I am retired and take educated guesses on all things financial.

February 02, 2007

February 4, 2007: Defense appropriation tidbits 07/08

1.Special robot (many more devices of this sort are in the pipeline),2. USCG Walnut coming home to Honolulu after meritorious service in the Gulf -2003, 3.Army in action in Iraq (undated) and 4. how some Democrats in Congress view our military.

The President will recommend a 10% increase for the 2008 military budget. The component that funds the defense industry will be up 12.4%.

Supplemental war spending for 2008 will be requested at $142B, a 10% increase from 2007.

The supplemental request for the War on Terror for 2007 will be about $93B, less than anticipated.

Including War on Terror spending, military spending will be requested to grow at 14% levels for 2008.

Congress approved only $382B of the President's 2007 $439B Baseline military budget, cutting most deeply into MILPER and O&M while increasing family housing a notch.
Then, they increased the Bridge Fund from a requested $50B to $70B, a budgetary slight of hand. A second supplemental request for $94B is expected the second half of the year. If things improve in Iraq, the President will probably get it.

One reason the 2008 budget request is high is that the Administration may have concluded it has limited time and resources to continue to fund and prosecute the war in Iraq. This may be the last shot to get it right.

Another reason is that the $100B projected increase in the 2008 baseline budget includes both the initial cost of expanding permanent end strength for the Army/ Marines and, the incorporation of significant portions of OIF Optempo expenses into the 2008 baseline budget as directed by Congress in the 2007 Defense Authorization Act.

WARNING: Companies that depend upon the present conflict in Iraq to support their coffers had better begin to diversify their product line. Quickly. Investors must execute precise due diligence before purchasing stocks of this genre.

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