President Obama is advancing a defense budget plan that will result in a $150 billion shortfall over the next half a decade, unless Congress amends it substantially, a military analyst argues.
Michael O’Hanlon, senior fellow with the Brookings Institution think tank in Washington, D.C., presented his argument in The Washington Post, in an op ed piece.
Just to execute programs already in place, without any radical new expansion of programs, would take far more funding than the Obama budget envisions, O’Hanlon argued.
If one discounts inflation, the Obama budget plan for the fiscal year ending Sept. 30, 2010, and later years would represent no growth in military outlays. But history and experience show that typically, costs of successfully completing defense programs rise at a rate 2 percentage points faster than inflation, O’Hanlon observed.
To be sure, in a separate column, he argued in favor of cutting some missile defense programs. (Please see separate story in this issue.)
In assessing the overall Obama budget plan for fiscal 2010 through 2014, O’Hanlon said it falls short of the mark, even as a stand-pat document. It is, O’Hanlon stated, “perhaps his first mistake” since taking office Jan. 20.
The problem, O’Hanlon continued, is that “his plans are insufficient to support the national security establishment over the next five years. Thankfully, this mistake can be fixed before it causes big harm — either by Congress this year or the administration itself next year.”
Here’s how the numbers work — or rather, don’t work.
While the total Obama defense budget for fiscal 2010 would provide more total dollars than the current fiscal 2009 military allowance, inflation devours the modest increase, so there is “zero real growth in the ‘base budget’ (the part that does not include war costs, which are too unpredictable to include in this analysis),” O’Hanlon noted.
Getting technical, the base budget grows something like 2 percent annually over five years, but that is almost obliterated by an inflation rate averaging 1.5 percent over the half decade, O’Hanlon said.
(Actually, inflation may run at a far higher clip. Many financial analysts fear the Federal Reserve and Treasury have pumped so much money into the sagging economy that gigantic price increase soon may appear, in a new age of soaring inflation.)
But even if inflation doesn’t soar out of control, trouble lies ahead for Pentagon programs.
“Cumulatively, that would leave us about $150 billion short of actual funding requirements through 2014,” O’Hanlon observed.
He doesn’t oppose Obama’s moves to increase funding for diplomacy and foreign aid. “But it is unwise politics and unwise strategy to put these key elements of foreign policy in direct competition with each other, as appears to be the case in the new budget,” O’Hanlon observed.
Basically, his message is that there is no such thing as a free lunch, or a gratis national defense.
“For the Defense Department to merely tread water, a good rule of thumb is that its inflation-adjusted budget must grow about 2 percent a year (roughly $10 billion annually, each and every year),” he noted.
Defense isn’t the only economic sector where inflation runs faster than the overall civilian sector. For example, heavy highway construction costs usually increase far faster than consumer prices.
There is no silver bullet, no easy magic move that can make the Obama defense budget numbers work in the long run, O’Hanlon stated. Rather, the solution has to be more total money for defense. This is so because the four major segments of the military budget — military personnel, operations and maintenance, procurement, and research and development – – aren’t available for huge outlay cuts without serious adverse effects.
How can military personnel (end strength) be cut when U.S. forces in Afghanistan and Iraq already are overstretched and stressed, with repeated callups for reservists and guard personnel.
Deep cuts in operations and maintenance funding may be far more difficult than one might expect, especially in a time of war taking its toll on hardware and units.
That brings us to procurement and research and development, which is where Secretary of Defense Robert Gates focused his budget cuts.
He would terminate the F-22 Raptor strike fighter aircraft at 187 planes, and further trim numbers of the F-35 Joint Strike Fighter, or Lightning II, along with the half plane- half helicopter V-22 Osprey aircraft.
The next-generation DDG-1000 destroyer, a cutting-edge vessel that evades enemy radar while offering great fire power, would remain frozen at three ships in the class. And Gates proposes dropping plans to buy about $80 billion worth of vehicles for the Army Future Combat Systems.
As well, Gates would drop the future Marine One, the VH-71 presidential transport helicopter that has suffered from being over budget and behind schedule, the next-generation bomber, and more.
But O’Hanlon notes, slashing or eliminating a program now, in the short term, doesn’t mean there will be a genuine reduction in spending over many years. If new hardware was needed to replace geriatric systems decaying with age, some replacement still will be required, and it will cost money.
“When you eliminate a defense program, you still typically must buy something to replace aging equipment, even if the alternative is less expensive,” O’Hanlon pointed out, adding that “a lot of equipment (much of it purchased under Ronald Reagan and the first President Bush) is wearing out, and we need to replace it soon.”
Stop-gap and interim measures might work for a while, but not as a long-term strategy, O’Hanlon reasoned.
“Making greater use of service-life extension programs, modifications to existing weapons, and inexpensive but high-performance modern technologies such as advanced munitions and robotics can keep a check on cost growth,” he observed. “But these steps can’t freeze costs.”
Using a different approach, the numbers look like this: Congressional Budget Office figures show defense outlays need to rise by some 10 percent after inflation over the next decade just to pay for what the Pentagon already signed contracts to buy. Even with the Gates budget cuts, the Pentagon still would have to increase outlays by “7 to 8 percent higher spending for an average year in the future,” O’Hanlon stated. To tally up the financial disconnect, “That is another way of saying that we need roughly 2 percent real growth per year, while Obama offers zero.”
Switching from percentages to dollars, “By 2014, this amounts to a difference of about $50 billion in the annual budget, and a cumulative five-year discrepancy of about $150 billion,” O’Hanlon wrote.
Even that hefty gain would mean defense spending would consume a smaller portion of overall economic output.
With those increases included, “defense spending would still decline as a fraction of gross domestic product, but not as much as is currently forecast.”
So the fact is, more funds will have to be provided. The question is whether Congress will suck it up and take action now, or kick the can down the road until a funding crunch- crisis erupts in some later day.
“The plan will have to change,” O’Hanlon concluded. “The question is whether we do it now or do it later.”