Samuel Johnson once observed that “when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully.” This observation apparently applies to defense intellectuals. As successive waves of budget cuts coupled with steady increases in indirect and overhead expenses threatens to reduce to zero resources for modernization, the community of defense analysts, think tankers and retired Pentagon leaders has begun to speak, literally, with a single voice. On Tuesday, 25 of these notables, representing a broad swathe of institutions from the political Left to the Right, signed a letter to Congress calling on that institution to address well-recognized problems within the defense budget that threaten to undermine U.S. national security. The authors declare that “it is our shared belief that the Department of Defense urgently needs to close excess bases and facilities, re-examine the size and structure of the DoD civilian workforce, and reform military compensation.”
This letter is but the latest in a long string of missives, reports, articles and speeches on the subject of reforming the way the Department of Defense spends money. The Lexington Institute has killed its fair share of trees producing reports that propose ways of saving lots of money by taking relatively simple steps to reform defense contracting, simplify the acquisition process, rein in requirements, increase the use of commercial best practices and expand public-private partnerships. Official government bodies, most notably the Defense Business Board, but also the Defense Science Board and the Government Accountability Office, have produced dozens of studies along the same lines. Just yesterday, the Center for a New American Security tossed its contribution into the mix, publishing a report titled The Seven Deadly Sins of Defense Spending that pretty much reiterates the same points. We all agree, the patient – the U.S. military – has a terminal condition which, if not treated, will in effect result in its demise.
There is nothing new in virtually any of these studies and analyses. One need only reread the report of the 1986 Packard Commission to see most of the same issues raised and many of the same solutions proposed. The one additional complicating factor since then has been the explosive growth in military compensation and health care.
All this sudden enthusiasm for reforming how the Pentagon spends money prompts the following question: If everyone agrees on the nature of the problem and, in general, the steps that must be taken, why is there so little interest in or appetite for doing the right thing from Congress and the Administration? Yes, change is hard. Yes, there will be winners and losers from any reform efforts. And, yes, politics complicates efforts to do sensible things. But these factors are always present. Something else is at work.
There is a need for fresh ideas for how to achieve the necessary defense spending reforms. Take one example: closing military commissaries. Just suggesting that the Pentagon get out of the business of competing with Costco and Walmart for the delivery of food stuffs and consumer electronics will result in a torrent of angry letters and e-mails, primarily from military retirees and their families who consider subsidies for sundries as part of their benefits package. But how about providing those same individuals and anyone who retires with benefits over the next ten years with a “Gold Card” entitling them to a rebate equivalent to the lower price they would have received from a commissary on purchases from commercial establishments? The savings would be less than those achieved if the commissaries were simply shuttered, but there would be some. Moreover, once the current mass of retirees is through the system the savings would be substantial.
When the private sector wants to downsize it offers its people buyouts. The same is true when industry seeks to introduce labor-saving technologies. Port operators had to pay their dock workers for the privilege of transitioning to cargo containers, cranes and automated loading/unloading systems. But this approach paid off over time. Much of the resistance to reform is because it will cost jobs. The Pentagon along with Congress needs to look at ways of creating positive incentives so that it can reduce its head count, particularly in civilian employees, close excess facilities and create a balance between the Active and Reserve Components.
We all know what the problems are and even what needs to be done about them. The next study on reforming defense spending needs to take a fresh and creative approach to implementing the necessary changes. There is a lot to be learned from the private sector on how to achieve savings in overhead accounts while limiting the harm to individual workers and communities.
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