Covid-19: Pentagon Budget Unlikely to See Short-Term Impact, but Growing Debt Could Raise Long-Term Issues

The US Department of Defense (DoD's) USD740.5 billion discretionary defence budget request for fiscal year (FY) 2021 is unlikely to be affected by the outbreak of Covid-19, but responses to the virus and its economic effects are likely to increase US public debt and potentially hit budgets in the longer term. Within nine years, annual interest...

The US Department of Defense (DoD's) USD740.5 billion discretionary defence budget request for fiscal year (FY) 2021 is unlikely to be affected by the outbreak of Covid-19, but responses to the virus and its economic effects are likely to increase US public debt and potentially hit budgets in the longer term.

Within nine years, annual interest payments on publicly held federal debt have been projected to eclipse current defence outlays by FY 2030, potentially reaching USD755 billion annually, according the White House's Office of Management and Budget. With greater debt, that time may now come sooner.

The short-term defence budget impact in the United States is likely to be minimal, but outlays are expected to be somewhat reduced as many large military exercises are cancelled and contract awards or equipment acceptances are delayed.

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