Defense budget to reach $380 billion. (Washington Pulse).

The Defense Department's massive spending increase in fiscal year 2003 is the biggest boost the Pentagon's budget has received since 1982. Most of the $48 billion increase will fund the war on terrorism, pay raises for the military service members and health care benefits for military retirees. It also includes a $10 billion war reserve for contingency operations.

There is, however, a substantial increase--of about $8 billion--for procurement of new equipment.

Defense Secretary Donald Rumsfeld told reporters that the new modernization funding is badly needed. As equipment continues to age, he said, "You end up trying to take a 1934 Oldsmobile and prop it up for another five, six years, and there's a point beyond which that doesn't make good sense.

"We don't get rewards for having antiques in the military," Rumsfeld said.

One Pentagon account that will take a hit this year is military construction, said a congressional staffer. "That could turn into a potential bloodbath," the staffer said. The Bush administration proposed a $1.5 billion cut in military construction for fiscal 2003. According to the staffer, the cuts were part of an agreement between the administration and members of Congress who wanted to postpone BRAC until 2005.