The Delicate Balance Behind the Defense Budget Debate
By Benjamin Runkle – JINSA Program Director
Earlier this week I was fortunate enough to be able to attend a private dinner at another think tank featuring former Senator Jim Talent, who in March spoke about defense budget cuts and their impact on U.S. national security on a JINSA leadership conference call. Senator Talent served on the congressionally mandated, bipartisan National Defense Panel (NDP), whose recently released report argues that the Obama administration’s 2014 Quadrennial Defense Review lacks the funding needed for fulfilling global military missions and that the U.S. military faces “high risk” in the world unless changes are made. Senator Talent’s remarks were intelligent and timely, and clarified some of the paradoxes of the current defense budget debates that had been troubling me for some months. (To be clear, what follows is my understanding of the problem, not a summary of Senator Talent’s remarks. Hopefully he will do another briefing for JINSA soon).
It is clear that defense spending is in decline with potentially dangerous consequences for training and readiness. Anticipating a “peace dividend” following the success of the surge and the large scale withdrawal of U.S. forces from Iraq, the Department of Defense identified $400 billion of cuts in planned spending in 2009 and 2010 plus an additional $78 billion in reductions spanning five years for the Fiscal Year 2012 budget plan. On top of those already planned cuts, the Budget Control Act (BCA) of 2011 (a.k.a. “Sequestration”) added almost another $1 trillion in cuts to military spending spread out over a decade by imposing annual caps on the defense budget. Whereas the post-World War II average for defense spending as a percentage of gross domestic product (GDP) is 5.5, in 2014 it represents roughly 3.4 percent of GDP, and under the BCA’s spending caps would fall to below 2.5 percent of GDP, the lowest level of funding since 1940.
These cuts have real effects regarding the size and readiness of America’s military forces. As the NDP Review notes, rather than reaching the 346-ship goal articulated by the 1993 “Bottom Up Review” as the basis for America’s post-Cold War forward-presence, the Navy is on a budgetary path to 260 ships or less. Similarly, the Air Force now fields the smallest and oldest force of combat aircraft in its history, and under the BCA its Bomber, Fighter and Surveillance forces are programmed to drawdown to approximately 50 percent of the current inventory by 2019. In 2011, then-Secretary of Defense Leon Panetta warned senators that “after ten years of these cuts, we would have the smallest ground force since 1940.” This prediction will likely come to pass sooner than Secretary Panetta foresaw, as the Obama administration’s Fiscal Year 2015 budget called for a reduction in the active-duty Army from 520,000 to 450,000 (a 13.4 percent reduction) by 2017, although in reality the number will dip to possibly below 400,000 if the sequestration-imposed budget cuts remain in place.
These deep cuts are not inherently dangerous in and of themselves. Fiscal hawks are correct when they note that prior to 9/11 DOD had an inflation-adjusted budget of $368 billion whereas today it is $560 billion, that the Army had 481,000 soldiers versus 522,000 today, and that our DOD is still larger than the next ten militaries combined. They point to then-Chairman of the Joint Chiefs of Staff Admiral Mike Mullen’s 2010 declaration that “[America’s] national debt is our biggest national security threat” and argue that America can ride out the spending reductions outlined above without seeing its vital national interests jeopardized. Whether or not one agrees with this belief, it is important to acknowledge that it is a legitimate argument made by well-intentioned patriots, and should be distinguished from those who argue for reductions in defense spending because they believe the projection of American force is immoral.
The real problem with these reductions, and by extension the Fiscal hawks’ argument, is that they are disconnected to the strategic realities of the world as they stand today. Todd Harrison of the Center for Strategic and Budgetary Assessments, one of the leading defense budget experts in Washington, studied the QDR and reported that DOD would need an additional $200 billion to $300 billion above the current congressional spending caps to carry out the QDR’s intended defense program. “[DOD] has not budgeted enough to fully resource its strategy,” Harrison writes, nor has it revised its strategy to fit within the budget constraints set by Congress.” In other words, the Pentagon’s spending plan simply doesn’t match its long-term strategy for addressing rising threats from Iran, Russia, and China. Moreover, the QDR was drafted before the Islamic State in Iraq and al-Sham (ISIS)’s advances in Iraq forced President Obama to commit U.S. resources to a major new military campaign in the Middle East.
Even on its own terms, the urge to balance America’s budget on the back of the military seems short-sighted. As Robert Samuelson noted in a recent Washington Post op-ed, “The benefits of U.S. defense spending are often underappreciated because they flowed silently from wars not fought and global order maintained.” Indeed, the U.S. economy is dependent upon the rules-based international order that allows the global trade and investment to flourish, an order that is bolstered by America’s international leadership. Even if one opposes establishing this leadership through actual military intervention abroad, the NDP correctly observes that “The effectiveness of America’s other tools for global influence, such as diplomacy and economic engagement, are critically intertwined with and dependent upon the perceived strength, presence, and commitment of U.S. armed forces.” Yet the NDP (which included Democratic defense stalwarts such as former SecDef William Perry and President Obama’s Undersecretary of Defense for Policy Michele Flournoy) concluded that the defense cutbacks outlined above “have prompted our current and potential allies and adversaries to question our commitment and resolve.” Thus, as important as reestablishing America’s financial solvency is, attempting to do so primarily through short-term cuts in defense spending is ultimately self-defeating, especially given that the longer Joint Force readiness is allowed to deteriorate, the more money will be required to restore it.
The current crisis in defense spending and military preparedness reflects several deeper problems with our national policymaking. As noted above, in a less hostile global environment Sequestration would perhaps be defensible, particularly if it allowed the President or the Secretary of Defense to reallocate funds within the DOD budget to better align resources with national security priorities while still remaining under the BCA’s topline caps. Instead, the BCA mandates inflexible across-the-board cuts, the assumption being these cuts would be so painful that leaders of both parties would be forced to negotiate a long-term solution to America’s chronic deficits, to include serious entitlements reform. In the 2014 federal budget, Social Security comprised 23 percent of expenditures, Medicare 14 percent, and defense spending 16.3 percent. Yet whereas Social Security and Medicare spending are increasing due to demographics, defense spending is shrinking. Unfortunately, the grand compromise envisioned at the time of the BCA’s passage seems even more remote given the current toxicity of DC’s political environment.
Moreover, as the Washington Post’s Charles Lane recently observed: “As the United States’ defense budget shrinks relative to its economy, more and more of it is destined to purposes that have little, or nothing, to do with deterring or, if necessary, winning wars in the here and now.” From 2001 to 2014 the DOD health budget more than doubled from $19 billion to $49.4 billion, with the Congressional Budget Office estimating this will rise to $64 billion in 2015, roughly 11 percent of the defense budget. Similarly, the $51 billion spent on military pensions in fiscal 2014 is projected to grow to $62 billion by 2024. In an era of constrained resources, Lane notes, every dollar spent on health and pension benefits “is a dollar we can’t spend training and equipping men and women to deal with the Islamic State, Putin, and other threats.”
These problems are not necessarily helped by the House and Senate defense authorization and appropriations committees, each of which approved bills blocking the Pentagon’s plans to save money by retiring some weapons systems or not to purchase others next year. To be sure, these committees are right to seek an increase in defense spending, and there are strong cases to be made for retaining systems such as the A-10 attack plane, refueling the USS George Washington aircraft carrier, or saving the Navy’s E/A-18G Growler electronic warfare fleet. Yet although a top-line increase in the defense budget is merited, Congress also needs to articulate the strategic justifications for such an increase in order to obtain buy-in from the American public. Simply blocking every proposed cut does little to build the consensus necessary to sustain robust defense spending, and may actually undermine it. Increasing defense spending without also articulating a broader strategic rationale prevents the badly needed prioritization between vital and secondary national interests and the subsequent determination of the force structures, weapons systems, and future technologies required to protect these interests. By simply saying “more, more, more”, the committees feed the perception that parochialism rather than strategy is driving their choices, thereby numbing the American public to the genuine threats we face and subsequent dangers stemming from unpreparedness. Although this approach may increase funding in the near-term, it also inadvertently strengthens the budget hawks’ long-term argument.
So what is the solution? I don’t claim the expertise to specify which weapons systems, force structure, or technological and investment priorities should be pursued. Instead, if I’m correct in the above diagnosis, I would suggest four practical steps that can be taken to begin to reverse the dangerous course upon which shrinking defense budgets may be leading us. First, there needs to be a serious bipartisan panel to determine – and differentiate between – America’s vital, important, and secondary interests, both on a global and regional scale. This is especially critical given that the Obama administration has not updated its National Security Strategy since 2010…before the Arab Spring, the violent disintegration of Syria and Iraq, the return of Russian revanchism, and when Osama bin Laden was still watching Pakistani soap operas in his Abbottabad compound. (In other words, a lot has changed since then). Although the NDP is correct to note that “national defense needs should drive national defense budgets, not the opposite,” it is critical that a hierarchy of interests be established in order to guide decisions on force structure, weapons procurement, technological investment, and to prevent the squandering of finite resources on secondary or tertiary interests. Indeed, even proposals for robust military spending such as the Heritage Foundation’s 2007 “Four Percent for Freedom” proposal – which subsequently served as the basis for Governor Mitt Romney’s 2012 pledge to set the “core defense spending…at a floor of 4 percent of GDP” – was explicit that “America must have the capacity to secure its vital national interests” (emphasis added), not all global interests.
Second, as the NDP concludes: “The costs of maintaining a quality All-Volunteer Force need to be reduced in order to avoid a reduction in force structure, readiness, and modernization, a decrease in benefits, or a comprised” force. Whether this comes through modest co-payment increases or means testing of working-age retirees who qualify for insurance through their post-military jobs, I don’t know. I trust that the Military Compensation and Retirement Modernization Commission will come up with better recommendations than I can. I would only propose that if it is not possible to enact a grandfather clause that protects the benefits of current retirees and servicemen and women, that any reform require a dollar-for-dollar savings match in civilian entitlement reform so that veterans do not bear the brunt of the badly need deficit reduction measures.
Finally, the NDP notes: “Current estimates show the Pentagon has roughly 20 percent excess infrastructure capacity.” Yet the House and Senate Armed Services committees both specifically refused to authorize another Base Realignment and Closure (BRAC) round despite the substantial savings that could result. The NDP was correct to suggest a process for creating a consensus in favor of BRAC “as soon as possible,” which in addition to the savings would go a long ways toward enabling the defense authorization committees to shed the perception that they are more motivated by their districts’ narrow interests than by national strategy considerations, and thereby allow more political maneuvering room for the larger defense spending increases necessary to address current and future threats.
Although current events have inevitably drawn attention to the Obama administration’s decisions on when and how to employ military force, we should not lose sight of the critical decisions about defense spending that frame how these policy decisions are made. As Senator Talent said the other night, “defense policy is foreign policy.” Given the global upheaval that currently threaten U.S. national security, we cannot to wait to make the reforms necessary to properly train, equip, and prepare the U.S. military to address these threats.