Center for Arms Control and Non-Proliferation

A Perfect Storm for Pentagon Reform

by Travis Sharp [contact information]

Published in Joint Force Quarterly 53:2 (Spring 2009): 76-79

Introduction reprinted below. Download the full article online (PDF, 4 pages)

In each of the past several years, experts have concluded that U.S. defense spending could grow no more. Despite the fact that the defense budget is now at its highest inflation-adjusted level since World War II, this anticipated leveling off has yet to materialize. Lawmakers, presented with war funding requests still labeled “emergency” after 7 years of war, and motivated by a desire to be seen as pro-defense, have been ready and willing to give the Department of Defense (DOD) everything it asks for and more.

With the United States suffering through economic conditions not seen since the Great Depression, however, the era of $700 billion annual defense budgets may soon be coming to an end. “Any crisis of this nature is going to affect—must affect—other Federal spending,” former chief Pentagon budget official Tina Jonas said about the struggling economy in September 2008. “You cannot look at defense by itself. It is a subset of our macro financial picture.” In a much discussed report, the Defense Business Board concluded recently that “[b]usiness as usual is no longer an option. . . . [T]he current and future fiscal environments facing the [Defense] Department require bold action.” Secretary of Defense Robert Gates in September added, “I certainly would expect [defense budget] growth to level off, and my guess would be we’ll be fortunate in the years immediately ahead . . . if we were able to stay flat with inflation.”

The impending decline in defense dollars has been evident to Pentagon watchers for some time. The Bush administration’s future defense plan forecasts a 1.5 percent real reduction in the DOD base budget between fiscal year (FY) 2009 and FY2013. As operations in Iraq wind down and troops begin coming home, supplemental war budgets also will begin to disappear from the budgetary landscape.

A troubled economy, planned base budget reductions, and evaporating supplementals, however, are not the only forces exerting downward pressure on defense spending. Declining tax revenues and growing mandatory spending are also clouding the fiscal skies. The Bush administration’s tax cuts helped increase the gross national debt by over 70 percent (approximately $4 trillion) since FY2001, forcing the Government to spend more on debt interest payments despite generating less tax revenue. Federal spending on both mandatory programs (for example, Social Security) and debt interest payments, if current trends hold, will consume two-thirds of Government revenues by 2015, crowding out other spending priorities such as defense, education, and housing assistance.

In short, a time is rapidly approaching when defense budgets will not only taper off as war supplementals disappear, but will also compete against ballooning mandatory spending programs for fewer and fewer tax resources—all, of course, amid economic crisis. But that is not all. The Pentagon’s Office of Program Analysis and Evaluation estimated that increasing the end strength size of the Army and Marine Corps by 65,000 and 27,000, respectively, would require at least $360 billion in additional spending over the next 6 years. Since there is little flexibility when it comes to providing benefits for these new troops, end strength increases would dramatically increase personnel costs and usurp resources from other DOD priorities such as research and procurement. These are the budgetary tradeoffs required to prepare for the manpower-intensive stabilization and counterinsurgency missions currently favored by top leaders at the Pentagon.

While belts will need to be tightened, defense policymakers should not despair. With a new administration in office, today’s perfect budgetary storm presents an opportunity to fix a problem upon which too many words have been wasted, yet not enough action has been taken. In a time of increasingly scarce defense dollars, it is critical to optimize every penny invested in national security. The United States can only recover from the past and present, while preparing for the future, if the White House, Pentagon, and Capitol Hill repair the broken defense acquisitions process and give taxpayers the return on investment they deserve.