Defense Budget Cuts: $687 Billion Spent in 2010
Policy + Politics

Defense Budget Cuts: $687 Billion Spent in 2010

The special forces mission that killed Osama bin Laden and captured important al Qaeda documents a week ago showcased the effectiveness of a collaboration between military intelligence and U.S. military power.  Obama's appointment of CIA Director Leon Panetta to succeed outgoing Defense Secretary Robert Gates underscores what has been hailed by experts and analysts as another important step in transforming the Pentagon for the 21st Century.

“As a CIA director who’s played a decisive role in our fight against violent extremism, he understands that even as we begin the transition in Afghanistan, we must remain unwavering in our fight against al Qaeda,” Obama said late last month in announcing Panetta’s nomination as part  of a major reshuffling of his national security team. “And as a former OMB director, he’ll ensure that even as we make tough budget decisions, we’ll maintain our military superiority and keep our military the very best in the world.”

By nominating Panetta, the president opted for continuity and someone with vast government experience to help him complete the U.S. withdrawal from Iraq, define the best exit strategy in Afghanistan and impose meaningful cuts to the Pentagon budget.  Panetta, 73, has years of experience as  a former House Budget Committee Chairman,  Office of Management and Budget Director and White House chief of staff.

 “Job one will be to ensure that we remain the strongest military power in the world,” Panetta said. “Yet, this is also a time for hard choices. It’s about ensuring that we are able to prevail in the conflicts in which we are now engaged, but it’s also about being able to be strong and disciplined in applying our nation’s limited resources to defending America.”

But simultaneously  trying to find a way out of Afghanistan without compromising U.S. security interests, adopting new tactics and high-tech weaponry to project  U.S. might oversees, and gradually wringing savings out of the budget after nearly a decade of unrestrained spending will present major challenges for Panetta. Gates, who served both President Bush and President Obama, has been praised for his management acumen and tough talk on defense savings. Yet he has encountered stiff resistance to some of his budgetary initiative.

Excluding the wars in Afghanistan and Iraq, the administration has proposed a $553 billion budget for the Pentagon next year — less than a 1 percent increase over what it requested for 2011. Lawmakers overseeing defense spending  are attempting to block or modify deep cuts proposed by Gates, setting up a key vote this week that could help determine the success of the administration’s attempt to shrink the Pentagon’s budget

A House Armed Services subcommittee last week voted to prohibit a proposed increase in fees paid by retired service personnel for Tricare, the military’s health program; set the stage for possible reopening of competition over the controversial engine for the Air Force F-35 Joint Strike Fighter; and require studies before the Marine Corps can go ahead with a new proposed amphibious landing craft to replace the multibillion-dollar Expeditionary Fighting Vehicle (EFV).

Since the September 11, 2001 terrorist attacks, defense spending has increased 81 percent, with the $687 billion spent in 2010 alone, the equivalent  of  4.7 percent of gross domestic product. The Obama administration has called for a total of $478 billion of spending cuts over the next dozen years or so. But budget and military experts told The Fiscal Times that – even if these cuts were achieved – they are not large enough to make significant reductions in the $1.5 trillion  federal budget deficit and that areas of the defense budget once considered sacrosanct need to be on the chopping block.

“The United States is very clearly heading into a [military] build down, the fourth build down since the end of the Korean War,” said Gordon Adams, a professor of foreign policy at American University. “The budget is going down a lot more than the president said he wants it to because we’re coming out of Iraq and we may be coming out of Afghanistan sooner than we think. The American people and the political system are fed up with wasted resources.”

According to Adams and others experts, Panetta’s wide-ranging experience makes him well equipped to make difficult budgetary choices. “Leon never lost his interest in responsible budget policy,” said Joseph Minarik, a former colleague of Panetta’s and now senior vice president and director of research at the Center for Economic Development. “It’s clear that at the CIA he has learned a lot about what the national security establishment can accomplish. At the same time he’s going to have to weigh that against very serious budget problems.” “If there is a way to make defense budget cuts within budgetary constraints, Leon will find a way to do it,” Minarik said.

To accomplish this, Panetta will be forced to take on some of the most well-entrenched parts of the Pentagon and the military industrial complex. Some areas primed for cuts include:

Troop Reductions
Right now, there are more than 1.4 million active duty service members, with an additional 833,000 reserve troops. Only a small percentage of these soldiers are actually deployed in war zones – 100,000 troops in Afghanistan and with an additional 47,000in Iraq. The rest serve in what Adams calls “commercial functions” – education, facility management, and relocation services, among other functions. Adams notes that these troops consume 42 percent of the Pentagon budget. By eliminating or reducing this kind of work – much of which is redundant – the Pentagon could cut billions.

Acknowledging changing threats could also justify troops reductions. For instance, the United States has more than 50,000 troops stationed in Germany. Some of these troops are necessary to facilitate travel to warzones from Ramstein Air Base in western Germany. However, with the Cold War over for more than two decades, the large majority of troops in Germany are no longer needed. 

Military Benefits
Right now troops pay just one-tenth of what the average American pays for health care, and retirement benefits are generous. Retention payments, meant to entice soldiers to reenlist during wartime, have also increased in recent years. In 2003, they totaled $174 million, while in 2006 the Army and Marine Corps spent more than $1 billion to retain troops.

Spending on these benefits was once considered a sacred cow. But under pressure from the Tea Party, Republicans in Congress are acknowledging that these benefits might be on the chopping block. The House and Senate Veterans’ Affairs Committees held hearings on possible benefit cuts in March, drawing criticism from veteran groups. “We don’t want to be pawns in budget debates,” René A. Campos, deputy director of government relations for the Military Officers Association of America, told The Hill newspaper prior to the hearings.

Big Ticket Items
Big-ticket items are the bread and butter of the military industrial complex. A contract to build an aircraft carrier or a fighter jet can make a business for decades. However, according to Todd Harrison of the Center for Strategic and Budgetary Assessments, many of these programs are no longer essential. “We’re spending billions on a replacement program for aircraft carries,” Harrison said. “Do we need 11 air craft carriers when the most any other nation has is one? What role will aircraft carriers play in the future? Can the carrier even get into the fight anymore? Fundamentally, we have to stop and ask if there are some areas of military competition that we don’t need to compete in.”

Harrison cautioned, however, against completely eliminating big-ticket programs. For instance, U.S. Vice Admiral David Venlet just announced that Lockheed’s much-maligned $6.43 billion F-35 Joint Strike Fighter has potential cost overruns of $964 million. These overruns might be necessary, Harrison said, to complete the project.

“You can cut programs like that but we’re still going to need something to replace[old fighters].  The Joint Strike Fighter is the only fighter program we have right now,” he said. “Old planes can’t fly indefinitely.”