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April 15, 2008U.S. military readiness is at risk due to rising defense operations and maintenance costs and ballooning personnel expenditures, a new report by the Aerospace Industries Association concludes. "U.S. Defense Modernization: Readiness Now and for the Future" examines dynamics within the defense budget that threaten future readiness. The report also outlines the consequences of using Defense Department investment accounts as a discretionary bill payer. "We are issuing the report now to let the candidates know of an important challenge that awaits the eventual president," AIA President and CEO Marion Blakey said. "Modernizing our defense equipment is vital to making sure our troops are as well-prepared as humanly possible for the challenges they face on the battlefield." According to the report, the next administration will have to address financial resource challenges even if defense spending increases. At current rates, the operations and maintenance element of the budget will have more than doubled between 1988 and 2013 - faster than the growth in the defense budget itself. In contrast, modernization investment will increase by slightly more than 50 percent, well below the growth path of the general budget. This suggests a trend of steadily increasing operations and maintenance costs that will consume more of the defense budget, making it increasingly difficult to plan for modernization. The report recommends a five-part planning approach for the next administration to ensure the technological superiority of our defense systems: -Sustain a national consensus to adequately fund defense capability and readiness; -Acknowledge that defense modernization is long overdue and increase annual defense procurement funding to a steady state range of $120-$150 billion in constant dollars; -Establish a floor for defense spending at 4 percent of Gross Domestic Product; -Address the bow wave of modernization requirements by providing stability in procurement and research accounts; and -Foster innovation and stability in defense budget planning by establishing a Stable Program Funding Account. AIA is developing a second report with detailed analysis of the defense budget sectors to further guide the next administration as it develops future defense spending plans. "U.S. Defense Modernization: Readiness Now and for the Future" is available on AIAs Web site at www.aia-aerospace.org.