Pentagon Spending Spree May Be Over
Policy + Politics

Pentagon Spending Spree May Be Over

iStockphoto/The Fiscal Times

The latest era of fast-rising Pentagon budgets may be coming to an end. The Obama administration backs it. The Pentagon is preparing for it. The only question now is what it will take to get Congress on board.

The first clue to the military’s budgetary future could come in the next several weeks should Congress and the White House strike a deal that links deficit reduction to raising the debt ceiling. Many defense analysts expect some of the $400 million in military cuts called for by President Obama in his April speech at George Washington University will be part of the final package. The Department of Defense, at the president’s orders, is already engaged in a “comprehensive” review of the Pentagon budget with an eye to cutting anywhere from $430 billion to $460 billion over the next decade from previously projected spending. That would be about the same as giving the Pentagon an annual cost-of-living increase but no more, defense analysts said.

“You can actually achieve that by simply allowing the Pentagon budget to grow by inflation,” said Todd Harrison, a senior fellow at the Center for Strategic and Budgetary Assessments, a Washington-based think tank. “But that’s a 3 percent reduction from what the president proposed in his (last) budget.”

The Pentagon report, which isn’t expected until fall, will form the basis for the president’s next budget proposal, which comes out in February. Top defense department officials are scrambling to come up with $40 billion to $50 billion a year in new cuts over the next decade.

"Since 9/11, we could always reach for
more money. Those days are gone.”

“Everything must be on the table,” Ashton B. Carter, under secretary for defense for acquisition, technology and logistics, told a Brookings Institution forum late last week. “This era will require a different mindset for managers and Congress. Since 9/11, we could always reach for more money. Those days are gone.”

Post-conflict military build-downs are a standard part of American history. There were sharp reductions in military spending after Korea and Vietnam. The Clinton years saw steady declines at the Pentagon after the Reagan-era build-up of the 1980s. With Osama bin Laden in a watery grave and the conflicts in Afghanistan and Iraq winding down, many analysts have been projecting something similar will happen in the next decade. It’s been slow in arriving, however, especially in the face of bipartisan resistance on Capitol Hill.
The so-called budget hawks in the Republican-controlled House ignored the defense saving message in the appropriations bill that passed earlier this month. The legislation shaved just $9 billion or 1.7 percent off the president’s original request. Baseline military spending – not including the wars in Afghanistan and Iraq – will rise next year by about 3.4 percent or twice the rate of core inflation under their plan.

The Senate Armed Services Committee in its budget plan didn’t do any better in terms of cutting back on the military buildup of the 2000s, when defense budgets doubled. The Democratic-controlled committee, chaired by Sen. Carl Levin, D-Mich., shaved just $5.9 billion off this year’s administration request.

American’s approach to nuclear security provides
a good example of how a revamped strategy to
accommodate new realities can reap
large budget savings.

Yet pressure is building on Capitol Hill for larger defense cuts, which inevitably would lead to job losses in districts that contain defense contractors and military bases. And it’s not just coming from left-leaning liberals who can be counted on to back any proposal to rein in Pentagon spending.

Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee who also served on the Bowles-Simpson deficit commission, unveiled a proposed budget earlier this month that would cut $883 billion from security programs over the next decade. Most of those cuts would be made in the military.

“In our plan, we have done what the fiscal commission called for,” Conrad said in a speech on the Senate floor. “We have achieved the same savings out of security as the fiscal commission did.”

He used the speech to blast away at the House-passed budget authored by Rep. Paul Ryan, R-Wis., who chairs the House Budget Committee. “They continued the path of increasing defense spending year over year without any discipline,” Conrad said. “This is the plan they outlined – from $529 billion a year headed for $667 billion a year, and that does not count the war funding.”

Any plan to cut Pentagon spending from current projections will require new thinking about global strategy, procurement and military compensation, analysts say. “These cuts are manageable if done reasonably and done well,” said Michael O’Hanlon, a senior fellow at the Brookings Institution. “But you’re not going to find $40 to $50 billion a year in defense cuts by cutting waste.”

American’s approach to nuclear security provides a good example of how a revamped strategy to accommodate new realities can reap large budget savings. During the Cold War, the U.S. built a triad of options for nuclear retaliation: land-based intercontinental ballistic missiles; nuclear submarines; and long-range bombers. Every nuclear submarine and strategic bomber in the military’s arsenal is slated for replacement over the next two decades – programs that will cost well in excess of $100 billion.

Yet the Cold War is long over, and the U.S. and Russia are engaged in talks to reduce their nuclear warheads. Meanwhile, no nation on earth is attempting to build a strategic arsenal capable of confronting the U.S.

In their comprehensive review, Pentagon planners will be asking if we can risk going to “a diad instead of a triad,” said Harrison. “A smaller force doesn’t equate with a weaker or less capable military.”

The soaring cost of pay and benefits for professional military personnel are another area requiring serious reevaluation, defense analysts said. The current system mirrors corporate practices in the 1950s and 60s – early retirement, lucrative defined benefit pensions, and minimal co-pays on health care. Military spending on pay and benefits rose 46 percent per person in the last decade.

Moreover, when retiring from the service, military veterans can enroll in a retiree managed care plan that provides comprehensive coverage for life with private sector physicians and hospitals at a cost of less than $500 a year. The program, which didn’t exist in 2001, will cost nearly $11 billion in 2011.
“Since 2001, the Pentagon budget has grown by $300 billion after adjusting for inflation, and only 54 percent of that was for war spending,” Harrison said.