World

Somebody is too optimistic about defense spending

by YankeeJim | October 19, 2010 at 05:07 am

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This article from Washington Technology, a defense-biased journal, sees growth in IT spending and the defense budget. I don’t. There is yet to be any evidence that the US economy is being fixed sufficiently to warrant supporting growth in defense spending.
The defense industry needs to recalibrate, unless of course they believe they “own” the US government. Even if they do, the engine for such corporate welfare, the private sector is broken. Unless, they plan to balance trade with all weapons systems exports.

“DOD cuts will slow overall fed IT spending growth
TechAmerica survey sees 5-year growth rate of 2.8 percent

By David Hubler
Oct 18, 2010

Federal spending on information technology will increase slightly in the next five years even as overall defense spending declines, a new TechAmerica Foundation Vision Survey forecasts.

Growth is likely to be constrained by deficit-cutting measures and uncertainty related to program freezes and the consolidation of data centers, the survey states.

Similarly, defense spending is likely to decline in the face of budget cuts driven by an uncertain global economy, a focus on domestic priorities and efforts to reduce deficit spending.

The foundation’s 46th annual five-year survey of federal IT spending predicts a modest compound annual growth rate of 2.8 percent in current dollars, from $79.6 billion in fiscal 2011 to $91.3 in fiscal 2016.

Meanwhile, a 10-year Defense Department forecast predicts spending in current dollars will drop 1.1 percent, from $704 billion to $633 billion in fiscal 2021.

When inflation is taken into account, the defense topline is expected to decline to $512 billion in constant dollars (i.e., in terms of the buying power of fiscal 2011 dollars) by 2021, according to TechAmerica.

Breaking down all federal IT spending, the foundation projects the defense IT market will grow 1.8 percent between fiscal 2011 and 2016, increasing from $36.9 billion to $40.3 billion in current dollars.”