Cut out of the Conversation

This week’s last-minute deal to avert the fiscal cliff was welcome at one level, but it did little to address federal spending — including defense spending. Had Mitt Romney won the presidential election, we might now be talking about modest increases to the Pentagon budget. As things stand, however, the real debate is over how much more to cut, beyond the mid-sized reductions — about $350 billion if you measure against standard Congressional Budget Office baseline — already imposed on core, non-war defense spending by the 2011 Budget Control Act. Sequestration — like the Simpson-Bowles and Rivlin-Domenici deficit reduction commissions of 2010 — would cut another $500 billion or so over ten years.

The Obama administration’s current military plan, which incorporates the BCA cuts but not those from possible sequestration — will scale down the military from about 1.5 million active-duty uniformed personnel to its pre-9/11 total of 1.4 million, or two-thirds the Cold War norm. It chips away at modernization programs but preserves most major ones, with one or two notable exceptions. It levels off various forms of military pay and benefits, but most troops will continue to be compensated better than private-sector cohorts of similar age, education, and technical skill. It also holds out ambitious hopes for efficiencies from various unspecified reforms that would save $60 billion over a decade, and optimistically assumes that weapons systems will be delivered at projected costs.

Conceptually, the Obama approach is built on time-tested principles of American defense policy that have been modified only modestly in recent years. The Persian Gulf and Western Pacific remain the two principal theaters of overseas concern — though the administration is seeking to emphasize the broader Middle East/Gulf region somewhat less and, through its policy of "rebalancing," the Pacific somewhat more. A two-war capability of sorts is retained, even if two full-scale simultaneous regional operations are assessed as less likely than before, and large-scale stabilization missions also less likely. Of course, these latter assumptions must be tempered by the fact that possible enemies get a say in our decisions too. In the short term, force planning must also account for the ongoing operation in Afghanistan, where nearly 68,000 American troops remain, and possible operations against Iran’s nuclear facilities.

So far, the debate about the defense budget has focused chiefly on dollars — with the huge numbers involved tossed about like chips in a Vegas casino, with little regard for context or strategy. A more useful way to approach the problem is conceptually. There are two basic ways we can cut the defense budget further, should we choose to do so. One set of cuts would pursue relatively modest savings from additional efficiencies — within the parameters of existing national security strategy. The second would include the economies of the first approach but, in addition, change current strategy in important ways, or otherwise dramatically change how the Department of Defense goes about its global responsibilities. The real issue, which few are addressing head-on, is which approach the United States ought to take.

APPROACH 1: MAKE EFFICIENCIES WITHOUT CHANGING STRATEGY

The first possible approach to seeking further defense savings might generate additional cuts of $100 billion to $200 billion over a decade, beyond those now scheduled. Some of those savings might be counterbalanced by higher-than-expected costs in other parts of the Pentagon budget, so the net savings in the overall defense budget could be less than some hope — an important reality to bear in mind in all discussions of future defense reforms. We may need to cut more forces and weapons just to achieve the topline budget targets already assumed by existing law and policy. And such cuts would themselves be hard. For example:

• The size of the active-duty Army and Marine Corps could be reduced modestly below their 1990s levels (to say 450,000 soldiers and 160,000 Marines); current plans are to keep them slightly above those levels (at 490,000 and 182,000 respectively)
• Rather than increase its fleet, the Navy could employ innovative approaches like "sea swap," by which some crews are rotated via airplane while ships stay forward deployed longer, to get by with its current 286 ships or even a dozen or two less
• The F-35 joint strike fighter, a good plane but an expensive one, would be scaled back by roughly half from its current intended buy of 2,500 airframes
• Rather than design a new submarine to carry ballistic missiles, the Navy might simply refurbish the existing Trident submarine or reopen that production line
• Military compensation would be streamlined further as well, despite Congress’s recent reluctance to go along with even the modest changes proposed in 2012 by the administration. Stateside commissaries and exchanges might be closed, and military health care premiums increased somewhat more than first proposed. Military pensions might be reformed too, with somewhat lower payments for working-age military retirees having 20 years or more of service, and introduction of a 401k-like plan for those who never reach 20 years (and currently receive nothing). This could be done in a way that would achieve modest net savings.

Another idea in this vein could save substantial sums too, though it would require help from allies and would have to be phased in with time. At present we rely almost exclusively on aircraft carriers, each with about 72 aircraft onboard, to have short-range combat jets in position for possible conflict — with Iran in particular. Over the past decade, land-based jets in Saudi Arabia, Kuwait, and Iraq have largely come home. While we occasionally rotate fighter jets through the small states of the Gulf Cooperation Council, and while we maintain command and control and support assets in states like Qatar and the UAE, our permanent onshore combat power is very limited. By seeking two or more places to station Air Force combat jets continuously in Gulf states, we could facilitate a reduction of 1 or 2 carrier battle groups. (In theory, we could cut the aircraft carrier fleet even more this way, since the Navy currently needs about 5 carriers in the fleet to sustain one always on station in the Gulf, but the unpredictability of such foreign basing would counsel a more hedged approach.) Cutting two carrier battle groups could eventually save up to $15 billion a year.

APPROACH 2: MAKE MAJOR STRATEGIC CHANGES

The other approach to saving money in the defense budget, necessary if big cuts like those proposed by the Simpson-Bowles commission or required by sequestration are to happen, would involve not only the kinds of economies outlined above in approach 1, but also a strategic shift — a more profound reorientation of America’s role in the world. It would be an overstatement to say that it would emasculate the country, deprive it of superpower status, or require explicit abandonment of any ally. But it would accept substantially greater risk.

One of the least debilitating ways to strategically reorient the military would be to cut the active-duty Army and Marine Corps by 25 percent, going much further than the administration now plans (and much further than approach 1 would do). This would likely deprive the nation of the prompt capacity to conduct anything more than one large ground operation at a time. Under this approach, the active-duty Army might wind up with 400,000 soldiers, in contrast to more than half a million now and to some 475,000 in the Clinton and early Bush years (and, as noted before, to the currently planned level of 490,000). This would be enough for one major operation, like the unlikely but not unthinkable contingency of another war in Korea. It would also likely keep the Army large enough to retain its prestige as the world’s best ground combat force and to facilitate foreign engagement globally in peacetime. But it would not allow enough capability for that plus an ongoing mission similar to the one in Afghanistan today — or a substantial role in a future Syria operation, for example. It would effectively move ground-force planning away from the two-war standard that has, however imperfectly and inexactly, undergirded American military strategy for decades.

Another major, but not catastrophic, change could be in military compensation. No one likes to talk about this at a time of war, given the amazing service of our all-volunteer force. But with war winding down, perhaps this can be rethought, as long as help for wounded veterans and survivors is left untouched, and if entitlement reform in other parts of the federal budget creates a national sense of shared sacrifice. Military compensation, now $30,000 greater per person per year than at the start of the Bush administration, might be gradually returned towards 2001 levels. This could not be done quickly — and perhaps not at all. Even scaling real military compensation back by $10,000 per trooper through dramatic changes to health care and retirement policies, plus indefinitely freezing military pay, would be hard enough for our political system to consider.  So there would be huge challenges associated with reversing most of the $30,000 increase that may make it inadvisable.  Still, in strictly accounting terms at least, it is not unthinkable.   

Each of these initiatives could save $25 billion to $30 billion a year, but they would take time to phase in, meaning combined savings above and beyond those in Approach 1 of perhaps another $300 billion over the next ten years. All told, adding together savings from approach 1 with these additional cuts in approach 2, we would then approach the additional $500 billion in defense cuts as required by sequestration or Simpson-Bowles. 

To me, the reforms outlined in Approach 1 above, while difficult, are worth trying given the nation’s fiscal plight; however, the risks associated with Approach 2 would not be worth the benefits. But the point is to have the debate on these terms. It is time we stopped casually tossing around big defense budget saving numbers, or pretending that magical reforms in how the Pentagon does business can quickly yield huge savings painlessly, and instead talk about how any cuts to defense spending comport with what we’re asking the military to do.