Defense budget takes calculated risks.

• Author: Farrell, Jr., Lawrence R.
• Position: President's Perspective

The defense budget submitted to Congress in early February is touted by the administration as its first budget that truly addresses the need to "transform" our military services into a force better equipped to deal with the threats of the new century.

But given the relatively small increases in the procurement account, it would be fair to say that this budget should be more accurately categorized as a "transition" budget that, nevertheless, appears to be going in the right direction, as far as transformation goes.

At $379.9 billion, the budget request for fiscal year 2004 is $15.3 billion higher that last year's request. But procurement spending--at $72.7 billion--is not much higher than last year's $70 billion request. The budget for research, development, test and evaluation (RDT&E) is up to $61 .8 billion--higher than last year's Pentagon request, but lower than the amount Congress appropriated for fiscal year 2003.

In many ways, it is understandable why the administration has not been able to increase procurement or RDT&E significantly. We are, after all, in a time of war. Our forces are deployed around the world, fighting an ongoing war on terrorism and participating in homeland defense missions. Further, a new, possibly large-scale, conflict looms in Iraq. That means personnel and operations funding must come first.

From the $15.3 billion increase requested for fiscal year 2004, more than half goes to pay raises, housing allowance and defense health programs. It's interesting to note that most of the entire defense budget of $379.9 billion is spent on what the Pentagon calls "fact of life" accounts: military personnel ($98.6 billion), and operations and maintenance ($117 billion). It is not hard to see why there is not much room to maneuver when it comes to procurement.

From a modernization perspective, there are several pieces of good news in the budget. Funding is going up for unmanned aerial vehicles, space-based radar, the Joint Strike Fighter, the Army Future Combat System and shipbuilding. These are programs that are critical to transformation and should be funded accordingly. They are signs that the administration is serious about transformation.

But nobody should be fooled into thinking that this budget has any "silver bullets" that will magically bring about transformation. This will be a gradual process that will continue for years.

Pentagon Controller Day Zackheim explained that the underlying assumption in this year's...