The Missile Defense Agency’s (MDA) $8.9 billion budget request for 2008 is $500 million less than 2007. This budget marks the first decline since the initial Bush administration budget in 2002. Within a defense budget that has increased by 11.3 percent over last year — from $440 billion to $481 billion — MDA is one of the few agencies to have its budget reduced.

The 2007 budget priorities are organized into three strategic, and for the most part sequential, objectives. To “maintain and sustain an initial capability,” “close the gaps and improve this (initial) capability ” and “develop options for the future.”

Deployment of missile defense assets in significant numbers is beginning. In 2006, five additional ground-based interceptors were emplaced in Alaska and California for a total of 15, with plans for up to 24 in 2007, and 30 by the end of 2008. At sea, additional Aegis ships and interceptors were added with plans calling for 40 SM-3 interceptors deployed aboard 16 Aegis ships. Improvements to the Command, Control, Battle Management and Communications system are being fielded as well as significant additional radar and communications assets.

Testing is a subject of considerable concern among friends and foes of missile defense alike. After restructuring its test program in 2005, MDA had an impressive 13-for-14 record of successful flight tests in 2006. These tests included: an Aegis SM-3 intercept of a separating warhead; a Terminal High Altitude Area Defense (THAAD) missile intercept of a unitary target; and, for the first time, an intercept of a threat-representative target with an operational ground-based interceptor using data from an operational early warning radar along a likely threat trajectory.

In 2007, plans call for four Aegis flight tests, four THAAD flight tests, and tests of the Patriot and the Israeli Arrow systems. MDA has now achieved 24 hit-to-kill intercepts throughout the program since 2001.

Except for two years of Democratic control of the Senate (2001-2002), this is the first year the Bush administration has submitted a missile defense budget to a Congress controlled by Democrats. Close congressional scrutiny is anticipated.

For 2008, $206 million is requested for a third midcourse site in Europe. Last year, Congress did not receive satisfactory answers to questions about the need for a European defense or resolution of the tricky diplomatic questions. As a result, both the third-site funding request and the request for ground-based interceptors were cut. This year Congress will demand a comprehensive case, including clarification of its defensive value and resolution of diplomatic concerns especially in light of recent comments against such a site from Russia. Without these explanations, funding is vulnerable.

Congress fully funded the 2007 budget request for Airborne Laser of $632 million under the assumption that the program would meet its test objectives, including an interception test in 2008. That test was delayed to the fourth quarter of 2009. Supporters contend the funding is consistent with past levels and the program is making progress toward a lethality demonstration. But for some, the delayed test signals doubts about technical feasibility.

The Kinetic Energy Interceptor faces perennial funding battles. In 2007, Congress reduced the president’s request by $48 million, although three of the four defense committees cut the program by as much as $200 million. For 2008 the program was restructured to focus on development of a midcourse replacement booster. Even though it was scaled back considerably and is on schedule to achieve its 2008 flight test, others argue that the Kinetic Energy Interceptor does not offer a significant new capability unless it includes a mobile launcher or a boost-phase capability, and conclude it is a long-term development effort that should be cut to pay for short-term assets.

In 2007, Congress reduced the MDA’s request for the Multiple Kill Vehicle program by $20 million, citing excessive program growth. For 2008, $271 million is requested, an increase of $126 million. A significantly different program is proposed with the focus on developing two separate payload configurations. The competing paths may increase the likelihood of achieving operational capability and reduce risk. The program’s volume-kill capability is critical to addressing complex countermeasures and multiple re-entry vehicles, but presents threats to Russian and Chinese strategic capabilities. Congress may find this new direction confusing and inconsistent and critics will depict the Multiple Kill Vehicle as a far-term development effort undeserving of the new funds.

Bipartisan support exists to increase the number of flight tests, particularly for the Ground-Based Midcourse Defense program. Although 2008 funding is approximately $10 million less than 2007 appropriations, it will support six to eight system flight tests and three to six system ground tests per year. Some may not see this as enough. The request of a modest $10 million for the Space Test Bed is enough to prompt serious opposition. It is depicted as the first step toward the weaponization of space. Chinese and Russian opposition will add strength to calls to keep space free of military activity through arms-control agreements or “rules of the road.” In the past, nearly all Democrats have opposed space-based missile defense efforts. Today, many Republicans are ambivalent and even strong supporters of missile defense may see this small initial investment as a sign of a lack of commitment to space defense. Missile defense is inherently defensive and a space-based effort is the only way to have an effective global boost-phase capability. The recent Chinese anti-satellite test is proof that the United States faces serious challenges to our freedom of action in space, which require significant investment in space capabilities of our own.

The 2008 MDA budget reflects a commitment to consolidating gains; accelerating the delivery of capabilities that have progressed well; slowing down slightly those programs seen as far-term; and maintaining options in the face of potential development setbacks and advances in the threat.

The greatest danger is that the budget increasingly strains the broader mission to develop a program balanced between current and future threats. Future spending is directed toward near-term activity. To do this within budget constraints, future options are being sacrificed, such as proposing small-scale Space Test Bed and Space Tracking and Surveillance System programs, scaled back or delayed boost-phase defense programs and delayed acquisition of the Multiple Kill Vehicle. These shifts may jeopardize the ability to address maturing and emerging threats, uncertainty and surprise. Further cuts will only heighten this imbalance.

In the end, many analysts predict that overall congressional reductions could amount to more than $1 billion. To prevent or minimize these cuts, MDA will need to emphasize:

   its improved testing record using increasingly realistic tests;

   its demonstrated capabilities including the ability to have activated a defense against the North Korean tests last summer; and

   the need to maintain a careful balance between fielding current and near-term capabilities while continuing to anticipate various aspects of the growing ballistic missile threat.

It is this growing threat — embodied in recent months by advanced tests by North Korea, China and Iran — that will ultimately make the strongest case for sustained investment in missile defenses.

Jeff Kueter is president of the George C. Marshall Institute, a Washington-based think tank