Pentagon’s Budget Cutting Strategy Ignores Key Facts

According to The New York Times, Secretary of Defense Leon Panetta is poised to reveal the Pentagon’s new leaner but not meaner defense strategy. As expected, Panetta will propose that the United States formally fall off the requirement to be able to fight and win two near-simultaneous major regional contingencies (MRCs). Instead, the new strategy is said to propose a force capable of winning one MRC while maintaining sufficient additional capabilities to “spoil” another adversary’s aggressive plans and also conducting several other smaller operations. Winning an MRC means being able not just to stop an adversary but essentially eliminate his war waging capabilities and force him to sue for peace or impose regime change. We might assume that spoiling an adversary’s ambitions means forcing a halt in his offensive operations.

According to the Times article, there is broad agreement across the political spectrum that the defense budget cuts that necessitated the change in strategy — some $480 billion over the next decade — are “acceptable.” This is an erroneous statement. A number of defense experts and think tanks, as well as virtually all the Republican presidential candidates, have argued against cutting the defense budget. In part, this view reflects concerns mentioned in the article, that the inability to rein in personnel entitlement programs will gut a shrinking defense budget and force drastic reductions in weapons procurement and readiness accounts.

But there are other reasons why the decision to cut defense spending and, as a result, shrink the size of the military, is misguided. First, although the absolute percentage of the reductions is not great, approximately eight percent of planned defense spending over the next decade, and would result in an overall defense budget that is flat for the ensuing decade, this will still be a significant reduction in real terms. The cost of defense, whether personnel programs, operations and sustainment or procurement, is rising faster than the national inflation rate. The cost of health care alone has more than doubled over the past decade. The inherent inflation in weapons systems, even those brought in on time and on budget, is higher than for goods in the commercial sector. This is due to the technical content of such products and the relatively small production runs. Finally, operations and sustainment costs are rising rapidly, in part as a result of a force that is experiencing significant aging. An annual inflation rate of five percent for the overall defense budget, not a historically unreasonable figure, will mean a sixty percent reduction in the actual purchasing power for a defense dollar over the next decade.

Another fact that argues against cutting U.S. defense investments is continuing increases in defense spending by our adversaries and rivals. China increased its defense spending for 2011 by over twelve percent. If Beijing were to maintain this rate of increase for the next decade, its defense spending would triple. China is investing in everything from its own GPS satellite network and fifth-generation fighters to a family of aircraft carriers and several classes of nuclear submarines. Russia is modernizing its strategic nuclear forces and making selective investments in advanced conventional military capabilities. Iran is procuring a wide range of anti-access and area denial capabilities that could be sufficient to close, albeit temporarily the Straits of Hormuz. North Korea’s new leader appears committed to maintain the course set by his father, which involves deploying a larger number of more advanced ballistic missiles and helping other rogue states to acquire nuclear weapons know-how.

At the same time, a number of traditional U.S. allies are reducing defense spending and cutting the size of their armed forces. Despite the mutual backslapping that resulted from the successful air campaign against Libya, our NATO allies must admit that they could not even have conducted that campaign without substantial U.S. assistance. Although plans are underway to remediate the capability gaps highlighted by the recent conflict, it is by no means certain that Europe will be able to make good even on these modest goals in view of the continent’s current economic crisis. Other allies, particularly in East Asia, are investing in modern military hardware. Unfortunately, as a result of decisions taken by the Obama Administration, the strategic value of these investments will be less than might have been the case.

A two MRC defense strategy and associated defense budget is a minimum hedge in view of the uncertainties of the next decade. Anything less would mean unacceptable risk in a decade that is certain to be tumultuous and even very dangerous.