China poses an existential threat to the United States. China just announced a 7% increase in defense spending . It is likely spending tens of billions of dollars more than that on defense.

In contrast, for the last decade, U.S. defense spending has declined to just over 3% of GDP. Earlier this month, President Joe Biden submitted a proposed 2024 budget request of $842 billion for defense. That's an increase of $26 billion over fiscal 2023 defense spending.

The president’s request does not keep pace with inflation which is currently running at 6%. In his budget, the President explicitly acknowledges the military threat from China. That is to his credit. But, his budget request is clearly inadequate to meet that threat. And that is obviously not to his credit.

One big issue is the submarine concern.

In December 2021, Biden signed a Defense Production Act determination to strengthen the U.S. submarine industrial base. The goal of the determination is to enable the U.S. Navy to maintain supremacy in underwater warfare. At the moment, U.S. supremacy in underwater warfare is largely unchallenged. Under the 2021 force structure assessment, the submarine industrial base must maintain a minimum construction rate of two Virginia class attack submarines and one Columbia class ballistic missile submarine each year into the 2040s. U.S. submarine manufacturing facilities are not currently maintaining that production rate. The current production rate is only 1.2 attack submarines a year.

The inadequacy of the U.S. submarine industrial base is compounded by the recent agreement among Australia, the United Kingdom, and the U.S. for the U.S. to provide Australia with three or more Virginia class submarines by 2035. The bottom line is that the current submarine industrial base is inadequate.

The U.S. has two nuclear submarine manufacturers. General Dynamics’s Electric Boat Division builds submarines at Groton, Connecticut.  Huntington Ingalls builds subs at its Newport News, Virginia facility. Since 2018, the U.S. Navy has appropriated almost $6 billion to expand the industrial base of the two nuclear submarine manufacturers. But that investment is inadequate to produce two attack submarines a year and to build just one ballistic missile submarine a year. There is a substantial gap between reality and future commitments. 

The Navy needs a large increase in funding to build a minimum of three submarines a year. Money is not the only issue. There is a critical labor shortage in the submarine construction industry. Both submarine builders are short on labor . Electric Boat has been trying to expand its labor force for a decade or longer. 

But the U.S. labor market is tight, made tighter so by Biden's flawed economic policies. Submarine builders are competing for workers against companies benefiting from Biden’s too-many-to-count stimulus programs . 

The President must work with Congress to increase funding for the submarine industrial base. Equally important, the President needs to institute a crash training program to increase the supply of skilled labor necessary to build billion-dollar submarines. 

Hot air does not win wars.

James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He writes a daily note on finance and the economy, politics, sociology, and criminal justice.