1. Department of Defense Budget APEX 2006

2. Strategic Priorities The Quadrennial Defense Review – the first conducted in an era of global terrorism – continues a shift in emphasis by identifying strategic priorities. The FY 2007 budget invests in capabilities and forces in these priority areas. –Prevail in Irregular Warfare Operations –Defend the Homeland Against Advanced Threats –Maintain America’s Military Superiority –Support Service members and their families

3. Department of Defense Topline (Discretionary budget authority $ in billions) FY 06FY 07 Change DoD Budget410.8439.3 +28.5 FY 2007 Budget provides: 7 percent increase over FY 2006 enacted budget Capabilities for future challenges Advanced technology for greater operational capability and combat power Robust pay & incentives for recruitment and retention Superior health care coverage

4. VIETNAM (1968) KOREA (1953) GULF WAR (1991) GWOT 34.5% 11.7% 8.9% 6.0% 3.9% (2005) BUILD UP (1986) 4.6% DoD Budget as % of GDP Source: Historical Table, Budget of the United States Government

5. FY 2007 Budget by Service (Discretionary budget authority, $ in billions) FY 06FY 07 Army99.1111.8+12.7 Navy106.5110.6+4.1 Marine Corps16.016.8+0.8 Air Force124.1130.4+6.3 Defense Wide 65.169.7+4.6 Total410.8439.3+28.5 Increase Enacted

6. FY 2007 Budget by Title (Discretionary budget authority, $ in billions) FY 06*FY 07Increase Military Personnel106.8110.8+4.0 O&M142.6152.0+9.4 Procurement76.284.2+8.0 RDT&E71.073.2+2.2 Military Construction8.012.6+4.6 Family Housing4.04.1+0.1 Working Capital Funds2.22.4+0.2 Total410.8439.3+28.5 Enacted *FY 06 supplemental not included in FY 06 totals

7. 2011 DoD Procurement (current $ in billions) 1996 $42.6B 2001 $62.6B 2007 $84.2B 1985 $96.8B

8. Sustaining Military Health Care DoD provides one of the best health care coverage programs in the Nation. Our goal is to maintain exceptional health care coverage for those who serve by placing the program on a fiscally sound foundation for the long-term. Health care costs are projected to rise by 31 percent from FY 05 to 11. 35 37 39 40 42 44 46 Department of Defense Health Care (dollars in billions)

9. FY 2007 Budget Congressional Action Appropriation Bills: –House:$4 billion reduction –Senate:$9 billion reduction –Significant operations/military personnel reductions –Selected acquisition programs affected –War on terrorism funding included –House/Senate bills differ in framework Denied Savings proposals “Churn” Potentially difficult conference Possible continuing resolution

10. FY 2008 Budget Challenges Constrained fiscal controls Must-pay Bills –Inflation –Fuel –Pay raises ConPlan 7500 Core readiness –Force structure –Training –Depot Maintenance QDR Initiatives BRAC Implementation Equipment recapitalization War on Terrorism