Base Budget and How It Works

How It Can Mislead You

base budget
••• The Defense Department publishes its base budget each year. Photo: Chris Hondros/Getty Images

The base budget is the ongoing funding to keep a department functioning. It's used by the U.S. federal government, businesses, and other organizations.

Departments use the base budget when planning for more than 12 months at a time. For example, they can get lower costs on contracts that are multi-year. The base budget assures contractors they will get paid. That's because departments depend on the U.S. Congress for funding each year.

The base budget assures continuity. Without it, the department can't make legal commitments for more than one year. This would cost them, and the government, more.

The base budget is not used to cover extraordinary events. These need to be paid for under a contingency budget. How can departments plan for unexpected costs? They often know an unusual event is coming. Perhaps it's not every year. For example, private companies might host a convention every five years. Even if it occurs every year, the organization might not know how much it will cost. For example, a government might need funds for snow removal or hurricane disaster relief.

Examples

In the U.S. federal budget, the term is especially important when reviewing military spending. That's because the Department of Defense relies heavily on multi-year contracts. That's the most cost-effective way to buy expensive military equipment. These include fighter jets, aircraft carriers, and amphibious vehicles.

DoD must assure Congress that it can be in a state of readiness in case of war. That requires ongoing personnel training. It takes years to master sophisticated defense equipment.

The United States does not want to repeat the experience of mobilizing for World War II. The government had to take over private companies to produce a state of readiness.

This created painful shortages of everyday supplies for civilians. (Source: "Base Budget Fact Sheet," Department of Defense.)

How Base Budgeting Works: Defense Department Base Budget

The U.S. Department of Defense starts with a base budget each year. It then adds additional spending for wars and other contingencies.

Here is a record of the DoD's base budget since FY 2006.

  • FY 2006 -- $410.06 billion.
  • FY 2007 -- $431.5 billion.
  • FY 2008 -- $479.0 billion.
  • FY 2009 -- $513.2 billion.
  • FY 2010 -- $527.2 billion.
  • FY 2011 -- $528.2 billion.
  • FY 2012 -- $530.4 billion. Record high.
  • FY 2013 -- $495.5 billion.
  • FY 2014 -- $496.3 billion.
  • FY 2015 -- $496.1 billion.
  • FY 2016 -- $521.7 billion.
  • FY 2017 -- $516.1 billion.
  • FY 2018 -- $574.5 billion. Record high if approved by Congress

If you look at the base budget alone, it appears that President Trump's budget request for FY 2018 is the highest. If approved by Congress, it would exceed President Obama's record high of $530.4 billion. It is unlikely that Congress will approve it because it exceeds the limits set by sequestration. It cut discretionary spending by 10 percent between 2013 and 2021.

The media usually uses the base budget when it talks about military spending.

But that doesn't tell the whole story. The base budget only pays for the day-to-day operations of the Defense Department.

The Overseas Contingency Operations pays for wars and overseas operations. It is not an official part of the budget. It also is not subject to sequestration. It paid for the War on Terror. That includes expenditures for the Wars in Iraq and in Afghanistan. Here's the OCO spending, and what the new total is when it's added to the base budget.

FYOCO (in Billions)Base + OCO (in Billions
2006$124.0$534.6
2007$169.4$600.9
2008$186.9$665.9
2009$153.1$666.3
2010$163.1$691.0
2011$158.8$687.0
2012$115.1$645.5
2013$82.1$577.6
2014$85.2$581.5
2015$64.2$560.3
2016 Actual$58.6$580.3
2017 Enacted$82.4$598.5
2018 Budget$64.6$639.1

OCO spending peaked at $186.9 billion in 2008. That's the year violence escalated in Afghanistan.

It was also the year after President Bush sent a surge of 20,000 troops to Iraq to keep the peace.

Once the base budget is combined with the OCO spending, a different picture emerges. President Obama becomes the biggest spender on defense. He spent $691 billion in 2010. He sent a surge of forces to Afghanistan. It was after sending 47,000 troops to Afghanistan in 2009.

President Trump only proposed spending $639.1 billion. He requested more than Obama for the base budget, but much less on overseas operations. Obama ended the War in Iraq in 2011. He significantly cut U.S. troop involvement in Afghanistan in 2013. By 2016, there were only 12,457 boots on the ground in those countries. Their role was to oversee U.S. interests and provide support to local troops.

Review Each Year's Budget