Trump’s 355-ship pledge complicates the Navy’s budget dilemma

The Chief of Naval Operations (CNO), Adm. Michael Gilday, is caught between a rock and a hard place, or, more appropriately, between Scylla and Charybdis. On the one hand, he rightly announced that he must assign top priority to the service’s Operations and Maintenance budget. With the United States having just passed through a war scare with Iran, and with American warships having previously operated against ISIS targets in Syria, the chief recognizes that his forces must be on constant alert, trained, supplied and ready to go to war with Iran at any time, even as they continue to operate against surviving ISIS fighters.

On the other hand, President Trump has made it clear that he not only expects the U.S. Navy to grow to 355 ships — a promise he made during the 2016 campaign — but for the Navy to do so by 2030, four years earlier than the service originally planned. For its part, the Navy’s original proposal for fiscal year 2021 called for a goal of 287 ships by fiscal year 2025, which begins in Trump’s last year in office if he is re-elected. That total would render it virtually impossible for the Navy to reach 355 ships by 2030. 

For that reason, the Office of Management and Budget (OMB) ordered the Navy to revise its plans so it can reach 355 ships — manned and unmanned — by 2030. Yet, in order to do so, Gilday needs a bigger budget than is planned for the fiscal year 2021-2026 program. Since the Department of Defense (DOD) budget top line for FY 2021 is governed by spending caps to which the president and the Congress agreed in July 2019, the only way the Navy could get a funding increase would be to receive a larger share of the overall Pentagon budget. 

The Navy’s claim for more funds is because of its need to build a new class of strategic ballistic missile submarines to replace the aging Ohio Class, whose first boat was commissioned in 1981. Gilday has stated that the Columbia class that will replace the Ohio subs is his service’s highest shipbuilding priority. The Ohio cost about $3 billion in 2020 dollars. The first of the new Columbia class subs will cost nearly $7.5 billion. Gilday argues that the cost of the Ohio class represented 20 percent of the Navy’s budget, and accounted for 1 percent of the total DOD budget. 

On the other hand, he notes, Columbia will account for a somewhat larger percentage of the Navy budget, but the Navy’s share of the total budget is projected to be smaller than it was in the 1980s. Couple that fact with the CNO’s need for Operations and Maintenance funds, and the president’s demand for accelerating the schedule to achieve 355 ships, and one begins to appreciate Gilday’s dilemma.

To further complicate matters for the Navy, however, Secretary of the Army Ryan McCarthy has argued that the Army is already budgetarily short-changed in the DOD’s FY 21 budget plans, and that its share of the budget, currently below 25 percent, should grow. He argues that, contrary to Washington received wisdom, the Army is playing a significant role in the Pacific and is likely to enhance that role with additional deployments. 

Yet the Army’s funding could come only at the expense of the other services or as a result of cuts to “the Fourth Estate,” the collection of defense agencies that receive funds independent of the service departments and that currently command about 16 percent of the overall DOD budget. The latter already have seen their share of DOD funding decline in the past few years; how much additional cuts can be made to their budgets is an open question. That leaves the Navy, Marines and Air Force as the only potential sources of Army funding increases.

Since the fiscal year 1971, with the exception of the FY 1991 defense budget, the Army has been the service that received the smallest share of DOD spending, and the Navy the largest. Given the Navy’s needs, it is arguable that any increase in Army pending should not come at the Navy’s expense. Whether the Navy can increase its budget at the expense of other DOD agencies and departments is clearly another matter. 

Historically, the Navy has attempted to fund its strategic ballistic missile program outside its regular budget, arguing that the strategic program was a national, not a purely Navy, program. That argument never convinced DOD comptrollers, myself included. Perhaps this time might be different, but that is a doubtful prospect. Perhaps instead the Navy simply should backload its five-year plan so that it achieves 355 ships by 2030 by spending more funds in the out-years. It is easier to budget for out-years because, with some few exceptions, congressional appropriators fund programs on a single-year basis. 

In effect, the Navy could avoid facing the budgetary music for several years, possibly delaying tough decisions until the last year of a second Trump administration — if there is one — and then modifying the fiscal year 2025 budget when a new administration takes office. Whether the White House and OMB would consent to such an approach is uncertain at best. If they do not, the Navy can expect its budget pressures to be relentless, with the prospect of continuing headaches for the Navy’s leadership over the next several years. 

Dov S. Zakheim is a senior adviser at the Center for Strategic and International Studies and vice chairman of the board for the Foreign Policy Research Institute. He was under secretary of Defense (comptroller) and chief financial officer for the Department of Defense from 2001 to 2004 and a deputy under secretary of Defense from 1985 to 1987.