By Dave Ahearn
Defense procurement programs face huge budget cuts, not only in fiscal 2010 but even more in 2011 and the out years, with an immense array of programs in each of the armed services at risk of substantial cuts or even outright cancellations despite the continuing threat environment, experts said yesterday.
Rep. Trent Franks (R-Ariz.), a member of the House Armed Services Committee, joined Dan Goure, vice president of The Lexington Institute think tank, and Mackenzie Eaglen, senior policy analyst with The Heritage Foundation, also a think tank, in a Defense Daily Webinar moderated by Dave Ahearn, senior editor of Space & Missile Defense Report, sister publication of Defense Daily.
They assessed the outlook for defense finances as President Obama and a new Congress filled with Democratic members begin deciding how to defend the United States with fewer resources.
Peril lies ahead, Franks cautioned, noting that the so-called peace dividend when military outlays slumped in the 1990s left the United States with a huge amount of catch-up spending in the current decade. “Remember some of the mistakes we made,” which ought not to be repeated, he said. Democratic President Clinton and a Republican-led Congress were “complicit in reducing the military by one-third,” Eaglen recalled.
After years of soaring defense outlays that roughly doubled since 2001, the outlook for defense programs is bleak, and no one should be fooled by estimates that President Obama may go for a total defense budget of $535 billion to $545 billion in the next fiscal year ending Sept. 30, 2010, a hold-steady pace, experts warned.
There likely will be billions of dollars of cuts in weapons acquisitions programs, not just in fiscal 2010, but even more in 2011 and later years, the experts predicted.
Military outlays will be crushed by huge pressures from multiple directions, they said, including forces within the Department of Defense such as soaring costs of adding more military personnel ($126,000 for each active duty person, on average, every year, excluding medical care), spiraling health care expenses, exploding outlays for maintaining aging and tattered planes, tanks, and ships, and more.
Then there are competing external pressures to crush funding for defense procurement, including a bad economy savaging government revenues even as spending on the unemployed skyrockets, rising medical costs throughout the nation, retirements of millions of baby boomers, and worse, experts said.
Over the next six to 10 years, defense spending outlays could plunge by 25 to 40 percent, Goure estimated. Cuts total roughly $150 billion in typical defense downturns, he explained. But this one may entail a far larger loss. The Department of Defense faces “a very rough ride,” where defense procurement programs “are likely to see a down cycle” in financial support. “It’s just beginning,” he said. “It’s going to get much worse.” At issue here: whether the United States will continue to be a superpower, he said. But you get what you pay for, so the cuts will translate into “a smaller force, an older force and a less capable force” to defend what still is the wealthiest nation on Earth, despite these bad times.
That means America can afford an adequate defense, now spending only about 4 percent of economic output on the military, but whether that money will be provided is an entirely different matter, Goure said. Not only procurement programs will suffer, but the United States will have “retrenchment overseas,” having to decide whether to withdraw forces from Europe, the Pacific or other areas. “Which arena do we give up?” he asked.
In coming years, there already is “a $100 billion shortfall in the procurement account,” Franks warned, a yawning gap that is “a big deal…with dire consequences.”
“Many members of Congress are ready for defense cuts,” after a decade of rising spending on armed forces, Eaglen predicted. Outlays have soared, in part, on ballooning cost overruns in existing acquisition programs, she said. But the reasoning in cutting defense, or lack thereof, is flawed: the idea that money can be saved by purchasing fewer items in a given program only results in the cost of each item soaring, meaning less defense hardware obtained at greater unit cost to taxpayers, Eaglen noted. Worse, such penny wise- pound foolish cuts also yield reduced competition for defense procurement contracts, interdependence among contractors, and higher prices facing the Pentagon, she said.
Here are the experts’ assessments of individual programs:
The biggest, easiest target to hit is aircraft procurement programs, Goure said, for the same reason that Jesse James robbed banks: that’s where the money is.
Even large cuts in vehicle or shipbuilding programs wouldn’t produce the amount of savings that can be pulled out of aircraft programs, he said.
But if aging aircraft aren’t replaced, in a Catch-22, that only will result in huge and rising costs for the military to maintain creaky old planes that aren’t being replaced, he said.
Eaglen, too, sees tactical fighters and other fixed-wing aircraft headed for huge cuts, along with missiles. Navy shipbuilding may suffer cuts as well, but they won’t amount to nearly as much in dollar terms. Rotary-wing aircraft procurement programs, however, might see a gain, she said. In a tension between providing for today’s armed forces, and providing for the personnel in uniform of tomorrow, today’s force wins every time, she said. That means replacing worn-out platforms over buying new equipment, buying items to replace those destroyed in wars over acquiring next-generation systems, and the like.
Franks, likewise, sees a move to cut the Army Future Combat Systems (FCS), a sweeping $160 billion program led by Boeing [BA] and SAIC [SAI] to provide new vehicles, aircraft, communications and more for a 21st century land force to replace war-torn assets.
FCS, he said, is “easy to attack,” adding that perhaps the huge program, second-largest among Pentagon procurement efforts, should be broken into more affordable multiple components.
However, both Goure and Eaglen said there may be an exception in the bleak aircraft procurement picture, seeing the current authorization for purchasing 183 Air Force F-22 Raptor superstealth, supersonic strike fighter planes might be increased, perhaps to something like 250, though this program is expensive and will be placed under a magnifying glass by cost-cutters. That would afford the Air Force “all kinds of operational advantages,” Goure said, and keeping the production line open would yield a chance for sales to allied nations. It is a product of Lockheed Martin [LMT], which also will lead production of the future F-35 Joint Strike Fighter (JSF) Lightning II in a $300 billion program that is the most expensive defense acquisition effort in history.
As well, the experts said a long-planned Navy spending increase likely will survive the bloodbath: a move from building only one Virginia Class submarine annually to two per year, although this program also will be reviewed closely on cost concerns. The subs are built jointly by General Dynamics [GD] Electric Boat in Connecticut, and Northrop Grumman [NOC] Ship Systems in Virginia. “Do not underestimate the power of the New England congressional delegation,” Goure said, half in jest, as laughter erupted.
Other programs that Eaglen said are “in the cross-hairs” of budget cutters in Washington because of cost overruns, at risk of review and potential cuts, include: the F-35 JSF; Virginia-class subs; the Transformational Satellite System, or TSAT; a multi-contractor program to destroy the U.S. stockpile of chemical weapons; shipbuilding funds, in particular the futuristic DDG-1000 Zumwalt-class destroyers that General Dynamics and Northrop Grumman are just beginning to build; the F-22 Raptor stealth strike fighter, the most advanced fighter aircraft on the planet, where production could cease this year; the C-17 transport plane by Boeing, where production might cease soon. And Secretary of Defense Robert Gates is sharpening the budget knife for procurement programs more generally that have seen major cost overruns, she noted.
Goure said aircraft carriers by Northrop Grumman are another area for potential cuts, with the number of flattops sliding from a dozen in recent years, down to only eight.
He also sees the Zumwalt-class destroyers program at risk.