Pentagon’s future inflation losses revealed

The US military’s buying power to reduce by $110 billion in the near future amid a face-off with China, an industry group says

According to the National Defense Industrial Association (NDIA), the US Department of Defense needs an extra $42 million in fiscal 2019 to offset rising inflation and increasing procurement costs.

According to a Tuesday report, the Pentagon is expected to suffer a loss of $110 billion in purchasing power due record-setting inflation.

It also warns that this development “It comes at an extremely dangerous time” as the US faces challenges from China and still suffers from Covid-19 fallout, as well as supply chain and workforce issues. It also intersects with ongoing Russian military campaigns in Ukraine. Washington supplied Ukraine with weapons, aid and support.

Because of the lengthy acquisition and budget processes, inflation is especially disruptive for our national defense [the Pentagon]Inflation adjustments are delayed because of misuse,” the report states.

Learn more

US Defense Secretary Lloyd Austin (L) and Ukrainian Defense Minister Alexey Reznikov (R) at the meeting in Ramstein, September 08, 2022
New Ukraine Weapons Package unveiled by the Pentagon

If this deficit is not remedied, this will bring about “Maintainement backlogs and lower readiness ratings can lead to delays in modernization efforts.” and various other programs, undermining the overall readiness of US forces.

The report suggests that Congress increase the Fiscal Year 2023 Defense Budget by at least $42 Billion to prevent buying power loss and provide inflation relief for companies with long-term fixed price agreements with the Pentagon. It also recommends that future contracts be adjusted to reflect rising prices.

Meanwhile, all these figures and recommendations are based on the premise that “Inflation has reached its peak already” and will return to a “Normal” level in a couple of years.

However, many defense industry representatives don’t think they will receive the necessary aid, at least in the short term. “A sector-oriented solution that fully covers inflation is not possible this year, as there are competing interests and elections.“Yes,” Pawel Chdzicki, the leader of Aerospace and Defense at Miller Canfield, said to Reuters.

The defense industry group’s call to address the budgetary shortfall comes after the Pentagon advised its most vulnerable service members who were hit by inflation and skyrocketing gas prices to apply for food stamps as part of a Supplemental Nutrition Assistance Program.

This move would allow low-income members of the military and their families to receive a transfer card that can be used for food purchases in licensed retail shops.



Related Articles

Back to top button