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Federal Market Intelligence for Small Business |
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Set-Aside Alert news analysis:Trump plans U.S. defense buildup: more warships, aircraft and troopsTrump’s plans would cost $100B to $300B more than baselinePresident-elect Donald Trump sketched out ambitious plans during the campaign for expanding the U.S. military and increasing defense spending. Analysts have estimated the cost of Trump’s defense priorities at roughly $100 billion to $300 billion more than under the baseline set under President Obama, over the next four years. That could bring the defense budget to as high as $900 billion by 2020. Defense contractors If Trump’s plan is adopted, there would be a significant increase in defense contracting as well, affecting both small and large contractors. In fiscal 2015, $52 million in DOD spending went to small businesses. An increase proportionate to those under Trump’s plan likely would bring the small vendors’ share to between $60 billion and $80 billion over four years. Defense contracting overall might rise from $274 billion in fiscal 2015 (from USASpending.gov), to between $320 billion and $410 billion over four years. However, there is no clear picture of how such large hikes in defense spending would be paid for. The military budget hikes being talked about most likely would exceed the caps set under the Budget Control Act. Trump’s military readiness plan Trump spoke about his specific goals for U.S. weapons systems and troops in a campaign speech on Sept. 7. He outlined his “Military Readiness Plan” with specific numbers for various components, according to a transcript released by the campaign. In the readiness plan, Trump outlined several “long-term” goals:
Paying for Trump’s plan Trump did not estimate the costs of his proposed expansion of military forces. To pay for it, he said he would seek a repeal of the defense sequester budget caps under the amended Budget Control Act, among other measures. The law and its amendments were passed by Congress as part of bipartisan budget agreement to control costs, raise the U.S. borrowing limit and reduce the U.S. deficit. Also, Trump proposed an additional 1% decrease in non-defense government spending per year to help pay for the military growth. Trump said he would ask allies to cover more of the costs of U.S. support, and would generate new revenues from expanding energy production on federal lands. Estimated costs for Trump’s defense plan are $100 billion to $300 billion more than the current baseline, over the next four years, according to an estimate from two analysts at the conservative American Enterprise Institute. The nonpartisan Committee for a Responsible Federal Budget said that Trump’s proposed repeal of the defense sequester alone would cost the U.S. Treasury $450 billion over the next 10 years. The current Defense Department budget is about $600 billion a year. Under the plan, that would rise to at least $700 billion and possibly $900 billion by 2020. Will Trump’s plan succeed? It is much too early to say whether Trump’s military plan sketched out during the campaign actually will shape policies and strategies for the next four years. It will depend on a number of factors, including how Trump’s military strategy takes further shape, his key appointments in the next few weeks, and how Congress, the media and the public respond to his government spending proposals and broader economic strategy. Trump strategy, appointments During the campaign, Trump talked about revitalizing an allegedly depleted U.S. military and hitting ISIS with more force, but did not offer many details on his strategies. He named hawkish retired Lt. Gen. Michael Flynn as his national security advisor, but he has yet to name his choice for Secretary of Defense. If he chooses a defense moderate it may signal somewhat less ambitious goals for defense spending. Resistance in Congress Democrats and some conservative Republicans are resisting the drive to repeal the existing budget caps for the purpose of boosting defense spending. Sen. Lindsey Graham, R-SC, recently said that any rise in defense spending, should the budget caps be repealed, would require “Democrats to buy in,” according to Foreign Policy Magazine. Naval buildup as jobs program Building more warships is, in Trump’s view, partly a jobs program, according to an October internal Trump campaign memo obtained by Navy Times. The memo was sent by one of Trump’s senior campaign aides. It was sent to Rep. Randy Forbes, R-VA, who is a contender to be Navy Secretary. The memo stated that Trump wants to strengthen the defense industrial base. “Mr. Trump’s plan will require a significant partnership with a defense industrial base that has been strained by years of significant cuts to shipbuilding and ship repair,” the memo stated. Maintenance and operations are typically areas that have a high proportion of small businesses as contractors and subcontractors. Many presumably would benefit if the Trump proposals for building additional Navy ships and Air Force aircraft come to fruition.
More information:
Trump speech transcript: http://goo.gl/FNFtFm
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Correction:In the Nov. 4 article, “ASBL lawsuit denied,” the article stated that the first time the 23% small business goal was met was in fiscal 2013. Actually, it was met for the first time in fiscal 2005. We regret the error.
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