Gordon Adams and Matthew Leatherman
How to Cut the Pentagon's Budget While Improving Its Performance
U.S. military missions and the defense budget that supports them have grown without discipline over the past decade, largely as a consequence of the wars in
The national defense budget accounts for 56 percent of all U.S. federal discretionary spending. Defense is now one of the country's "Big Four" accounts, consuming roughly the same share of federal spending as do each of
Defense missions have expanded and spending has soared even though
Meanwhile, economic and fiscal challenges are center stage. As Admiral
The Congressional Budget Office currently projects that between fiscal years (FY) 2012 and 2018, the U.S. government will spend over
Even with these reductions, and after adjusting for inflation, U.S. defense spending in FY 2018 would be well above the Cold War average.
Defense Secretary
More effort will be necessary to discipline defense missions and reduce the Pentagon's spending. The last substantial drawdown, which started with the Balanced Budget and Emergency Deficit Control Act of 1985 and proceeded through the end of the Cold War, is a clear historical precedent: it proves that major reductions are possible and can make the force even stronger. At the same time as other cuts were being made across the national budget, between FY 1989 and FY 1998, the
Reducing the deficit and controlling debt today will require the U.S. government to make similarly tough calls -- and start setting priorities among missions rather than simply layering on additional missions, as proposed in the 2010 Quadrennial Defense Review. Spending less on defense means doing fewer things, and that means making firm choices in precisely the areas that Gates has said he wants to protect from budget cutbacks, including the size of the military itself. Force size drives the defense budget: it has a direct impact on the cost of operations, investment in hardware, and the cost of payroll. Thus, budget discipline requires mission discipline. Not all tasks are equal; some are more critical or more urgent, or demand more forces. A sober evaluation of missions' relative importance would lead to a smaller and more focused military, with budget savings as a result. Dismantling al Qaeda's core, including capturing or killing its leaders, should be the top priority. But this will require far fewer forces than the global campaign against terrorism; it will primarily require special operators such as the Army Rangers,
Cybersecurity is another critical priority. Controlling information and communications networks enables the military's missions, both offensive and defensive. As Deputy Secretary of Defense
Meanwhile, several threats to which the U.S. military has traditionally devoted considerable resources are now less likely to occur than in the past or would be less consequential if they did. The end of the Cold War brought an unprecedented level of security to
Some people point to
The prospect of a major war with other states is even less plausible. Defense planning scenarios in the 1990s were built around the possibility of two conflicts. The one involving
Given the stakes, some hedging for these exceedingly low-probability risks is reasonable. But even a smaller U.S. force and budget than today's would be ample because many of these risks are less likely than ever and
Setting priorities will make it possible to reduce the size of the U.S. military while retaining a sufficiently large and superior force for critical missions. Eliminating counterinsurgency, stabilization, and nation building as first-order tasks would allow for cuts in the number of ground forces. In particular, the buildup in ground troops that President
Moreover, a revised assessment of
U.S. forces could be trimmed even further by reducing the size of the military's "tail," or overhead, relative to its "tooth," or combat forces. According to a report by the consulting firm
This overhead must be streamlined. Some 100,000 active-duty forces should be cut from the back office across the services. This is a conservative estimate of the number of positions that could be cut through attrition alone over five years. The vacancies created would not need to be filled again by civilians or contractors because if missions were prioritized, the Pentagon's overall personnel needs would shrink. These cuts should come on top of the several thousand positions that will be saved by closing the Joint Forces Command. Together with the reduction of the 92,000 ground troops that were added for the operations in
Setting priorities would also help the Pentagon make better investment decisions. Emphasis should be placed on spending that supports priority missions and that is adapted to the specific tasks that U.S. forces are likely to undertake in carrying out those missions. For example, cargo aircraft and sealift capabilities make rapid deployment possible, which can justify having a smaller permanent force overseas. Increased investments in unmanned aerial vehicles for surveillance, missile strikes, and support for ground forces would advance multiple missions, from conventional deterrence to modern special operations, and thereby decrease the need for high-cost fighter jets. Additionally, investments in hardware should be assessed according to whether they create excess capability, are too costly for the capability they deliver, and perform as expected.
With these criteria in mind, five major investment programs currently under way should be cut, curtailed, or delayed. They are excessive both because the mission that justifies them, conventional war, is extremely improbable and because
The F-35 Lightning II program, which is expected to cost a total of
Two other investment programs need to be reconsidered. Plans to add 42 vessels to the existing fleet of next-generation attack submarines -- at a cost of
Based on figures in the Pentagon's Selected Acquisition Report for the fall of 2009 and other government analyses of recent budgets, canceling the five hardware-purchase programs, deferring the construction of some submarines, and reducing funding for ballistic missile defense research would yield
Yet discipline in the
The budget for research and development (R & D), which has grown in real terms by 60 percent since 2001, should also be reduced. There is no obviously "right" level of funding for R & D, but with the current overall U.S. military R & D investment exceeding
The U.S. military's pay system has become increasingly disconnected from its primary purpose: developing a compensation system that produces the mix of personnel that can get the work done most effectively. By this standard, the key indicator of the adequacy of military pay is whether recruitment and retention targets are being met, particularly for tasks requiring critical skills. The Congressional Budget Office has determined that overall military pay, including cash and in-kind compensation, presently exceeds compensation for comparable work by civilians by at least 11 percent. This is the result of the Pentagon's long-standing tradition of maintaining morale by paying members of equal rank and grade roughly the same, irrespective of the demand for particular skills, as well as of
A much more refined pay model is needed, one that replaces across-the-board pay raises with a more tailored approach that would allow supply and demand to generate the right combination of needed specialties and skills. This would involve much greater use of targeted bonuses and special pay for key required specializations or jobs, such as assignments to hazardous stations and language or technological skills. Importantly, current pay increases based on promotions or longevity would not be affected, nor would the special compensation given to combat troops for hazardous duties. Across-the-board pay increases should be suspended as military forces are reduced and reorganized according to the cuts suggested here. This adjustment could take two years or more, at which point the general pay increase question could be revisited. This could save roughly
Likewise, the
There are two types of retirees in the TRICARE system: those who are eligible for
This must be corrected. Retirees who are eligible for
Finally, the military's retirement program should be revised. It is an unfair system for those employees who leave the service before 20 years, the term after which they become eligible for the program. And it frustrates Pentagon managers, who could more easily encourage departures to match the military's personnel needs if a retirement option before 20 years of service were available. The system should be revised wholesale, using the civilian Federal Employees Retirement System as a model. FERS benefits become vested after five years, the program includes
Funding for intelligence, 80 percent of which falls under the responsibility of the secretary of defense, should also be reconsidered. In 2004,
Duplication in information technology, security procedures, human resource systems, and purchasing could be eliminated and overall management simplified. More savings still could be found by decreasing spending on government satellite imagery, which duplicates commercially available imagery, and by no longer vacuuming up more intelligence signals than are needed or can be processed. Helping the policymakers across the government who consume intelligence better communicate their needs to intelligence providers would also eliminate a sizable amount of unused analysis and the costs of generating it. Analysts with considerable internal management experience in the intelligence community think it reasonable to assume that such initiatives could save U.S. taxpayers
Defense missions, plans, and budgets have been largely exempt from scrutiny over the last decade. Yet the lessons of the wars in
Foreign Affairs, January/February 2011
Dr. Gordon Adams is a Professor of International Relations at the School of International Service and Distinguished Fellow at the Stimson Center. Matthew Leatherman is Research Associate at the Stimson Center and a regular contributor to its blog, The Will and the Wallet.
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