The annual National Defense Authorization Act ( NDAA ) provides authorization of appropriations for the Department of Defense (DOD), defense-related atomic energy programs of the Department of Energy, and defense-related activities of other federal agencies such as the Federal Bureau of Investigation. In addition to authorizing appropriations, the NDAA establishes defense policies and restrictions, and addresses organizational administrative matters related to DOD. Unlike an appropriations bill, the NDAA does not provide budget authority for government activities . Congressional action on the FY2018 NDAA reflected a running debate about the size of the defense budget given the strategic environment and budgetary issues facing the United States. Annual limits on discretionary spending set by the Budget Control Act of 2011 ( P.L. 112-25 ) remain in place through FY2021 and fundamentally shape congressional actions related to all federal spending, including defense funding. Constrained by these limits, Congress and the executive b ranch face an increasingly complex and unpredictable international security environment, evidenced by a variety of threats to U. S. security interests including action around the globe by nonstate, violent extremist organizations—such as the Islamic State of Iraq and Syria (ISIS) and Al Qaeda; Russian-backed proxy warfare in Ukraine; North Korean provocation evidenced by an "unprecedented" number of missile test launches and its "use of malicious cyber tools" to threaten and destabilize the region; China's expansion of its nuclear enterprise, its investments in power projection and continued island building in the South China Sea; and Iran's continued efforts to support international terrorist organizations and establish regional dominance. Congress completed action on the FY2018 NDAA before the Trump Administration completed its initial updates of the National Defense Strategy and National Security Strategy. A Nuclear Posture Review also was in progress when the bill was enacted. Thus, to some degree, the Trump Administration's initial FY2018 budget request served as a placeholder while Congress awaited completion of these major strategic assessments. One exception to that rule is that the Administration's November 2017 amendment to its FY2018 budget request reflected its revision of U.S. strategy in Afghanistan: The additional $5.9 billion requested included $1.2 billion to support the President's decision to deploy in Afghanistan about 3,500 more U.S. personnel than the May 2017 budget request had assumed. Although the additional funds were requested after the House and Senate each had passed their respective versions of the NDAA, conferees incorporated the requested amounts into the version of the bill that was enacted. The Budget Control Act of 2011 (BCA/ P.L. 112-25 ), enacted August 2, 2011, contains several measures intended to reduce the budget deficit by $2.1 trillion over the period FY2012-FY2021. Toward that goal, the legislation established annual limits that would reduce discretionary spending by approximately $1.0 trillion, compared with projected spending over that period. The BCA established separate limits (commonly referred to as caps ) on defense and nondefense discretionary budget authority that are enforced by a mechanism called sequestration . Sequestration provides for the automatic cancellation of previously appropriated spending to reduce discretionary spending to the limits specified in the BCA. The defense limit applies to the national defense budget (function 050), but does not restrict amounts designated by the President and Congress as funding for emergencies or for Overseas Contingency Operations (OCO). Over the nearly six decades from 1962 through 2022, OMB projects that defense outlays would increase from $52.6 billion to a projected $662.3 billion. Over the same period, net mandatory spending is projected to increase at roughly 10 times that rate (from $27.9 billion to $3.16 trillion). (See Figure 1 .) According to OMB data, defense outlays, which accounted for 49.2% of federal spending in 1962, had dropped to 19.4% in 2011—the year the BCA was enacted—and are projected to drop to 13.7% by 2022. On the other hand, net mandatory outlays combined with net interest on the national debt, which accounted for 32.5% of outlays in 1962 and 62.6% in 2011, are projected to account for 76.2% of outlays in 2022. (See Figure 2 .) Similarly, the defense share of the GDP has declined relatively steadily since 1962, while the share of the GDP consumed by mandatory spending and net interest has risen. (See Figure 3 .) During the period in which Congress was deliberating on the FY2018 NDAA, the BCA limit (or cap ) on FY2018 discretionary spending for national defense (budget function 050) was $549 billion. The Trump Administration proposed $603 billion for base budget national defense discretionary spending in FY2018—$54 billion more than the BCA cap. In the absence of the appropriate statutory changes to BCA, defense appropriations at the requested level would have triggered sequestration. The Trump Administration's FY2018 budget called on Congress to raise the defense discretionary caps for FY2018 and subsequent years to accommodate proposed defense budget increases in FY2018 and beyond. This proposal was coupled with a recommendation to continue BCA-like limits on nondefense discretionary spending through FY2027—six years beyond the expiration of the Budget Control Act (see Table 1 ). Under the Administration's proposal, projected defense spending increases totaling $463 billion over the period FY2018-FY2027 would be more than offset by reductions in nondefense spending that would total $1.5 trillion over the same period. All told, the President's budget plan proposed a $1 trillion reduction in federal discretionary spending. The House and Senate disregarded the defense spending cap in passing their respective versions of the FY2018 NDAA and in agreeing to the conference report on a final version of the measure. All versions of the bill ( H.R. 2810 ) authorized defense appropriations at levels which, if enacted, would have exceeded the cap then in force, thus triggering sequestration. After the FY2018 NDAA was enacted, but before final action on any FY2018 appropriations, the caps on discretionary spending for defense and nondefense programs in FY2018 and FY2019 were increased as part of P.L. 115-123 , which included the fifth continuing appropriations resolution for FY2018. The revised cap on base budget, discretionary defense appropriations for FY2018 is $629 billion, which would accommodate appropriations to the level authorized by the enacted version of the FY2018 NDAA. Shortly after taking office, President Trump directed Secretary of Defense James Mattis to conduct a "30-day Readiness Review" of "military training, equipment maintenance, munitions, modernization and infrastructure." In the wake of that review, DOD moved out along three axes: Submitting a detailed amendment to the Obama Administration's FY2017 budget request—seeking an additional $30 billion to address what it described as "immediate and serious readiness challenges;" Developing the FY2018 Budget Request to be "focus[ed] on balancing the program ... while continuing to rebuild readiness;" and Beginning formulation of the FY2019-FY2023 Defense Program to be shaped by a new National Defense Strategy and provide "an approach to enchanc[e] the lethality of the joint force against high-end competitors and the effectiveness of our military against a broad spectrum of potential threats." In its presentation of the initial FY2018 budget request, DOD highlighted several priorities: Improving warfighting readiness; "Filling holes" in capacity and lethality while preparing for future growth; Reforming DOD business practices; Keeping faith with servicemembers and their families; and Supporting overseas contingency operations. The Trump Administration's initial FY2018 budget request, released on May 23, 2017, included a total of $677.1 billion for national defense-related activities of the federal government (budget function 050). Of the national defense total, $667.6 billion was requested for discretionary spending to be provided, for the most part, by the annual appropriations bill drafted by the Appropriations Committees of the House and Senate. The balance—$9.6 billion—was requested for mandatory spending, that is, spending for entitlement programs and certain other payments. Mandatory spending is generally governed by statutory criteria and it is not provided by annual appropriation acts. As has been typical in recent years, about 95% of the national defense total, $646.9 billion, is for military activities of the DOD—designated as subfunction 051. The balance of the function 050 request comprises $21.8 billion for defense-related atomic energy activities of the Department of Energy (designated subfunction 053) and $8.4 billion for defense-related activities of other agencies (designated subfunction 054), of which about two-thirds is allocated to the Federal Bureau of Investigation. (See Figure 4 .) Of the initial, $677.1 billion request, $612.5 billion was for the base budget , that is, for funds intended to pay for those activities the DOD and other national defense-related agencies would pursue even if U.S. forces were not engaged in contingency operations in Afghanistan, Iraq, Syria, and elsewhere. The remainder of the FY2018 request—originally amounting to $64.6 billion—is designated as funding for Overseas Contingency Operations (OCO). Originally, the OCO designation was assigned to funding associated with post-9/11 military operations in and around Iraq and Afghanistan. However , the range of DOD activities funded as OCO has broadene d. The FY2018 OCO request inclu des $4.8 billion for the European Reassurance Initiative (ERI) , a set of actions intended to beef up the U.S. military presence in Europe as a counter to menacing Russia n military actions .