After organizational sessions Friday, Congress meets today to certify the election of President-elect Donald Trump and Vice President-elect J.D. Vance, who will take office Jan. 20. We talked with John Ferrari of the American Enterprise Institute about what defense communities can expect over the next year, with Republicans controlling the White House, House and Senate.
Don’t forget to register for the Defense Communities National Summit – Navigating Change, taking place in the D.C. area March 31 to April 2, with a focus on how administration and legislative changes are affecting installations and communities.
ADC: What should defense communities watch for as a new Congress and a new administration take control?
Ferrari: One is how DOD and the new DOGE organization interact. Efficiencies and cost reductions, through the elimination of contractors, unneeded contracts and perhaps reductions in workforce are possible.
The second item to watch, given the tight margin in the control of the House of Representatives, is if prolonged fights over debt ceilings and appropriation levels could increase the risk of shutting down the government for some period of time or forcing DOD to operate under a full-year continuing resolution. DOD has never operated under a full-year continuing resolution, and while the odds are low, they are certainly not zero for this year.
Lastly, one other important item: In the recent National Defense Authorization Act, junior enlisted service members were approved for a 15% pay raise by April 2025. This should increase their discretionary income available to be spent in the communities surrounding our military bases.
ADC: There’s some uncertainty about the level of support some U.S. leaders want to provide to Ukraine this year. How does that dialogue affect defense manufacturing communities and the nation’s global standing?
Ferrari: There are two major wars going on that are consuming defense stockpiles, one in the Middle East and one in Europe. These wars have driven large investments in the industrial base, as well as for war materials, such as munitions and weapons.
Congress recently passed a very large funding increase for the submarine industrial base. Over the next several years, those funds will be used to pay shipyard workers additional wages and invest in critical shipyard infrastructure. In any future case, funds approved over the past several years have created a backlog of work that will keep the industrial facilities busy for a couple of years.
At this time, any speculation on whether there will be additional war funding for the Middle East or Ukraine would be very difficult to predict.
ADC: Last year’s NDAA, signed into law over the holidays, includes a big pay raise for junior enlisted troops, as well as other quality of life improvements. Do you think this will continue to be a focus of DOD and Congress this year?
Ferrari: Yes, the emphasis on quality-of-life improvements and pay were a particular focus in the last Congress. In the coming months, the Department of Defense will release the Fourteenth Quadrennial Review of Military Compensation. This is important and is the administration’s chance to provide their views to Congress concerning pay and quality of life improvements. We can expect that this upcoming Congress will review this report closely for any additional changes.
We also can expect that Congress will be monitoring military recruitment and retention closely to see if any adjustments are needed. With the extra pay raise coming later in the year, Congress may defer a year to see if further non-cost of living adjustments are needed.
