January 2005

The Pentagon Budget Cuts

Dov Zakheim
Booz Allen Hamilton

It has been suggested that the Program Budget Decision (PBD) describing Pentagon budget cuts, which was leaked to the media in late December, was a trial balloon or, alternatively, sealed in concrete. In fact, it is neither. The PBD indicates 95 to 98 percent of the decision, but until it has been locked into the budget, it can be revised.

It has also been suggested that the defense cuts are not real, because they concern "out year" money. This, too, is inaccurate. The cuts are partly a function of the higher costs associated with the Iraq war. In October 2003, the Pentagon was spending less than $4 billion a month; today, that figure is over $5 billion. Most of these expenses are in the personnel, operations, and maintenance accounts. Normally, these would be the areas in which one would look to cut outlays. But because these funds are needed by U.S. troops on the ground, defense planners must look elsewhere--namely, to the research and development and procurement accounts.

While there are many in Congress and the defense industry who will fight for particular weapons systems, these programs can only be restored by going after other weapons systems. No one has the stamina to go after personnel, operations, and maintenance accounts, or add to the deficit.

In targeting acquisition accounts, it is difficult to demand cuts from the Army, which has already lost the Comanche helicopter and the Crusader artillery. Instead, one naturally looks to the Navy and Air Force, which are more capital intensive. The Air Force already has commitments to its space program, mobility program, unmanned aerial vehicles, and tankers. This leaves tactical aviation, which is fundamentally a choice between cutting the Joint Strike Fighter (JSF) and the F-22. Cutting the JSF would upset not only the defense industry and Congress, but also some of America's closest allies, including the British, who are very heavily invested in the JSF--and in Iraq.

There are those who argue that the Bush administration has not advanced defense transformation. In fact, the transformation priorities put forward in 2001 included unmanned combat aerial vehicles, cruise missile-armed submarines, crypto-modernization, laser communications, space-based radar, and a joint training center--none of which existed in the 1990s, but are being funded today.

Michael O'Hanlon
Brookings Institution

The Pentagon's budget cuts, as leaked to the media through the PBD, are largely sensible but should be expanded. Some object that there is no grand strategy behind them. In fact, defense transformation is a gradual process, advanced by selectively funding programs that offer greater promise, and cutting those that offer less. The budget cuts also reflect the necessity of decreasing the deficit, and the military needs to contribute its fair share to that effort--not by depriving troops on the ground, but by asking defense planners in Washington to look hard at programs. The cuts also take a tentative step toward recognizing that the foremost priority of defense planning today, beyond winning Operation Iraqi Freedom, must be to ensure ground forces are not broken. The Army and Marine Corps are too small for the missions they have been given, and the strain is showing.

There are some areas where the Pentagon cuts might be deeper. While the JSF should not be cancelled, it also is not necessary to buy 2,500 planes. Rather than a full slate of JSF, the U.S. Air Force should refurbish F-16s and anticipate that unmanned combat aerial vehicles will be able to perform more combat missions within a decade or less. The Pentagon should also consider purchasing a few hundred short take-off and vertical-landing aircraft, given that future technology trends may allow adversaries to threaten runaways.

U.S. nuclear forces are quite large and can be maintained in more economical ways. The Osprey tilt-rotor aircraft has speed and range, but it does not offer sufficient advantages for full amphibious assault; instead, it should be treated as a prototype program, and the Pentagon should otherwise buy standard helicopters to replenish the aging inventory and sustain the industrial base.

Steven Kosiak
Center for Strategic and Budgetary Assessments

Under the Defense Department's February 2004 plan, military spending was projected to increase 2 to 3 percent a year beyond inflation, reaching $450 billion in 2009. In fact, the Pentagon's defense program is likely to cost $500 billion by 2009. This is because new weapons systems typically cost 20 percent more than the Pentagon assumes, and operations and support costs, especially those related to personnel, are likely to grow.

A $500 billion defense budget is politically unsustainable, and the cuts reflect the Bush administration's recognition of that reality. They also reflect a desire to demonstrate that the Pentagon is sharing the pain in a tight fiscal year. But while the Bush administration may slow defense spending growth, the PBD does not suggest that it will actually cut it.

The PBD is complicated by the Pentagon's request for a supplemental to fund ongoing operations in Iraq in Afghanistan. This is likely an additional $70 billion, having already received $25 billion for this year. The sum total of these supplementals, $95 billion, is probably more than actually needed. The Congressional Budget Office estimates that operations cost $60-65 billion, and even factoring for an increased number of troops, a higher operational tempo, and the replacement of equipment, this still suggests that costs from Iraq and Afghanistan are less than the Pentagon has requested.

For the next several years, the Pentagon is likely to escape deep budget cuts, but for the longer term, prospects for defense spending are less rosy. It is difficult to imagine a program for long-term deficit reduction without significant restraint on the defense budget. While the Navy and Air Force can preserve their procurement accounts by cutting the size of their force structure, the Army does not have this option, at least not until it is out of Iraq.

Loren B. Thompson
Lexington Institute

The Pentagon cuts are less a function of budgetary or fiscal pressures than of Secretary Rumsfeld's ideological convictions about the future of conflict and emerging challenges. Rumsfeld came to the Pentagon in 2001 with a mandate to transform the military, animated by a faith in air power and information technologies. The result was what Rumsfeld called a capabilities-based posture. What this approach failed to grasp, however, were the near-term threats posed by terrorism and insurgency. The surprises of 9/11 and the postwar security situation in Iraq led to revisions in Rumsfeld's strategic plan, but the original emphasis on network-centric warfare remained. The durability of this ideology is reflected in the Pentagon budget cuts.

Although the F-22 is the Air Force's top modernization priority, critics complain that the plane is too costly and irrelevant to emerging military needs. However, five administrations have already invested $40 billion on the plane, which works quite well, providing stealth and low fuel consumption at high speeds. The Air Force cannot sustain air dominance without 381 F-22s-one squadron in each of its ten air fleets. Consequently, it offered the Secretary of Defense an alternative for saving money in its 2006 budget, proposing to cut its purchase of Joint Strike Fighters from 1,763 to 1,200 fighters. The decision to instead cut F-22 reflects Rumsfeld's belief that U.S. air dominance is assured in the future as well as his determination to force the services to share technologies.

The Pentagon has also proposed lower spending on every category of warship, and even further cuts to the Navy's force structure are likely. The Chief of Naval Operations may reduce the fleet to as few as 260 vessels, a further 10-percent reduction from today's level. Sea power, like air power, is a shrinking priority in the Pentagon's investment agenda.

When Secretary Rumsfeld finds a technology ideologically appealing, he will support it generously. The best example of this is space-based radar, which has been given $1 billion despite congressional appropriators repeatedly balking at funding it. The support for space-based radar is especially strange, as the current threat environment prioritizes positioning reconnaissance closer to adversaries than in the past. If the United States no longer fears enemy air power, why is the Pentagon pursuing an expensive new reconnaissance satellite instead of airborne solutions for intelligence gathering?

AEI research associate Vance Serchuk prepared this summary.