Defense: Are We Cutting Too Close to the Bone?

In January of this year, President Obama announced a revamping of the military that entails budget cuts of $487 billion across ten years. Before leaving office last year, Defense Secretary Robert Gates had already trimmed several hundred billion dollars by shutting down costly weapons programs, notably the F-22 fighter. And beginning this January 2, barring further action, another $500 billion over ten years will be lopped off the defense budget by law.

That’s the consequence of the nation having walked to the brink of default in mid-summer 2011 after months of dispute over raising the debt ceiling. On August 2 of last year, when Treasury Secretary Geithner had warned that the United States would run out of cash needed to pay its bills, Congress passed and President Obama signed the Budget Control Act. It called for $917 billion in spending cuts but, out of an inability to reach agreement on further savings, it set up a congressional “super-committee” to do Congress’ job. Half Republican and half Democrat, the committee was given until that November to come up with a plan — or else $1.2 trillion in cuts over ten years would be triggered automatically.

The committee failed, and else won out. The $1.2 trillion “sequester” splits the spending cuts between military and other discretionary expense. Which is why a cut of yet another $500 billion in defense spending lies in wait just past the New Year.

The three sets of cuts have caused Defense Secretary Leon Panetta to warn that the damage to national security will be “devastating”.

Governor Romney agrees. He wants to increase military spending to 4% of the Gross Domestic Product and add 100,000 more troops, although he has not specified why they are needed.

Others cite procurement as the greater need, vividly made clear in this passage from a Wall Street Journal op-ed by an American Enterprise Institute fellow:

Many of the Air Force's aerial refueling tankers predate human space flight. Training aircraft are twice as old as the students flying them. The F-15 fighter first flew 40 years ago. A-10 ground-attack planes were developed in the Carter years. And all of our B-52 bombers predate the Cuban missile crisis.

That same piece says, “We have to look all the way back to 1916 to find a year when the Air Force purchased fewer aircraft than are included in Mr. Obama’s budget request”.
Bi-plane, 1916

F-35, 2012 Others have somehow discovered that moment as fruitful for compar- isons: Mitt Romney points out that with 285 ships, ours is the smallest Navy since 1917.

But quantity is a peculiar metric to use, failing to take the hugely greater lethality of our smaller inventory into account. Not to mention the cost of modern weaponry, which we will: Today’s Nimitz class aircraft carriers run to $4.5 billion apiece. Even a destroyer costs $2 billion. The sticker price for each budget busting F-35 Joint Strike Fighter runs to over $200 million or so — and that’s without its share of R&D. Robert Gates asked, “Does the number of warships we have and are building really put America at risk when the United States' battle fleet is larger than the next 13 navies combined, 11 of which belong to allies and partners?”.

re-trading the deal

The sequester was the default that was agreed to by both Republicans and Democrats when negotiations between the President and House Speaker John Boehner could not arrive a “grand bargain” of spending cuts and increased taxes to reduce the deficit. But Republicans now want to re-trade the deal, arguing that the military side of the sequester should be dropped as too hazardous for national security. But they offer no quid pro quo, i.e., canceling the domestic side of the mandatory spending cuts as well, or increasing taxes to pay for restoring $500 billion to the defense budget. Any attempt to rescind only the defense portion of the law would face the president’s veto.

What is worst about the sequester and badly needs fixing is the stupid approach it took. The law requires that all programs be cut back by the same percentage — what Panetta calls taking a “meat-axe” to the budget — rather than selective cuts according to priorities. The Economist provides examples: The Pentagon wants to spend only $74 million on heavy tanks next year but because the dollars of the sequester cuts are based on out-of-date congressional spending resolutions rather than current planning and military requests, the Pentagon will be forced to spend $403 million on tanks. “On the other hand, the Pentagon is planning to put $1.8 billion next year into an urgently needed new aerial-tanker programme, but will now be allowed to allocate only $781 million to it”.

Military pay and benefits are exempt from the sequester as are “overseas contingency operations” (Pentagon speak for the Afghanistan war), which means that the cuts can only come from what’s left — a base of $375 billion — that will heavily impact weapon and equipment procurement. Organizations such as the National Association of Manufacturers and the Aerospace Industries Association are forecasting a loss of a million jobs because of the cutbacks. Congress members are up in arms about job losses in their home districts, whether at the big defense companies or at small manufacturers that are part of the huge defense supply chain and vital to local communities’ economic well-being.

Such outcries are usually exaggerated, though. The Pentagon has had a blank check for the last ten years. Since 9/11, the defense budget has been swollen by $1.283 trillion in budget authorizations for operations in Iraq and Afghanistan. With one war ended and the second beginning to pack up for home, the military should not expect continuance of $700 billion a year — double what was spent on defense in the middle of the Clinton presidency.

perennial waste

The constrained budget may force the Pentagon to take a serious look at its wasteful practices.

The military was once self-sufficient. It did all its own work on bases or in the field, from cooking to clerking. But in Iraq and Afghanistan the Pentagon adopted the practice of hiring civilian contract workers, and at much higher pay than the military. There are now nearly 800,000 civilians working for the Pentagon, up 10% from just 2009 even though the wars are winding down. One report had it that there are more contract workers in Afghanistan than troops, although this counts all the other U.S. agencies deployed there. The military cannot cry poorhouse while continuing this costly practice.

There is the question of benefits. The Hoover Institution notes that by 2014 the tab for former service personnel’s pensions and benefits will exceed that of those in active service. The military can retire after 20 years with a lifetime pension equal to half their final pay. That there is a spike in retirement at the 20-year mark says that the pension is a substantial inducement to stay in the military, but should not there be some experimentation? A huge percentage of the military is never deployed into the danger zones; they are not all “heroes”. And cannot working age retirees — many not yet 40 when they leave the service — pay more for their health plans? Somehow, the word “entitlement” is never mentioned in conjunction with “military”.

And then there are the notorious cost and schedule overruns of weapon systems development, so often caused by adding features and making mid-course changes. Senator John McCain said, “The U.S. cannot afford a budget-driven defense strategy” but went on to say “but we must also address the broader cultural problem plaguing our defense establishment: the waste, inefficiency and ineffective programs”. The cost of those F-35 fighters is double what was estimated when the project began in 2001.
The Navy's littoral combat ship
The “littoral combat ship”, a fearsome looking, stealthy craft meant to work close to shore and capable of speeds close to 50 miles per hour, has been perhaps the most troubled program in the Navy’s annals. A decade after the program’s inauguration, only two of the 55 planned $700 million ships are in the water. One had a cracked hull. The other reportedly had difficulty identifying underwater mines, one of its principal tasks, and “is not expected to be survivable in a hostile combat environment”, in the view of the Pentagon’s top weapons tester.

And then there is the Marine’s Osprey, which lifts off like a helicopter, converts to a plane and has resulted in 30 deaths in test flights. The Pentagon artfully sprinkles contracts around the country. It is a tactic that keeps Congress members voting the money that a program will bring to their districts. Thus do programs never die. Not even Dick Cheney could kill the Osprey program.

Unlike Panetta, the President is comfortable with the cuts of the sequester, or, as The Economist put it, “the Obama administration seems to intend to sit tight and wait for its opponents’ nerves to crack”. Post Iraq and Afghanistan, the budget’s cost reductions may dovetail well with the reorientation of the military that Obama announced in January. Cuts are likely to force reduction of the army from 570,000 to 490,000, but the new strategy is no longer to be able to fight two ground wars at the same time. Experience tells us not to be drawn into ground wars against insurgencies, but instead to to use drones and special operations forces. And a re-alignment is underway to the Pacific to counter the rising threat of China, where what is called AirSea Battle will be our war fighting doctrine.

But critics are wary of a plan assumes that the future is knowable and holds no surprises.