Annual Report — September 17, 2010 3:46 pm

Defense Spending

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When America’s founders gathered at the Constitutional Convention of 1787, they did so in large part to raise taxes to finance a national military.  Since then, defense spending has been a priority in the federal budget. As America’s role in the world expanded, so did American military expenditures – amounting to nearly $720 billion in 2010, representing 19% of the total budget.  As the largest single discretionary budget item, defense spending has become a target for many seeking to reduce the budget deficit. While the government may be able to eliminate a few obviously wasteful programs, many argue that achieving significant savings can only come at the cost of reducing America’s military capabilities. Thus, any attempt to reduce military spending will be met with opposition from those unwilling to consider a potential reduction in our military’s strength.

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How the Budget is Spent

The Department of Defense controls $692 billion of the $719 billion devoted to defense spending. Most of the Pentagon budget is dedicated to “operations and maintenance,” which covers the missions of the armed forces and upkeep of military vehicles, weaponry, and buildings. Other major expenditures included $155 billion for troops’ wages and health care and $147 billion to purchase new weapons.  In addition, some programs outside of the DoD budget are categorized as “defense-related” spending.  This category includes work related to atomic energy defense and anti-nuclear proliferation activities (such as protecting nuclear stockpiles or identifying and recovering loose nuclear materials), both administered and paid for by the Department of Energy.

Unsurprisingly, much of this spending can be attributed to America’s increased military activity since the September 11 attacks.  In 2010, Congress appropriated over $37 billion to fund the wars in Iraq and Afghanistan, in addition to the regular defense budget.  According to the nonpartisan Center for Strategic and Budgetary Assessments, federal spending on the “war on terror” through the beginning of 2008 totals $687 billion for Iraq, $184 billion for Afghanistan, and $33 billion for homeland security measures, including enhanced airport security and air defense. These counts also exclude other counter-terrorism operations around the world in places such as the Horn of Africa and the Philippines. The yearly cost of sending one American soldier to Iraq or Afghanistan amounts to about $775,000, three times more than in other recent conflicts. This suggests that spending has only continued to increase in the wake of President Obama’s surge in Afghanistan.

Trimming the Fat

Critics of U.S. military spending often charge that much defense spending is wasteful and can be eliminated without consequence for American security.  Both Barack Obama and John McCain made this claim during the 2008 presidential campaign.  Unnecessary military bases, costly weapons systems, and generous benefits for military personnel have all been identified as potentially wasteful programs.  However, for logistical and political reasons, eliminating military waste is far from an easy solution to the bloated defense budget.

The classic example of governmental waste is excessive military installations: too many military bases. Before and especially during the Cold War, the United States constructed numerous military bases in preparation for potential attacks. As the Cold War came to a close and the nature of war changed, the government instituted the Base Realignment and Closure (BRAC) process, which relies on an independent commission to identify military installations for closure, in the hopes of avoiding political pressure to keep superfluous bases open.  As a result of the five rounds of BRAC since 1989, 350 installations have been closed, saving the federal government about $17.7 billion. BRAC, however, will likely not contribute to the newest round of military spending cuts: closures recommended by the most recent BRAC report in 2005 will not be fully implemented until September 2011, and it is unlikely that another round of closures will occur soon.

Deficit hawks also frequently target wasteful and expensive weapons programs. The proposed alternative engine for the F-35 Joint Strike Fighter, a new military aircraft, is one such instance. Four years ago, Congress approved funding for the primary engine of the F-35. The engine has passed all its tests with flying colors and is ready for use as part of this new fighter. However, companies like GE and Rolls Royce, and legislators whose districts include factories that manufacture engine parts, have launched a campaign in support of public funding to develop an alternate engine.  Despite the objections of Defense Secretary Robert Gates, the House recently approved $485 million to develop the alternative engine.

Finally, scholars and government officials have identified the rising cost of personnel as a potential area for cuts. TRICARE, the military’s health plan, has risen in cost from $19 to $50 billion in the past decade.  At the same time, TRICARE premiums have not risen over the past fifteen years despite the consistent rise in inflation, and military families are not required to opt out of TRICARE even if alternate health coverage is available.  Furthermore, military compensation, as Secretary Gates recently pointed out, increases even faster than the Pentagon plans, as Congress now “add[s] an extra half percent to the pay raise the Department [of Defense] requests each year.”  Although the political pressures to increase pay and benefits for soldiers are obvious, a report by the Center for American Progress explains that military pay “already equals or exceeds the average salaries of civilian workers with comparable educational backgrounds.”

Such wasteful programs are the main targets of Secretary Gates’ attempt to cut spending in his own department.  In August, Gates recommended a package of cuts, including the closure of the Joint Forces Command, a coordinated military command staff that sought to coordinate actions of the armed services; a hiring freeze in the office of the Secretary of Defense; and a 50% reduction in the numbers of generals and admirals. However, the proposal did not represent a new era for the defense budget: the Pentagon declined to estimate the savings associated with the proposed changes, and Gates himself emphasized that his goal was not to reduce overall defense spending, but to protect more critical military programs from lawmakers seeking to cut the deficit.

Cutting Capabilities

If Gates’ proposed cuts showed that eliminating waste alone will not balance the defense budget, Congressman Barney Frank’s Sustainable Defense Task Force demonstrates the difficult choices required to truly reduce defense spending.  Frank commissioned a review panel to suggest a number of significant cuts to American military capabilities. In June, the group recommended significant cuts to American military capabilities.  The task force’s proposals, in total, could reduce defense spending by $960 billion over the next ten years.

However, the Sustainable Defense Task Force suggestions are much more controversial than eliminating “waste,” because they could comprise America’s actual ability to exercise military power. For example, the task force concluded that the U.S. could save $40.3 billion by retiring two Air Force fighter wings and reducing purchases of F-35s.  However, eliminating fighter wings could reduce the capability of American forces to respond to military threats at home or abroad.  Similarly, the task force suggested reducing America’s nuclear arsenal to 1,000 warheads.  In an interview with the HPR, Undersecretary of State Lawrence Korb went further, arguing that the US needs only 331 nuclear weapons on hand to easily devastate its enemies.

While these changes would yield much bigger savings than simply reducing “waste,” making cuts to military capabilities is significantly more difficult, as many, including fiscal conservatives, consider the military budget sacrosanct due to exigent threats to American power. In an interview with the HPR, Claude Berube of the conservative Heritage Foundation argued that the United States needs to augment its fleet as well as our bases abroad in case of a military conflict. He claimed that each base serves a critical role, and that cutting back these aspects of American military power could handicap America’s ability to project power abroad.

The Pentagon, the think tank community, and politicians have formed a consensus about cutting governmental waste, but proposals to cut spending by shrinking American military capabilities have thus far run into a wall. In addition to the immediate political challenges of reducing military spending in wartime, eliminating particular military capabilities would raise deeper questions about the United States’ role in the world: should American defense stop at the water’s edge, or should the U.S. project its power with myriad bases and fleets abroad? If the American people do not seriously discuss these issues, cuts to military spending may go overlooked as policymakers continue with business as usual in Washington.

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