Providing for the Common Defense A Promise Kept to the American TaxpayerSeptember 2018Weakness is the surest path to conflict, and unquestioned strength is the most certain means of defense.- President Donald Trump the secretary of defense September 26, 2018The Bipartisan Budget Act of 2018 enabled the Department of Defense (DoD) to continue rebuilding the U.S. military after years of destructive budget cuts. In a time of competing priorities, Congress demonstrated political courage to ensure America's sentinels remain the combat-credible military force we need to deter war and guarantee the President and our diplomats always negotiate from a position of strength. Congress did its part and we are grateful to the American taxpayers for their support. It is now DoD's duty to spend these funds responsibly. This report demonstrates how DoD has kept its promise that every decision we make is focused on lethality and affordability. The following pages highlight how our investments over the last 18 months directly support our 2018 National Defense Strategy's three lines of effort: Restoring readiness and building a more lethal force; Strengthening existing alliances while building new partnerships abroad; and Reforming and modernizing our Department for greater affordability, accountability, and performance. Going forward, stable funding rooted in a consistent, predictable budget process will be essential to fielding a force that can deter and if necessary, defeat any threat in this constantly changing world. I look forward to continuing our work with Congress to protect this great experiment in democracy and maintain the trust of the American people.James N. Mattis Secretary of DefenseREBUILDING THE MILITARYTABLE OF CONTENTS Defense Challenges....... 1 The 2018 National Defense Strategy ...... 2 Funding the National Defense Strategy 3 People: Adapting the Force ........ 4 Operations: Restoring Readiness ........ 5 Investments: Enhancing Lethality ........ 7 Strengthening Alliances as We Attract New Partners ..... 9 Business Reform to Support the Warfighter .. 11 Financial Statement Audit .......... 12 Protecting the Next Generation ... 13Providing for the Common Defense - A Promise Kept to the American TaxpayerDEFENSE CHALLENGES Primary Challenge: Great Power Competition CHINA is using influence operations to penetrate democratic societies in a whole-ofgovernment approach and is leveraging military modernization and predatory economics to coerce other countries in an effort to reorder the Indo-Pacific region and beyond to its advantage. China's militarization of disputed features in the South China Sea contributes to the intimidation and coercion of regional allies and partners, undermines the principles of a free and open Indo-Pacific, and is inconsistent with President Xi's 2015 Rose Garden pledges to President Obama.RUSSIAseeks veto authority over nations in their governmental, economic, and diplomatic decisions in order to shatter the North Atlantic Treaty Organization (NATO) and change European and Middle East security and economic structures to its favor. Russia continues to use destabilizing activities as a security tool and subjugates democratic processes, as demonstrated by its occupation of territory seized following its invasion of Georgia in 2008 and its occupation of parts of Ukraine in 2014. In Syria, it supports the murderous Assad regime.Enduring Challenges NORTH KOREA DoD continues to ensure that the President and our diplomats negotiate from a position of strength with credible military options available to protect the U.S. and its interests. The U.S. works with allies and likeminded nations to enforce United Nations Security Council resolutions.STATE OF DEFENSE IN 2016 Five years of operating under destructive spending caps left DoD with a significant funding shortfall. This resulted in: The smallest military since 1940; Key munitions shortages; Aircraft and ships unable to deploy; Declining technological edge; and An urgent requirement to refresh our nuclear deterrent.IRANis the principal destabilizing force in the Middle East and is increasing its malign influence, using state-sponsored terrorist activities, a growing network of proxies, and its cyber, naval, and missile programs. Iran is aiding a humanitarian catastrophe in Yemen by supporting and arming the Houthis in their conflict against the internationally recognized government.VIOLENT EXTREMIST ORGANIZATIONScontinue to sow hatred, destroying peace and murdering innocents across the globe, particularly in regions with unstable political and economic structures. Terrorist acts committed by ISIS continue to pose a threat to the stability of the Middle East, despite the defeat of the physical caliphate in Syria and Iraq.1Providing for the Common Defense - A Promise Kept to the American TaxpayerTHE 2018 NATIONAL DEFENSE STRATEGY Consistent with President Trump's National Security Strategy, the first National Defense Strategy in a decade orchestrates DoD's response to a more complex security environment than any experienced in recent memory. The central challenge to American prosperity and security is the reemergence of long-term strategic competition by China and Russia. As directed in the National Defense Strategy, DoD is making urgent and significant change to expand the competitive space and rebuild America's military advantage. A more lethal, agile, and innovative Joint Force, together with a robust constellation of allies and partners and departmental reform, will sustain American influence and ensure favorable balances of power that safeguard American interests.DoD's Three Lines of EffortCHANGING COURSE IN 2018 BUILD A MORE LETHAL FORCE (PAGES 4-8)STRENGTHEN ALLIANCES AND ATTRACT NEW PARTNERS (PAGES 9-10)REFORM THE DEPARTMENT FOR GREATER PERFORMANCE AND AFFORDABILITY (PAGES 11-12)Recognizing the challenges facing the nation and DoD, Congress took the difficult step of reversing the 2016 trends and restoring funding to pre-spending cap levels with the 2018 and 2019 budgets, facilitating implementation of the National Defense Strategy. These budgets are driven by a strategy to reinforce all aspects of national power and preserve sustainable military advantages for the U.S. warfighter. DoD now has momentum, but needs stable funding to continue its efforts.Providing for the Common Defense - A Promise Kept to the American Taxpayer2FUNDING THE NATIONAL DEFENSE STRATEGY In 2018, the American people, through the President of the United States and Congress, provided $700 billion in national security funding, with $671 billion going to DoD to implement the 2018 National Defense Strategy. DoD is 15% of the Federal Budget; so for every thousand dollars paid in taxes, $150 goes to the Department for people, operations, and investments in new military equipment.WHERE DO YOUR TAX DOLLARS GO For every $1,000 in Federal taxes: Department of Defense .. $150 People ..... $50 Operations .......... $47 Investments ......... $53THE FISCAL YEAR 2018 DOD BUDGET Department of Defense .......... $671B People ........ $222B Operations . $212B Investments$237BYOUR TAXES AT WORK PEOPLEDEPARTMENT OF DEFENSE SPENDING IS NEAR HISTORIC LOWS AS A SHARE OF BOTH THE FEDERAL BUDGET AND THE NATIONAL ECONOMY DoD's % of the Federal Budget*Active Duty Military 483,500 Army 327,900 Navy 186,000 Marine Corps 325,100 Air Force DoD Civilians 741,671 FY18 Enacted AmountsGuard/Reserve 343,500 Army National Guard (NG) 199,500 Army Reserve 59,000 Navy Reserve 38,500 USMC Reserve 106,600 Air NG 69,800 AF Reserve19572017All Other 48%DoD 52%DoD 15% All Other 85%CURRENT OPERATIONAL FORCE 58 Army Brigade Combat Teams (31 Active and 27 Guard/Reserve) 284 Navy Battle Force Ships 3 USMC Marine Expeditionary Forces 312 Air Force Operational Squadrons FY18 Enacted Amounts*DoD does not include funding for the U.S. Department of Veterans Affairs. Source: OMB Historical Tables 5-2 & 5-4; U.S. Depa