Defense budget: how low will it go?

• Author: Erwin, Sandra I.
• Position: Defense Insider

Senior defense analyst Anthony Cordesman, of the Center for Strategic and International Studies, estimates that defense spending--including both base funding and war costs--will drop by about 22 percent from its peak in 2010, after accounting for inflation. By comparison, the seven years following the Vietnam and Cold War peak budgets saw a similar level of decline on the order of 20 to 25 percent.

Clark Murdock, senior fellow at CSIS, calculated that the defense budget top line, including war spending, would drop from $660 billion to $520 billion by 2021, in 2013 dollars.

Pentagon contractors already have begun to absorb the effects of a defense slowdown that began in 2010, according to Tom Captain, vice chairman and aerospace and defense leader for Deloitte LLP.

"Defense revenues were flat through the lust nine months of 2012 at the global level, but in the U.S., revenues continued to decline at negative .5 percent," Captain said in a Deloitte report. "Indeed, only three out of the top 13 defense contractors doing business with the Defense Department experienced revenue growth."

Murdock said the Defense Department's biggest budget problem is not...