Reconciliation Recommendations of the House Committee on Armed Services

Legislation Summary

H. Con. Res. 14, the Concurrent Resolution on the Budget for Fiscal Year 2025, instructed the House Committee on Armed Services to recommend legislative changes that would increase deficits up to a specified amount over the 2025-2034 period. As part of the reconciliation process, the House Committee on Armed Services approved legislation on April 29, 2025, that would increase deficits.

Estimated Federal Cost

In CBO’s estimation, the reconciliation recommendations of the House Committee on Armed Services would increase deficits by $144.0 billion over the 2025-2034 period. The estimated budgetary effects of the legislation are shown in Table 1. The costs of the legislation fall within budget functions 050 (national defense) and 700 (veterans benefits and services).

Basis of Estimate

For this estimate, CBO assumes that the legislation will be enacted in summer 2025. CBO’s estimates are relative to its January 2025 baseline and cover the period from 2025 through 2034. Outlays of appropriated amounts were estimated using historical obligation and spending rates for similar programs.

Direct Spending

Enacting this legislation would increase direct spending by $144.0 billion over the 2025‑2034 period. (see Table 2). Almost all of that amount would result from specified direct appropriations for defense activities ($142.8 billion in outlays), with additional estimated amounts related to changes to military housing privatization authorities 
($1.2 billion in outlays).

Appropriated Amounts

The legislation would appropriate $150.3 billion for 2025. Of that amount, almost all would be for the Department of Defense (DoD), with the remainder for nuclear weapons activities of the Department of Energy ($3.2 billion) and the Armed Forces Retirement Home ($6 million). CBO expects that amounts appropriated by this legislation would be subject to sequestration under the Balanced Budget and Emergency Deficit Control Act of 1985. CBO estimates that a portion of any unobligated balances from those appropriations would be canceled in 2027, 2028, and 2029, which would reduce the budget authority provided by this legislation. After adjusting for the effects of sequestration, CBO estimates that, on net, specified budget authority would total about $146.3 billion and outlays from that budget authority would total $142.8 billion over the 2025-2034 period. The following sections would appropriate specific amounts for the following purposes:

• Section 20002 would appropriate $33.8 billion for shipbuilding programs, increasing outlays by $31.8 billion;
• Section 20003 would appropriate $24.7 billion for air and missile defense activities, increasing outlays by $23.5 billion;
• Section 20004 would provide $20.7 billion for the acquisition of munitions and sustainment of the defense industrial base, increasing outlays by $19.5 billion;
• Section 20005 would appropriate $13.5 billion to expedite the delivery of low-cost weapons and capabilities, increasing outlays by $13.0 billion;
• Section 20006 would appropriate $0.4 billion to improve the audit readiness of DoD’s financial statements and for cybersecurity programs, increasing outlays by $0.4 billion;
• Section 20007 would provide $7.3 billion for air superiority programs, increasing outlays by $6.8 billion;
• Section 20008 would provide $12.9 billion for improvements to nuclear forces (of which $3.2 billion would be for the Department of Energy), increasing outlays by $12.6 billion;
• Section 20009 would appropriate $11.1 billion to improve the capabilities of the U.S. Indo-Pacific Command, increasing outlays by $10.5 billion;
• Section 20010 would appropriate $11.5 billion to improve military readiness, increasing outlays by $10.9 billion;
• Section 20011 would appropriate $5.0 billion for border security activities, increasing outlays by $4.9 billion;
• Section 20012 would appropriate $2.0 billion for military intelligence programs, increasing outlays by $1.9 billion;
• Section 20013 would appropriate $10 million for oversight activities by the DoD Inspector General, increasing outlays by $9 million; and
• Section 20001 would increase budget authority by $8.5 billion. Of that amount, $7.3 billion would be specifically appropriated for efforts to improve the quality of life for members of the armed forces, increasing outlays by $6.9 billion.[1] The remaining budget authority and outlays in section 20001 would arise from changes to housing privatization authorities, described in the next section.

Estimated Amounts

Section 20001 would modify authorities related to the privatization of military housing that CBO estimates would increase direct spending by $1.2 billion over the 2025-2034 period.

To finance housing privatization projects, DoD typically enters into long-term contracts with private-sector developers to renovate, construct, operate, and maintain military housing. Those developers leverage DoD contributions, along with expected future Basic Allowance for Housing (BAH) payments for military personnel, to borrow additional capital to complete the projects.

CBO considers acquiring housing for military personnel in that manner to be a governmental activity, and that amounts expended by such public-private ventures should be recorded in the federal budget as outlays at the time they occur. When proposed legislation would affect transactions involving third-party financing of governmental activities, CBO’s cost estimate for the legislation shows budget authority for the full cost of the project at the time the project is initiated. Outlays are shown over the construction period for each project. In cost estimates, CBO classifies those cash flows as direct spending.

Subsection 20001(b) would increase, through 2029, the limit on the amount of funding that DoD can contribute to privatization projects. Measured by the total capital costs of a project, the section would raise DoD’s authorized contribution threshold from 33.3 percent to 60 percent. CBO expects that providing additional funding would facilitate DoD privatization projects that are not financially viable under current law.

CBO estimates that extra funding would allow DoD to initiate one additional privatized housing project by 2029. Based on the cost of previous projects, CBO estimates that the new project would cost $500 million. To account for the uncertainty regarding the timing of that project, CBO evenly distributed the estimated budget authority over the 2026‑2029 period. Thus, after accounting for the time needed to complete the construction of the project, CBO estimates that increasing the funding limit would increase direct spending by $450 million over the 2025-2034 period.

Subsection 20001(c) would authorize DoD to pay higher rates of BAH through 2029 to unaccompanied service members living in military housing (such as barracks) provided under the Military Housing Privatization Initiative. CBO expects that the increased payments would facilitate DoD privatization projects that are not financially viable under the current amounts for that allowance.

CBO estimates that in each year from 2027 through 2029, DoD would initiate one project for unaccompanied housing as a result of the higher rates. Based on the cost of previous projects and adjusting for inflation, CBO estimates that, on average, projects would cost $270 million each. Accounting for the time necessary to complete each project, CBO estimates that enacting the higher BAH would increase direct spending by $780 million over the 2025‑2034 period.

Uncertainty

Unobligated balances of appropriations provided by this legislation would be subject to sequestration procedures. The amount sequestered would depend on how quickly the agencies can obligate the provided amounts. If obligation rates differ from CBO’s estimates, the amount of balances canceled through sequestration could be greater or less than estimated here.

In addition, the cost and number of the military housing privatization projects arising from the temporary authorities in section 20001 could differ from CBO’s estimates.

Pay-As-You-Go Considerations

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. The net changes in outlays that are subject to those pay-as-you-go procedures are shown in Table 1.

Increase in Long-Term Net Direct Spending and Deficits

CBO estimates that enacting the legislation would not increase net direct spending or on‑budget deficits in any of the four consecutive 10-year periods beginning in 2035.

Mandates

The legislation contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.

Federal Costs:

Caroline Dorminey (for Procurement)

William Ma (for Operation and Maintenance, Defense Outlays)
Christopher Mann (for Military Construction, Family Housing)

Aldo Prosperi (for National Defense Stockpile, Research and Development)

David Rafferty (for Military Retirement)

Dawn Sauter Regan (for Military and Civilian Personnel)

Matt Schmit (for Military Health System)

 

Mandates: Brandon Lever

Estimate Reviewed By

David Newman
Chief, Defense, International Affairs, and Veterans’ Affairs Cost Estimates Unit

Kathleen FitzGerald
Chief, Public and Private Mandates Unit

Christina Hawley Anthony
Deputy Director of Budget Analysis

H. Samuel Papenfuss
Deputy Director of Budget Analysis

Chad Chirico 
Director of Budget Analysis

[Table 2 begins on the next page.]

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