How to Shrink the Defense Budget and Come Out Winning
Policy + Politics

How to Shrink the Defense Budget and Come Out Winning

Reuters/iStockphoto/The Fiscal Times

The U.S. military is going to shrink, that much is clear. Whether it will be harmful or helpful is less certain.

Shedding unneeded troops, surplus bases and 20th century weapons could be a good thing.  Deputy Defense Secretary Ashton Carter envisions a U.S. military that is “leaner, but agile, ready, technologically advanced.”

Critics of the coming cuts fear a different outcome. They worry that the United States will field an anemic force ill-prepared to confront increasingly sophisticated adversaries with growing arsenals of precision munitions, stealth aircraft, cyber weapons and anti-satellite missiles and lasers.

Carter envisions greater reliance on highly-trained special operations forces and on high technology – including “new capabilities, novel capabilities that we haven’t revealed yet,” he told a Duke University audience Nov. 29. Critics like Sen. John McCain (R-AZ) fear “a swift decline of the United States as the world’s leading military power.”

To many, the U.S. military is still living large on a budget swollen by 11 years of war. The 2012 defense budget of $646 billion has declined from the war-spending peak of $691 in 2010. But the 2012 budget, which is still in effect because Congress hasn’t passed the 2013 spending bill, is more than double the pre-war $316 billion budget of 2001.

Defense now consumes almost 20 percent of the U.S. budget. Only Social Security at $773 billion and health care programs such as Medicare, Medicaid and children’s health insurance at $838 billon, cost more.

With the Iraq war over and Afghanistan winding down, many wonder why defense spending can’t be cut dramatically. It has been in the past. Defense spending plunged 43 percent after the Korean War, 33 percent after Vietnam and 36 percent after the Cold War, according to the Center for Strategic and International Studies.

“How much deeper can defense cuts responsibly be?” asks defense scholar Michael O’Hanlon of the Brookings Institution.

The 2013 defense budget is likely to be a bit lower than 2012. The House version calls for $635 billion; the Senate approved $632 billion. And that downward trend seems likely to drop markedly if automatic cuts called sequestration kick in Jan. 2.

Sequestration will cost the military $492 billion over the next 10 years – $56.5 billion in 2013. Congress and the president are struggling to prevent those cuts, which they approved last year in the Budget Control Act, hoping to give themselves an incentive to come up with a better deficit reduction plan.

Sequestration would cut far too much, says O’Hanlon. The Defense Department is already struggling to cut $60 billion through new efficiencies and by eliminating waste, he said. The department also faces $487 billion in cuts over ten years imposed by spending cap limits set by the Budget Control Act. Those cuts would slow growth in the defense budget to the rate of inflation, but not reduce defense spending.

Given the national budget crisis, O’Hanlon says defense can be cut more. In a Dec. 11 address to the military advocacy group Concerned Veterans for America, O’Hanlon said additional cuts would be “a little risky, and a little painful,” but they should be made to help control the federal deficit and fix the U.S. economy.

He joins a range of other defense experts who say deeper defense cuts can, indeed, be made. 

“I tried to identify specific defense savings that I believe we can responsibly make,” he said. “When I go through my list I can find ways to save maybe $100 billion over the next 10 years, maybe $150 billion. I’m doing this in a cautious way.” He stressed that deeper military spending cuts “only make sense in the context of broader national deficit reduction and fiscal reform.”

Speaking to the same group, Sen. Lindsey Graham, R-S.C., tentatively endorsed O’Hanlon’s plan.

“I’m one of the strongest defense hawks in the Congress,” Graham said. But “if we could come up with an entitlement reform deal that saves Social Security and Medicare and deals with Medicaid and sets spending limits that are sustainable, I would entertain going past $487 billion” in defense cuts over the next decade.

Sequestration – the $492 billion in automatic, across-the-board cuts set to begin in January – is out, Graham said. “It’s a dumb way to reduce defense spending. I’m disappointed in the Republican Party for signing up for sequestration. While agreeing with O’Hanlon that $100 billion to $150 billion could be cut from defense, Graham stressed that American military power must remain “superior to anything on the planet at all times,” and he complained that current defense spending, which equals about 5 percent of gross domestic product, is historically low for a nation at war.

Acknowledging that additional defense cuts may be necessary – and would not be calamitous – puts the moderate O’Hanlon and the conservative Graham in the same ballpark as Lawrence Korb, a former assistant secretary of defense and current senior fellow at the liberal-leaning Center for American Progress. Korb, too, is calling for an additional $100 billion in defense cuts.

But where O’Hanlon sees acceptable short-term military risk, Korb sees merely “a smart first step” toward reining in a decade of excessive defense spending.

The $487 billion in cuts imposed last year won’t actually cut defense spending at all, Korb writes in a Dec. 6 report. They’re cuts from “projected increases in the defense budget” and will “essentially keep the defense budget steady at its current level, adjusted for inflation, over the next five years, before allowing a return to moderate growth thereafter.”

By contrast, the much bigger cut of sequestration would reduce defense spending to its 2007 level, Korb said in an interview. That year, the base defense budget was $472 billion and funding for the wars in Iraq and Afghanistan was $171 billion.

Returning to a 2007-size budget in 2013 “is doable,” Korb said. “If you can’t run the Pentagon on $500 billion, then something’s wrong.”

Whether risky or too reserved, what would cutting another $100 billion mean for the military?

Almost certainly, there will be fewer ground forces. The Army and Marine Corps grew 15 percent during the Iraq and Afghan wars, and current plans call for returning them to pre-war levels. They could go a bit lower, O’Hanlon said. The threats the United States is likely to face in the near future require naval, air and cyber forces rather than soldiers and Marines, he said.

Korb advises simply cutting ground forces to pre-war levels: shrink the Army from 547,000 active-duty troops today to 490,000, and shrink the Marine Corps from 209,000 to 189,000. That would save $16.6 billion over a decade, he says.

Cut the Joint Strike Fighter program. The plan now is to buy 2,500 planes, but half that number would suffice to counter the threats posed by Iran and China, O’Hanlon said. Refurbished F-16s and more drones could help make up the difference. North Korea’s launch of a long-range missile launch on Wednesday underscored the fluidity of the threat. 

Korb would eliminate the Navy’s purchase of 237 Joint Strike Fighter and instead buy 240 “effective and affordable F/A-18E/Fs,” saving $16.2 billion over 10 years. 

Reduce the inventory of nuclear weapons, O’Hanlon advises. “There are more economical ways to maintain the triad.” For example, cut the ballistic missile submarine fleet from 14 to eight and load each sub with more missiles. “You don’t save a lot of money – a billion, two, maybe three billion a year, but it’s worth looking at.”

Korb would reduce the number of deployed nuclear weapons from 1,722 to 1,100 by 2022 to save at least $28 billion over 10 years. “Our nuclear arsenal is expensive to maintain and largely useless in combating the threats facing the nation today,” Korb writes. Even the Pentagon concedes that deterrence goals can be achieved with a smaller nuclear force, he said.

O’Hanlon said he would agree to “a slightly smaller Navy” as long as ships were kept at sea longer and crews were rotated on and off every six months. That way the Navy could get more use out of fewer ships without wearing out its sailors, he said. Aircraft carriers would be exempted from that program.

Korb would squeeze another $40 billion from the budget over 10 years by reforming “outdated health care programs.” Health care for troops, their families and military retirees cost the Pentagon $51 billion in 2012, nearly triple the $19 billion price tag in 2011. Health care is one of the fastest growing sectors of the defense budget. The Congressional Budget Office estimates it could rise to $65 billion by 2017. In 2011, then Defense Secretary Robert Gates said,
“Health care costs are eating the Defense Department alive.”

While endorsing the idea of additional cuts, Graham offered few specifics. “We can try to do more with less. We can have smaller land forces if they have more capability,” he said.

Stealthy Joint Strike Fighters “can probably do things that F-15s and F-18s can’t by a factor of five,” Graham said. But there are limits to reducing the number of less capable aircraft without creating a “coverage problem” – that is, having too few planes to cover too many trouble spots, he said.

And any cuts beyond the $487 billion already scheduled should also probably wait until it is clearer how the war in Syria and tension over Iran’s nuclear program are going to turn out, he said. “The budget has to reflect fact that there’s no substitute for American military power in 21st Century.” Graham said.