Despite the current budget drama, Defense spending for FY 2018 and FY2019 is eventually going to be 11% higher than in FY 2017. This would seem to be a bold statement given the current political scene but the ongoing drama in DC seems to be about everything but the level of near term defense spending.
Negotiators from both parties and in both houses of Congress have tentatively agreed to raise the defense and non-defense caps specified in the Budget Control Act by $80B and $63B respectively for both FY18 and FY19. The current defense and non-defense caps for FY18 are $549B and $516B respectively. These caps are actually $2B and $4B lower than the equivalent caps in FY17.
Note that OCO and other "emergency" spending is additive to the caps (caps are raised by the amount of emergency spending after the fact). There is a lot of Congressional latitude in both the definition and amount of emergency spending and they have used it. Latest information indicates that Congress is considering $75B in OCO for defense spending and $81B in disaster relief and other non-defense emergency spending for FY18. FY19 OCO has not been announced.
There is however a lot of drama here in DC so the timing of this largesse is very questionable. For the fifth time this year, Congress is struggling to come up with a Continuing Resolution that will keep the government open on a temporary basis - this time past midnight Thursday. While a "clean" CR at FY17 spending levels was relatively easy to achieve back in October, a "clean" CR won't suffice on this go around given the more imminent deadlines of debt ceiling and potential work stoppages in some defense shipbuilding contracts. "Anomalies" are going to be required and that requires "buying" votes.
In order to get Defense hawk support in the House and Senate, Republican leadership is proposing to lock in the two year cap changes discussed above in this coming CR. Democrats in the Senate may not allow a resolution to the Defense budget without a DACA resolution so we find it more likely that a two year deal along the lines we have outlined will pass whenever the fights over DACA and debt ceiling are resolved which essentially must happen before the end of March.
In the absence of a two year deal this week, the White House has provided a list of modest anomalies totaling $105M to keep ongoing shipbuilding contracts going through March that would seem likely to pass.