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Finishing a Great Decade Te last 10 years were very good for defense. Te US defense budget enjoyed a very strong decade of increases, and defense contractors enjoyed a strong period of growth and profits. Between FY 2003 and 2012, weapons procurement grew at a 6.1% compound annual growth rate (CAGR).
Te broad political consensus is that a serious budget deficit, a growing national
debt, and the reduction of combat operations in Iraq (to be followed by a reduction of operations in Afghanistan) mean that the current high defense plateau is unsus- tainable. While the delta of the anticipated defense spending downturn is quite un- certain, changing budget dynamics will have a strong impact on aircraſt programs.
More Than Just Numbers Te US defense budget is not historically cyclical. Tat is, there is no historical cor-
relation between defense spending and any economic trend, such as economic growth or national debt. Yet with a record national debt and an FY 2011 budget deficit of around
Richard Aboulafia Vice President, Analysis Teal Group Corp. Fairfax, VA