Despite US$850bn budget, serious concerns emerge about the continuing US capacity to maintain global order

Amid the jubilation of its ultimate triumph over the Soviet Union, the United States stood alone as the world’s most powerful nation, unparalleled in human history with its capacity to unilaterally wield its immense power to solve the world’s problems.

For the most part, the world was happy to allow the US to unilaterally fulfil this role; however, this wasn’t to last.

Off the back of this “American sacrifice”, as it has been described by US-based strategic policy analyst and author Peter Zeihan, much of the developing and developed world alike enjoyed reliable access to energy at reasonable prices, paving the way for the period of economic growth and prosperity in the aftermath of the Cold War.

Today, however, at every turn, it looks as if the global order upon which our wealth, security, and stability have been built over the last eight decades is under assault.

At the centre of this emerging new world order is the relative decline of the world’s once undisputed economic, political, and strategic hegemon, the US, coupled with the emergence of, or in some cases, re-emergence of once mighty historic powers with their own unique and often competing designs for the global order.

Whether it is on the steppes of eastern Europe, the rolling hills of the Holy Land, or the vast waters of the Pacific, the blood is in the water, and the sharks are circling.

Revolutionary focused powers like China and a resurgent Russia under Vladimir Putin, among other emerging global powers, including India, Brazil, and a number of others, across the “developing world”, are seeking to challenge the post-Second World War order and establish their own “world order”.

VIEW ALL

As a result, the US has been progressively expanding its defence expenditure in order to modernise, replace and upgrade its vast arsenal, much of which still is from the last great US military build-up under the Reagan administration.

The latest example of which, the financial year 2024 US defence budget has major implications for the US global hegemony and allies like Australia, which have grown increasingly dependent upon the continuing benevolence and capacity of the US to maintain the post-Second World War global order.

Setting the scene, US Secretary of Defense Lloyd Austin stated: “The FY 2024 budget is the most strategy-driven request we’ve ever produced from the Department of Defense. And as our National Defense Strategy makes clear, the People’s Republic of China (PRC) is our pacing challenge.

“This budget seeks to meet this critical challenge today, tomorrow, and into the future by providing the resources today to continue to implement our National Defense Strategy and keep our nation safe while delivering a combat credible joint force that is the most lethal, resilient, agile, and responsive in the world.”

Secretary Austin added: “To sustain our military advantage over China, it makes major investments in integrated air and missile defences and operational energy efficiency, as well as in our air dominance, our maritime dominance, and in munitions, including hypersonics.

“This budget includes the largest ever request for the Pacific Deterrence Initiative, which we are using to invest in advanced capabilities, new operational concepts, and more resilient force posture in the Indo-Pacific region. It also enables groundbreaking posture initiatives in Guam, Mariana Islands, the Philippines, Japan, and Australia.”

However, despite the rhetoric, all is not well with the US military, and this budget has some major challenges for continuing US military dominance across the globe.

What is in the budget request?

In recognising the People’s Republic of China as the major “pacing challenge” for the US, the Biden administration sets the tone for US response, with an emphasis on building what it calls “integrated deterrence”, which is a strategic deterrence umbrella created by the aggregated capability of the various branches of the US Armed Forces.

Doing so allows each of the branches to maximise their efficacy and efficiencies in their respective domains while strengthening the whole to establish an integrated “joint force” capable of fighting and winning against a peer competitor, or near-peer competitor across all domains.

This emphasis includes immense expenditure on critical deterrence capabilities across the US Armed Forces, including:

• US$61.1 billion (AU$93.04 billion) for air power to continue developing, modernising, and procuring lethal air forces, including a focus on fighters, including F-22, F-35, F-15EX; the B-21 bomber, mobility aircraft, including KC-46A; specialised support aircraft; and unmanned aircraft systems.
• US$48.1 billion (AU$73.22 billion) for sea power, including new construction of nine battle force fleet ships and continued funding for the incremental construction of Ford Class nuclear-powered aircraft carriers and Columbia ballistic missile submarines, with a cut to planned Virginia Class submarine numbers.
• US$13.9 billion (AU$21.15 billion) for land power supporting the modernisation of Army and Marine Corps combat equipment: armoured multi-purpose vehicle, amphibious combat vehicle, and optionally manned fighting vehicle.
• US$37.7 billion (AU$57.4 billion) for nuclear enterprise modernisation across the US strategic nuclear arsenal (including advance funding for the LGM-35A Sentinel ICBM).
• US$29.8 billion (AU$45.4 billion) to enhance missile defeat and defence capabilities (including ongoing development for the Next-Generation Interceptor and the development of a resilient overhead persistent infrared capability in low-Earth orbit and medium-Earth orbit).
• US$ 11 billion (AU$16.75 billion) to deliver advanced precision-guided munitions (including hypersonic prototyping and maximising joint air-to-surface standoff missile, and long-range anti-ship missile, and Standard Missile 6 capacity through multiyear procurement.)
• US$33.3 billion (AU$50.7 billion) worth of investment in critical space capabilities, resilient architectures, and enhanced space command and control (including position, navigation, and timing for GPS III Follow-On satellite support and Next-Generation Operational Control System development and 15 launch vehicles and launch range upgrades).

This vast amount of “capability” or “platform” expenditure is further supported by a US$146 billion (AU$222.3 billion) to enhance the readiness and campaigning capabilities of the US Armed Forces, with an emphasis on prioritising “joint force readiness” designed to build and maintain critical warfighting forces across the globe.

As part of this, the US has committed US$9.1 billion (AU$13. billion) to the Pacific Deterrence Initiative (PDI), a 40 per cent increase from FY2023 and includes the construction of resilient and distributed air basing, new missile warning and tracking architecture, construction to enable enhanced US posture in the western Pacific, including funding for the construction of critical missile defence capabilities for Guam and Hawaii, and multinational information sharing, training, and experimentation.

Finally, rounding this out, the US will commit US$30.6 billion (AU$46.6 billion) to acquire munitions, ranging from basic small arms munitions to tactical missile capabilities and the US strategic missile force. This will also be supported by a US$1 billion (AU$1.5 billion) investment in the “munitions industrial base” to expand capacity to support growing demand as a result of ongoing conflict in Europe and rapid depletion rates in the Red Sea.

Major concerns over the long term

However, despite this immense spending, not all is well with the mighty US Armed Forces at a time when both America and the world can ill afford continued decline and weakness in the world’s superpower.

Highlighting this is a piece for The Wall Street Journal by its editorial board titled “Joe Biden shrinks the US military”, which stated: “The President’s $850 billion request for the Pentagon in 2025 is a mere 1 per cent increase over 2024. That’s a cut after inflation, the fourth in a row Mr Biden has proposed. What’s happened in the past year? Israel was brutally attacked and is now fighting a war for survival. Iranian proxies have fired drones and rockets at US troops in the region more than 100 times, and its terrorists in Yemen have taken a global shipping lane hostage.”

Further expanding on this is the Congressional Budget Office (CBO) in its report titled Long-term Implications of the 2024 Future Years Defense Program, which stated: “The proposed budget for DOD in fiscal year 2024 totals $842 billion. Adjusted for inflation, that amount is about the same as the amount appropriated for 2023 (excluding the supplemental funding provided in 2023) but is 5 per cent more than the amount anticipated for 2024 in the previous FYDP.”

Going further, the CBO stated: “According to the 2024 FYDP, DOD’s budget after 2024 would remain nearly unchanged (when adjusted for inflation) through 2028.”

The dire financial situation only gets worse, the further down that decade-long projection you look, with major cost implications and growth, with major growth as a result of a near 70 per cent increase due to the operation and maintenance of equipment or military personnel, bringing a 10 per cent increase to the US military budget in 2038.

Ultimately, this would have a dramatic impact on the long-term funding trajectory of the US Armed Forces, particularly if, as the CBO stated, the costs are underestimated (due to inflation, cost overruns, delayed delivery timelines, etc) in the 2024 FYDP. The CBO stated: “The costs of DOD’s plans may be underestimated in the 2024 FYDP. They would be about 3 per cent higher from 2024 to 2028 and about 4 per cent higher from 2024 to 2038 if the department’s costs grew at rates consistent with CBO’s economic forecast (in areas such as compensation) or historical trends (in areas such as weapons acquisition).”

Ultimately, this would translate to a real-term cuts to US defence funding requests over the next decade despite the rapid deterioration of the geopolitical and geostrategic environment.

Reverting to The Wall Street Journal, the budget contraction will have a dramatic impact on the individual branches, with the US Army to shrink 442,300 troops, despite the Biden Administration authorising 485,000 and analysts stating that 500,000 is more appropriate given the threat environment.

Meanwhile, the US Navy will retire 10 ships while only acquiring six new vessels, resulting in a fleet of 287 ships in 2025 from 296 today. This also has dramatic impacts on US submarine production, with the Navy agreeing to acquire only a single Virginia Class submarine this year as opposed to the planned two, which will result in subsequent flow-on impacts for the delivery timeline for the first of Australia’s own Virginia Class submarines under AUKUS Pillar 1.

The Wall Street Journal stated: “The industrial base is struggling to produce two boats a year, and the administration presents its decision as a concession to this incapacity ... Yet buying only one boat is a terrible signal for capital investment, and it tells adversaries that the US isn’t serious about rearming. The US needs to build 2.3 subs a year to meet the Navy’s needs while also supplying subs to Australia under the AUKUS pact.”

Going further, The Wall Street Journal added: “The larger picture presented by this budget is that the US military is in a state of managed decline. US defence spending falls to a projected 2.4 per cent of the economy in 2034, down from an estimated 3.1 per cent this year, which is half the nearly 6 per cent spent during the 1980s when the US was rearming to win the Cold War.”

Far from the firm words of Secretary Austin, who added: “As the PRC races to modernise its military, this budget will sharpen our edge by making critical investments across all time frames, theaters, and domains. Among numerous important actions that bolster our combat credibility in the short term, this budget makes the department’s largest-ever investments in readiness and procurement – and our largest investment in research and development.”

All of this combines, unfortunately, to reinforce the reality of America’s waning capacity to act as the world’s unrestricted global hegemon, a reality that surely isn’t lost on China’s leadership but seemingly needs to be reiterated for both the Australian public and our political leaders.

Final thoughts

One can’t help but be drawn back to the comments of US Secretary of State Antony Blinken when he revealed: “When it comes to Russia’s war against Ukraine, if we were still in Afghanistan, it would have, I think, made much more complicated the support that we’ve been able to give and that others have been able to give Ukraine to resist and push back against the Russian aggression.”

This statement presents a rather uncomfortable reality that the emperor, indeed, has no clothes and has a long way to go before the wardrobe will be fully restocked.

Importantly, for Australia’s policymakers and the public, we are going to have to accept two uncomfortable realities. First, the US, despite the best of intentions, may not be capable of actively defending the global order on a scale and over a protracted period of time as it currently stands.

Second, Australia is in for a bumpy ride as the Indo-Pacific becomes the main battleground for geopolitical, economic, and strategic competition in the 21st century.

We can’t escape this, so we had better plan accordingly.

Ultimately, we need to see Australia begin to play the long game to fully capitalise on the trends and opportunities transforming the Indo-Pacific and respond to challenges as they arise.

The most important questions now become, when will we see a more detailed analysis and response to the challenges and opportunities facing Australia, and when will we see a narrative that better helps industry and the Australian public understand the challenges faced and opportunities we have presented before us, and rouse them to action?