Situation Report

News flash: the Pentagon’s in fiscal hot water

News flash: the Pentagon’s in fiscal hot water

People don’t get how much fiscal trouble the Pentagon is actually in. Sequestration ain’t nuthin’. The real problem stems from the Pentagon’s internal cost growth, which has been hollowing out the force for decades. While that realization is not new — the cost of personnel, health care, operations and maintenance, and acquisition has been raising the price tag for defense for decades — it’s now forcing the Pentagon to make choices between end strength and modernization, says CSIS’s Clark Murdock.

"The reason why the Pentagon has been screaming about the catastrophic effect of sequester dollars is because it really will have catastrophic effects because it’s exacerbated by the effects of the internal cost inflation," Murdock tells Situation Report.

What does he mean? The combination of the $487 billion the Pentagon must cut between now and 2021 and the additional $500 billion in cuts it will need to make if sequestration happens in January alone represents a 31 percent reduction in Pentagon spending. That is not as large a decrease as other drawdowns (36 percent after the Cold War, 33 percent after Vietnam, and 43 percent after Korea); but in combination with the rising internal costs the Pentagon confronts, taxpayers are paying way more for much, much less.

"We’re paying more for a smaller force," Murdock says. So what would seem like a reasonable post-war cut is actually far more bloody. "What looks like only a 30 percent drawdown is really more like a 50 percent drawdown…. Plus the dollar is weaker."

What to do? Murdock isn’t the only one to see the sky falling. But the demand now is to find a way to develop a national security strategy the U.S. can actually pay for. That means determine the topline then decide what the strategy is. And if that Pentagon requires modernization, and it always will, a significant reduction in the size of the force is required. To Murdock, who has been around the defense block for years, that means saying good-bye to 455,000 troops and putting DOD’s end strength at a svelte 845,000. That, he says, is required to maintain a modernization budget of around 32 percent of overall spending. But getting the Pentagon’s modernization budget back to that level will force not only that huge reduction in size of the force, but a major recalibration of its defense posture, Murdock says.

"We’re getting into an era, because of internal cost growth, where you really do have to make zero-sum choices between how much equipment you have, how many people you have, and what strategy you can pursue."

Panetta’s been here before, albeit on the other side of the fence. In 1991, Panetta was in the role currently played by Paul Ryan, when, as House Budget Committee chairman, he stared down Defense Secretary Dick Cheney and said: "The days of big spending, free-wheeling defense budgets are clearly over." And Cheney stared back, saying: "We’ve already cut the living daylights out of the defense budget, Mr. Chairman."

Writing on FP, Micah Zenko notes that today Panetta is playing Cheney’s role, with some key differences: "Like Dick Cheney 21 years ago, Secretary of Defense Leon Panetta has engaged in an exhaustive effort to avoid both sequestration and any further reductions in the Pentagon’s budget. The distinction between Panetta and his predecessors, however, is in the tactics he has employed to protect his bureaucratic turf. Panetta has belittled the process of deliberative democracy, told Congress how it should reduce the federal debt, and declared that the Pentagon cannot survive another penny in cuts," Zenko writes.

In the FP piece, Zenko continues to take the secretary to task: "Last week, [Panetta] further remarked: ‘I have to tell you one of the most disturbing things that I talk about — one of the national security threats is the question of whether or not the leaders we elect can, in fact, govern.’"

Zenko: "This is an absurd and dangerous charge, and one that Panetta should answer for if he ever appears before Congress again. Panetta acts as if it is his role to provide oversight of Congress, rather than the other way around."

Welcome to Wednesday’s edition of Situation Report, where we invite you to provide us oversight by telling us what we should be thinking and writing about. Follow me @glubold. Or hit me anytime at And sign up for Situation Report here: or just send me an e-mail and I’ll put you on the list.

New water cooler wisdom: Panetta’s departure may not be as soon as we think. The thinking had been that if Obama won a second term, the former congressman turned budgetary chief turned White House chief of staff turned CIA director turned defense secretary was finally ready to return to California to grow walnuts on his farm. Although neither Panetta nor his aides will ever discuss the topic, most people thought he would stay until the budget issue was resolved and then be gone by spring. But the abrupt resignation of David Petraeus as CIA director is throwing a wrench in the plan. And Hillary Rodham Clinton’s expected departure — Susan Rice has been practically nominated to succeed her — may mean there is too much movement at the top. Now folks expect him to stay until summer.

China asks: What’s the Asian pivot all about? Mabus explains. Navy Secretary Ray Mabus is in China for high-level meetings with Defense Minister Liang Guanglie and other PLA officials. The E-Ring’s Kevin Baron: "Mabus kicked off his China tour quickly by meeting Rear Adm. Zhang Jianchang at the airport in Beijing. He later plans to visit other sites outside the capital. Mabus is the first U.S. Navy secretary to visit China in 28 years, Chinese media noted proudly, while boasting that Mabus was briefed on China’s recent inaugural aircraft carrier landing."

Move out! Women tell Panetta he isn’t moving fast enough to get them into combat. The ACLU and four women are suing Panetta to move faster to lift historic bans on women in combat. Earlier this year, the Pentagon opened about 14,000 positions to women after acknowledging that many have already served in combat over the last 10 years. The services are studying physical standards, leadership, and other factors to see how to allow more women into combat roles. Meanwhile, some 238,000 military combat jobs, by DOD’s own count, remain closed to women.

Ariela Migdal, senior staff attorney with the ACLU’s Women’s Rights Project, providing legal counsel to the plaintiffs: "It’s sort of unbelievable that the policy that has remained largely unchanged since 1994 is still the same policy, even though so much of these wars has changed how women fought."

The suit:

E-Ring’s Kevin Baron has the rest of the story: