History will remember Robert Gates as the defense secretary who averted U.S. military defeat in Iraq. Right now, though, he is struggling to prevent a different kind of military setback: congressional budget cuts that could compel the military to reduce its force structure. Gates remembers how congressional sentiment for defense cuts coalesced when the Vietnam War and Cold War ended, and he can sense the same sort of dynamic unfolding today. So he is two years into a series of measures aimed at proving the defense department can become more efficient without help from Capitol Hill. Last year weapons programs the department deemed unnecessary were cut by $330 billion, and now it is the bureaucracy’s turn.
The latest installment in the efficiency drive came on August 9, when Secretary Gates proposed hiring freezes, reductions in contracted services, network consolidations and organizational shutdowns within his own office, various combatant commands and the defense agencies. Like the much larger savings in “overhead” he earlier directed the military services to identify, the goal of the August 9 proposals is to free up money for military modernization and personnel. His basic thesis is that the department can live with a flat budget in future years if it transfers money from non-essential functions to more important activities that currently look under-funded.
For example, Gates is convinced that funding for naval shipbuilding needs to be increased to cover the cost of developing a new class of ballistic-missile submarines without imposing corresponding cuts on other types of warships. But that money won’t materialize within the flat budgets dictated by White House spending guidance unless it is freed up from other defense functions. So the defense industry has a real stake in seeing that the efficiency push succeeds, because even though it will lose money that might have gone to contracted services, more money will become available for next-generation military systems like the F-35 joint strike fighter and the Littoral Combat Ship.
One wrinkle in the August 9 announcements that may provide some additional good news for industry is that Gates does not intend to replace departing contractor personnel on a one-for-one basis with newly-hired civil servants. Instead, the ranks of federal workers will remain relatively stable as the contractor workforce engaged in administrative support declines. Gates thus appears to be defusing industry concern that the department might be hiring many thousands of new workers even as it asks companies to economize. That is a real step forward in departmental thinking that will make it easier to generate savings.
However, when you strip away the details of the August 9 proposals, a stark reality emerges: for all of his economizing, Secretary Gates does not want to cut the defense budget at all. He aims to shift money around within the budget so that it can be applied more productively, but he does not intend to return any money to the federal treasury for deficit reduction — even though the government is spending $4 billion per day it does not have, and even though Gates himself noted last Summer that America is generating nearly half of all global military outlays. Gates thinks any cuts in force structure will make America less safe, but by refusing to entertain ideas for cutting the defense budget, he may be setting up his successor for a rough ride with Congress when it gets serious about deficit reduction.
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