is more than any president has asked for.

Congress spent more than $20 billion more each year in 2022 and 2023. Before that, the Pentagon used “Overseas Contingency Operations” (OCO) funds for ten years to get more money and get around spending caps that Congress had put in place.

This year, the deal to raise the debt limit could make that harder.

Additional Funding

After the $48 billion lawmakers gave Ukraine in December has been spent, most people expect Biden to ask for more money in August or September to help Ukraine fight the Russian attack.

The Ukraine’s request for more money is likely to include a wider range of defense spending, as well as some items and pet projects that were left out.

Defense hawks complained, so the Democratic and Republican leaders of the Senate made a formal promise Thursday night, before the debt ceiling bill was passed, that the spending caps in the bill would not stop the Senate from passing supplemental spending bills to give the Department of Defense more money.

Mackenzie Eaglen, a senior fellow at the American Enterprise Institute, said, “I am sure there will be an emergency supplemental spending bill for Ukraine that covers the defense needs and priorities of countries other than Ukraine.

“This supplemental won’t be enough to make up the difference between what Congress probably would have added to the defense budget above the president’s budget and the final non-Ukraine toplines,” Eaglen said. “But it will give some priorities a chance to breathe.”

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