Contingency Operations

Sequestration, complete with furloughs for some civil servants, is on its way. And it is going to set defense planning on a different trajectory. Rather than being a "meat axe" or "Armageddon," sequestration may turn out to be just the kind of wake-up call the Pentagon needed.

The appropriations bills likely to pass this week or next do not change that, though they will prevent a government shut-down. There was some discussion of providing special flexibility for the Defense Department in the appropriations bill so they could manage sequestration more easily. That’s not going to happen unless the same flexibility is given to all agencies — so there will be no relief at the Pentagon from the cuts.

For Congress, however, sequestration may turn out to be like the Base Realignment and Closure (BRAC) process for the entire defense budget. As a series of unavoidable and somewhat arbitrary budget cuts which Congress cannot prevent, sequestration becomes the outside actor members can point to, saying, "It wasn’t me; the sequester cut the budget." Just like they could point to a base closure proposal and say, "It wasn’t me; the BRAC Commission set up the plan and I had to vote for the whole plan, up or down."

With the sequester, the defense drawdown is underway. And it is possible, just possible, that the new leadership at the Pentagon has begun to smell the coffee. On March 15, Secretary Hagel sent a memo to, well, basically everyone in the Pentagon, announcing that he had asked the deputy secretary and the chairman of the Joint Chiefs to carry out a "Strategic Choices and Management Review" by May 31 in light of "budgetary and strategic uncertainty."

This review is new, and it is going to come before the Pentagon machinery begins to grind away at its fifth Quadrennial Defense Review, the document that is supposed to guide long-term strategy, mission, and force planning. Hagel stepped in front of the QDR train and said, "Not so fast; we gotta take a look at where we are, to know where we can go." So, we get a review before the review.

This first look at the defense past and future could help him set out strategic choices and management challenges as a way to guide the QDR. But it has to be budget constrained, and two things are unclear: First, is the secretary going to put resource limits on an equal footing with strategic choices, as is necessary; second, is he going to make this review a real plan with real guidance for the QDR.

His spokesman, George Little, suggested that the answer to the first question is yes: "The review will define the major decisions that must be made in the decade ahead to preserve and adapt our defense strategy, our force, and our institutions under a range of future budgetary scenarios."  A senior defense official may have undermined that intention, though, by fudging the second issue: "The department hopes never to have to work toward the contingencies this review might identify," the official said. If the budget cuts under sequestration are lifted, "those contingencies are likely to go away."

Deputy Secretary Ash Carter may have pulled the rug from under his own review in Indonesia on March 20, when he said "these arbitrary cuts are temporary, lasting through October of this year. The sequester mechanism is an artificial, self-inflicted, political problem, not a structure problem. The turmoil and gridlock will end, and the U.S. can get back to normal budgeting."

If Carter sticks to this view, the forthcoming Hagel review will be meaningless. While the across-the-board nature of sequestration goes away in October, the sharp reduction in the defense budget baseline for the next nine years is likely to remain. That is not "normal budgeting" by any stretch of imagination; it is a deeper downturn than the Pentagon now plans.

If the QDR is going to be realistic, as opposed to a wish list, the review had better not imagine normal business in the future, but instead be a serious, ground-breaking effort, and not a contingency plan. Sequester or not, the defense budget is declining, and probably at a rate that will strip $500 billion from the baseline then-Secretary Panetta projected last year. Hard choices and serious management will be needed, not hopes and wishes.

This realism has not yet seeped in deeply at the Pentagon. As evidence, the Congressional Budget Office, one of the best sources in town for hard numbers and objective analysis, took a look at the current defense plans and said that the current plans for forces, weapons systems, and defense operations were unaffordable, even without sequestration. Losing another $500 billion in the 10-year plan will only make matters worse, according to the CBO.

Military pay, the CBO analysts said, is going to grow faster than the Pentagon projects, because the politics of pay don’t make restraint easy. Healthcare costs will grow because they always do, despite optimistic DOD projections. Military hardware programs will cost significantly more than the DOD projects, because a perpetual and definitive history of underestimating almost all hardware costs tells us so. And the costs of operating the forces (training, exercising, moving around the globe) will be higher than DOD forecasts because that has been true for decades. Put it all together and, using realistic cost estimates, the Pentagon’s plans will cost 20 percent more than they are likely to have over the next 10 years.

Secretary Hagel should pay attention here. A realistic review has to use good numbers, or the forces are going to find themselves seriously short-changed.

There are at least three ways of dealing with this funding gap. One of them is to revisit strategy, as Hagel might do in his review and as the QDR should do. There are lots of good ideas about how to do that out there, which I summarized in a column four months ago. The world hasn’t changed a lot since November. We still live in a moment of extremely low threat to our national security, a good moment to step back and review strategy.

The second way is the "peanut butter" way. Whatever a strategy review comes up with, spread the costs and benefits over everyone. This way, nobody comes up short. The Army doesn’t have to batter its way into a "Pacific Pivot," they can pretend they are part of the strategy in that region and keep their share of the budget. The Navy doesn’t get to grow, or buck the budgetary trend, it has to hold its share and live with the strategic consequences. And the Air Force still gets to invest in some technology. That’s the "good service partners" way and nobody’s ox gets too badly gored, but we don’t necessarily end up with the best force for the world we live in.

A third way is to mix a strategy revisit with some tough love for the perpetual drivers of Pentagon budgets: weapons costs, the back office, and pay and benefits. Of course, that’s the politically hard way. The Iron Triangle (services, members of Congress, and the defense industry) resist the idea of tough choices on hardware and tough love on costs. The services like to hold on to their infrastructure and find letting go of offices and processes pretty hard, as Secretary Gates found out with his effort to find efficiencies a couple of years ago. And most members of Congress (and a lot of the military) would sooner re-invade Iraq than touch the third rail of pay and benefits.

But it’s like bank robber Willie Sutton said: &q
uot;That’s where the money is." And there is growing recognition inside the Beltway that constrained budgets are forcing closer attention to at least two of these.

Don’t believe me? Take a look at a paper out this week by conservative defense analyst Mackenzie Eaglen from the American Enterprise Institute. Set aside the politically necessary rhetoric she opens with — a readiness "crisis," "slashed" programs, and Pentagon budget "cuts." Go to the back of the piece where the facts are. Where she discusses pay growth and pay differentials and higher healthcare contributions by retirees. Or where she recommends another BRAC round because the services have way more infrastructure than they need. Or where she says the back office needs to shrink, which means bringing down the number of both civilian and military personnel to levels below where we were in 2000.

Some of these things are not controversial to conservatives, who generally take a "cut the waste; save the forces and weapons" position. But some of them are, and the "gung ho" advocates of "defending defense" might take offense. The proposals suggest two things that are truly important. First, the number of people outside the Pentagon who think long-term planning for a drawdown is necessary is growing and spreading across the political spectrum. And second, there may just be a constituency out there in the "aware public" for some realism in the Pentagon. Some support for the kind of tough love Hagel needs to bring to the services and the bureaucracy.

That — and some serious, budget-constrained options inside the Hagel planning process — could get us started on the drawdown management the Pentagon badly needs.