The Center for Strategic and International Studies (CSIS) International Security Program convened a high-level, half-day Defense360 conference in Washington, D.C., to dissect the recently released Fiscal Year 2017 (FY2017) defense budget request and evaluate the underlying strategic priorities driving the nation’s military investments. The event brought together senior Pentagon leadership, renowned defense economists, and prominent national security analysts to scrutinize the intersection of fiscal constraints, national security strategy, and capability development.
Against the backdrop of shifting geopolitical dynamics, rising great-power competition, and ongoing operations in the Middle East and Eastern Europe, the conference provided a vital forum for public discourse regarding the Pentagon’s financial blueprint. As lawmakers on Capitol Hill grapple with statutory spending caps mandated by the Budget Control Act of 2011, the FY2017 defense budget request served as a crucial litmus test for how the Department of Defense (DOD) intends to balance modernization, readiness, personnel costs, and force structure in an era of constrained resources.
Context and Background of the FY2017 Defense Budget Request
The release of the FY2017 defense budget request arrived at a pivotal moment for United States national security policy. Formulated under the leadership of Secretary of Defense Ashton Carter and the Obama administration’s national security team, the budget proposal sought to pivot the military away from counterinsurgency paradigms toward high-end deterrence and multi-domain warfare. However, these strategic ambitions faced severe headwinds from the statutory budget caps established by the Bipartisan Budget Act of 2015, which provided temporary relief from the Budget Control Act sequestration cuts but left long-term fiscal predictability in question.
The defense topline requested for FY2017 included approximately $583 billion in total national defense discretionary funding, split between the base budget and theにつき Overseas Contingency Operations (OCO) account. Within this total, the base budget accounted for roughly $524 billion, while the OCO account—traditionally reserved for emergency war-fighting needs—was leveraged to backfill base budget requirements, sparking fierce debate among fiscal hawks and defense strategists alike.
Understanding the calculus behind these funding allocations requires examining the strategic environment of the mid-2010s. The resurgence of Russian assertiveness in Europe, the rapid military modernization and territorial expansion of China in the South China Sea, the persistent threat of violent extremist organizations, and the technological proliferation of anti-access/area-denial (A2/AD) capabilities required the Pentagon to make difficult trade-offs. The Defense360 conference was designed specifically to unpack how civilian leadership translated these formidable global threats into line-item budgetary decisions.
Chronology of the Conference Sessions
The conference proceedings commenced with opening remarks delivered by Dr. John Hamre, President and Chief Executive Officer of CSIS. Dr. Hamre framed the morning’s discussions by emphasizing the structural challenges facing the defense enterprise, noting that the tension between modernization and operational readiness remains the defining dilemma for modern defense planners. He underscored the necessity of robust analytical frameworks to evaluate whether current spending levels are adequate to meet the demands of the National Military Strategy.
Following the opening remarks, the first substantive panel of the morning featured the primary architects of the defense budget request. Moderated by Todd Harrison, Director of Defense Budget Analysis and Senior Fellow with the CSIS International Security Program, the discussion included Mike McCord, Under Secretary of Defense (Comptroller) and Chief Financial Officer; Dr. Jamie Morin, Director of Cost Assessment and Program Evaluation (CAPE); and Robert Scher, Assistant Secretary of Defense for Strategy, Plans, and Capabilities.
This panel provided a comprehensive overview of the administration’s strategic rationale. Mr. McCord articulated the fiscal constraints and realities that shaped the topline figures, detailing the mechanisms used to balance the accounts under legislative caps. Dr. Morin elaborated on the analytical methodologies employed by CAPE to evaluate program cost-effectiveness, risk assessment, and long-term affordability. Mr. Scher connected these fiscal metrics directly to geopolitical strategy, explaining how the budget supports regional deterrence postures, alliance commitments, and capability development in critical domains such as cyber, space, and electronic warfare.
The second half of the morning transitioned to an external expert panel, also moderated by Todd Harrison. This session featured a diverse group of national security veterans and policy analysts, including Tina Jonas, former Under Secretary of Defense (Comptroller) and Senior Adviser at CSIS; Andrew Hunter, Director of the Defense-Industrial Initiatives Group at CSIS; Mark Cancian, Senior Adviser with the CSIS International Security Program; Shawn Brimley, Executive Vice President and Director of Studies at the Center for a New American Security (CNAS); and Roger Zakheim, Visiting Fellow at the American Enterprise Institute (AEI).
This second panel offered critical commentary on the administration’s proposals. While acknowledging the strategic clarity in identifying priority threats, the panelists debated the sustainability of relying on OCO funding for base budget requirements, the pacing of major acquisition programs, and the adequacy of end-strength levels across the military services.
Supporting Data and Financial Allocations
The FY2017 defense request reflected deliberate choices regarding where to invest and where to accept risk. A breakdown of the budget reveals several key trends and allocations that were heavily scrutinized during the conference:
- Research, Development, Test, and Evaluation (RDT&E): Recognizing the erosion of the U.S. technological edge, the budget prioritized RDT&E funding, allocating approximately $71.8 billion. This surge was intended to fuel the "Third Offset Strategy," an initiative aimed at developing game-changing technologies—such as artificial intelligence, autonomous systems, advanced hypersonics, and quantum computing—to deter technologically advanced adversaries.
- Force Structure and Readiness: The budget sought to halt the dramatic end-strength reductions that had characterized previous years, stabilizing active-duty Army troop levels at roughly 475,000, the Marine Corps at 182,000, and maintaining stable force levels for the Navy and Air Force. However, panelists debated whether these personnel levels were sufficient to simultaneously maintain global presence, deter aggression in multiple theaters, and preserve high readiness standards.
- Major Acquisition Programs: Multi-billion-dollar modernization programs occupied central positions in the budget. The procurement of the F-35 Lightning II joint strike fighter, the development of the B-21 Raider long-range strike bomber, the construction of Virginia-class submarines, and the modernization of the nuclear triad (including Columbia-class ballistic missile submarines and ground-based strategic deterrents) accounted for a substantial portion of the capital investment portfolio.
- The OCO Controversy: The utilization of roughly $58.8 billion in OCO funding—with a portion explicitly designated to bridge the gap between statutory budget caps and the Department’s perceived operational needs—drew considerable criticism from budget analysts. Critics argued that utilizing war-fighting funds for enduring baseline requirements obscured true structural deficits and avoided necessary, albeit politically painful, budget reforms.
Official Responses and Expert Assessments
Throughout the conference, divergent viewpoints emerged regarding the viability and wisdom of the FY2017 submission.
Administration officials defended the budget as a pragmatic and strategically sound compromise. Mr. McCord emphasized that within the confines of the Bipartisan Budget Act, the Department maximized every available dollar to preserve technological superiority and force readiness. Dr. Morin stressed that CAPE’s rigorous cost estimation processes ensured that major acquisition programs were placed on realistic financial trajectories, minimizing the risk of the cost overruns and schedule slippages that had historically plagued defense procurement. Furthermore, Mr. Scher maintained that the budget successfully realigned defense resources to counter modern state-based threats from nations like Russia and China, while retaining the capacity to address ongoing crises in the Middle East.
Conversely, external experts offered a more cautionary appraisal. Tina Jonas highlighted the inherent dangers of fiscal unpredictability, noting that chronic reliance on Continuing Resolutions (CRs) and last-minute budgetary compromises severely undermines the efficiency of the defense-industrial base. Andrew Hunter and Mark Cancian pointed out that while RDT&E investments were commendable, the sheer magnitude of the modernization bow wave—the convergence of simultaneous upgrades to nuclear, naval, aviation, and ground systems—would place immense strain on future defense budgets in the 2020s.
Shawn Brimley and Roger Zakheim focused on the broader strategic implications, arguing that the defense topline remained fundamentally inadequate to execute the ambitious goals outlined in the National Military Strategy. They contended that statutory spending caps handcuffed military planners, forcing them to accept unacceptable levels of strategic risk in a deteriorating international security environment.
Broader Impact and Implications for Defense Policy
The discussions at the CSIS Defense360 conference resonated far beyond the walls of the conference room, offering a microcosm of the perennial debate between fiscal discipline and national security requirements in American politics.
The analytical insights generated during the event underscored several critical takeaways for the future of U.S. defense policy:
- The Modernization Dilemma: The defense enterprise faces a structural imperative to modernize its aging equipment and outpace technologically sophisticated adversaries. However, doing so requires freeing up capital by divesting legacy platforms—a process routinely met with fierce political resistance from lawmakers who protect domestic military installations and manufacturing contracts.
- The Budgetary Process is Broken: The reliance on short-term funding mechanisms, debt ceiling standoffs, and the looming threat of sequestration creates profound inefficiencies. Defense contractors cannot optimize supply chains or invest in long-term workforce development when funding streams are perpetually uncertain.
- Strategy-Resource Mismatch: The persistent gap between stated national security objectives and allocated resources remains a central vulnerability. As global challenges multiply, defense planners are routinely asked to accomplish more with resources that fail to keep pace with inflation, technological inflation, and rising personnel costs.
By convening policymakers, financial managers, and independent analysts, the CSIS Defense360 conference provided an indispensable public accounting of the defense budget process. As Congress began its deliberations on the FY2017 National Defense Authorization Act (NDAA) and defense appropriations bills, the data, arguments, and strategic assessments voiced at the conference helped inform legislative oversight and shape the trajectory of American military power for years to come.
