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Commentary: Pentagon's Budget Reality

Put Affordability at Front of Defense Planning

Aug. 7, 2014 - 03:12PM   |  
By ByClark Murdock   |   Comments
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The US Defense Department must prescribe for itself a large dose of budgetary realism and dramatically revamp how it builds its budget if it is to produce the best military it can under the severe resource constraints it faces.

The prevailing view at the Pentagon is that the budget reductions mandated by the Budget Control Act of 2011 (the so-called sequester cuts), and the manner in which they will be applied (meat-ax style, across the board) will do irreparable harm to national security. So, the Pentagon has been promoting the budget it thinks is needed, not a budget it is likely to get.

This refusal to accept budgetary reality could bring the very thing the department fears — the wrong military for the threats of the future.

Complicating the issue is the fact that the meat-ax approach has its supporters. Cutting everything equally (except for uniformed personnel) would leave intact today’s priorities, which serve many interests both inside and outside the department.

And avoiding the pain of making tough decisions suits the bureaucratic inertia found in every large organization.

There is more bad news: The sequester cuts are just one part of the budgetary double whammy the Pentagon faces. The second part is supplied by the eroding power of the defense dollar to buy military capability. It’s not just fewer defense dollars; it’s also the “weaker” defense dollar in terms of purchasing power.

The aggregate impact of growth (above inflation) in the cost of personnel, health care, operations and maintenance, and acquisition results in a defense dollar that buys less and less capability.

The cumulative impact of this double whammy is significant. DoD’s defense budget peaked in fiscal 2010 at more than $700 billion in 2013 dollars (with overseas contingency operations, or OCO, accounting for $175 billion of the total).

In fiscal 2021 under the budgetary caps imposed by the Budget Control Act, the budget will be about $520 billion (with OCO pegged at $25 billion by the Congressional Budget Office) again in 2013 dollars, which represents a decline of 21 percent.

During this same time period, the defense dollar will have lost 15 percent of its purchasing power because of the aggregate impact of internal cost growth.

And this is a conservative estimate. The figure could be as much as 20 percent, according to one former senior Defense Department official, and could be exacerbated by funding moved from OCO to the base budget as the drawdown proceeds.

These stark figures underscore the need to use the defense dollars we have as efficiently as we can for the threats we will face tomorrow, not simply bring forward a shrunken version of today’s military.

Recognizing this, the Center for Strategic and International Studies formed a study group two years ago to explore how best to allocate available resources. The result is out now in report form titled, “Building the 2021 Affordable Military.”

The report provides a detailed, multistep methodology for an affordable military, but the first, absolutely essential step is budgetary realism. It won’t be easy. It is going to take a major revision in Pentagon thinking.

Traditionally, planners and strategists settle on a strategy and then ask, “how much is enough?” Given the harsh budgetary realities they face, planners must now ask, “how much is affordable?” This a cost-capped approach, and it is the key to building the most effective national defense our resources will permit.

This will not guarantee that the military of 2021 will be adequate for the nation’s needs, but it will enable the department to better prepare for the deep defense drawdown that is coming, and it will also help make a more compelling case for the harmful impact on national security these cuts are having. ■

Murdock is senior adviser at the Center for Strategic and International Studies, Washington.

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