Tag: defense spending

This Is What Defense Consolidation without BRAC Looks Like

For the past few months, nearly thirty communities around the country have been anxiously awaiting an announcement from the Pentagon concerning the military bases that would be affected by the planned drawdown of 40,000 active-duty Army personnel, plus another 17,000 or so civilian employees. Local news outlets have been filling in the details as they become available. Some communities, including Leesville, Louisiana (Fort Polk), and northern New York (Fort Drum) are breathing a “sigh of relief.” Others, in Georgia (Fort Benning) and Alaska (Joint Base Elmendorf-Richardson), are crying foul.

Sen. Johnny Isakson (R-GA) seems especially peeved. “I am demanding answers from the Department of Defense on how they are justifying these troop cuts in Georgia,” Isakson said. And, in the meantime, he plans to block the nomination of a “new congressional liaison for the Department of Defense in light of the Department’s failure to give Congress a heads up before these cuts were made public.”

This is what defense consolidation looks like without the formality and relative transparency of the Base Realignment and Closure (BRAC) process.

I am in the midst of a major research project studying the effects of military spending cuts on local communities. With the help of my excellent research assistant, Connor Ryan, I am looking at some familiar cases, such as San Francisco’s Presidio and Monterey’s Fort Ord, and some that are more obscure (e.g. Portsmouth, New Hampshire’s Pease AFB). I’m also writing about some bases closed before BRAC (e.g. Frankford Arsenal in Philadelphia; the Springfield Arsenal in Massachusetts; and Dow AFB in Bangor, Maine), and some facilities that were privately owned and operated, but that grew primarily by supplying products to the military (including the Tredegar Iron Works in Richmond, Virginia; and DuPont’s Eleutherian Mills in Wilmington, Delaware). The project aims to go beyond studying the economic effects predicted and observed by economists (e.g. here and here), but to also get a feel for the history of each place, what it built, or how it fit into the nation’s defenses, and, ultimately, each facility’s denouement. To oversimplify: “How’s it goin’?”

My preliminary conclusions, after having visited about half of the places that I plan to study (and I will visit all of them), is that communities do adapt and recover, some more quickly than others, and many emerge after the transition period with a robust and more diversified economic base. In other words, the resources once directed toward the military do eventually find their way to more productive uses.

The Future of NATO (Event: March 4th)

Russian aggression in Eastern Europe during the last year has brought to the fore many of the issues surrounding the transatlantic security relationship, in particular, the role of NATO. Since the end of the Cold War, NATO has been floundering, seeking new missions and goals, with recent involvement in military campaigns in Afghanistan and Libya emblematic of this search. In some ways, Russia’s recent actions have brought back a sense of purpose to the alliance.

Unfortunately, NATO still has many problems. Common vision among members is lacking, a problem exacerbated by the expansion of NATO from sixteen members at the end of the Cold War to twenty-eight members today. Many of these new member states in Central and Eastern Europe feel – understandably – more threatened by Russian aggression than West European or North American member states, creating tension within the organization.

NATO itself has increasingly become a political entity. Indeed, the growth of NATO membership among East European states during the last decade has been a key impediment to improved relations with Russia. The suggestion that Georgia and Ukraine might become EU or NATO members has also been widely discussed as one of the roots of the current conflict.

NATO funding is a big problem. Though most member states hail NATO’s importance and demand its services, few are willing to pay the costs, which fall disproportionately on the United States. In 2012-2013, only three other member states met NATO’s stated military spending target of 2% of GDP: the United Kingdom, Estonia and Greece. Many countries which rely heavily on NATO nonetheless contribute little to the alliance or their own defense, relying instead on the United States.

Pentagon Spending and Bureaucratic Bloat

There are major spending battles on the Washington agenda this year, including over the defense budget. Congress needs to decide whether to stick with capped spending levels agreed to in 2011, or allow its past restraint efforts to unravel.

Republican defense hawks want to bust the spending caps, while the small-government wing of the party wants to hold the line. Rep. Justin Amash (R-Mich.) told the Wall Street Journal, “We’ve been spending too much on defense for years because we have a lot of waste within the Department of Defense … There’s room to cut, and I think we are perfectly capable of staying within the sequester caps.” Sen. Rand Paul (R-Ky.) noted, “To defend ourselves, we need a lean, mean fighting machine that doesn’t waste money on a bloated civilian bureaucracy.”

Amash and Paul’s position is buttressed by a new GAO study on the management bloat in Department of Defense (DoD) headquarters.

It is also buttressed by looking at DoD civilian and uniformed employment levels. The chart below shows that civilian DoD employment has grown 105,000 since 2001, while uniformed employment has grown just 22,000. Based on numbers in the chart, the ratio of bureaucrats-to-soldiers has increased from 47 percent in 2001 to 54 percent in 2014. But with the advance of computer power and other technologies, one would think that the bureaucratic overhead costs of our fighting force would be falling over time, not increasing.

How much could we save by improving bureaucratic efficiencies, and cutting the number of Pentagon civilians by at least the apparent excess of about 100,000? Annual pay and benefits for federal civilians is about $120,000 a year, so we could save roughly $12 billion a year by trimming this aspect of Pentagon bloat.

All data from the “Analytical Perspectives” sections of the FY2003 and FY2015 federal budgets. Data for 2014 are OMB estimates.

Congress Should Stand Firm on Spending Caps

Rumors abound that budget negotiators are nearing a possible deal to reverse spending cuts required under the 2011 Budget Control Act (BCA).

Senate Republican Leader Mitch McConnell is hoping his colleagues will stand firm and reject any deal. He told reporters last week that it would be “a bad idea to revisit a law that’s actually working and reducing spending.” But he is competing with military spending advocates such as Reps. Buck McKeon and Mac Thornberry. They claim that the dangers confronting the United States today are graver than ever, that the costs to address these threats are rising and cannot be contained, and removing the defense spending caps is necessary to ensure the United States remains safe and secure.

They are wrong on all counts.

First, some context on spending: The Pentagon’s base budget, excluding the costs of the ongoing war in Afghanistan, remains 26 percent higher than in 2000, in inflation-adjusted dollars. Under the spending caps established by BCA, Pentagon spending would average around $528 billion per year from 2013 to 2021, over 18 percent higher than during a typical year in the Cold War.

This is curious considering the threats facing the United States were far greater then. The threats today are declining, not rising. In fact, all forms of violence, from cataclysmic great power wars, to civil wars and ethnic conflicts, have declined to historic lows.

To be sure, some insurance against potential threats is wise, in the unlikely event that current favorable trends are reversed, but we can maintain our safety while spending less because technological advances allow today’s military to address possible threats with fewer people and fewer platforms. U.S. naval vessels have far more striking power than the early 20th century dreadnaughts, just as precision-guided munitions have rendered today’s aircraft at least 10 times more capable of striking targets as their dumb-bomb-dropping precursors. To be sure, these new platforms are much more expensive, but the military services and their suppliers are more cost-conscious today than a decade ago, as when the Air Force recently killed a plan to outfit the next-generation bomber with a $300,000 kitchenette. Such excesses might be resurrected if BCA opponents succeed in changing the law.

The reforms extend well beyond procurement. In 2011, then-Chairman of the Joint Chiefs of Staff Mike Mullen admitted that the military hadn’t been forced “to make the hard choices” because they had all the money they requested, plus a little more. Today, the spending caps are forcing the services to prioritize.

For example, austerity has focused attention on the military’s antiquated compensation system. Today’s soldiers, sailors, airmen and Marines are better compensated than those who served during World War II or the Cold War. And they should be. A modern military must compete to attract and retain the best and the brightest, and that costs money.

The current trajectory of personnel costs is unsustainable, however. Pay and benefits are already eating into other Pentagon spending accounts, including procurement, operations and maintenance, and training. The net effect may impair military readiness. Now, even outspoken military spending advocates, such as Reps. Duncan Hunter and Adam Kinzinger, both veterans of the post-9/11 military, have endorsed changes, including expecting working-age retirees to pick up more of their health care costs.

There is, in fact, broad, bipartisan support for proposals that touch what were once thought of as the third-rails of Pentagon politics. In addition to compensation reform for active-duty military personnel, a letter signed by scholars from the American Enterprise Institute, the Center for American Progress, and the Brookings Institution, among others, also calls for shrinking the Pentagon’s sprawling civilian workforce and reducing overhead, including eliminating excess base capacity.

The most important piece of the military spending puzzle remains the United States’ hyperactive foreign policy. Even if we were to implement the sensible reforms made politically realistic by spending caps, we would still spend more than we need to keep Americans safe. That is because today’s military is mainly geared toward defending others. By discouraging our allies from doing more to defend themselves and their interests, U.S. policymakers have ensured that U.S. troops bear disproportionate burdens, and U.S. taxpayers pay disproportionate costs. If we are going to spend less on the military in the next ten years than we have over the last ten, we must ask our smaller, cheaper military to do less. And we must expect others to do more.

The Budget Control Act, for all its flaws, has managed to deliver something once thought impossible: actual spending cuts. Our military remains second to none, despite those cuts, and might be stronger in the future because of them. A deal to cancel or reverse those cuts threatens to derail sensible reform proposals that could deliver far larger savings to taxpayers in the future.

Sen. McConnell is right: Congress should stand firm.

Barro and de Rugy on Defense Spending and the Economy

Earlier this week, Harvard economist Robert Barro and Veronique de Rugy of the Mercatus Center published a short paper assessing the economic effects of defense spending. Their findings are consistent with those of other studies, including one that Cato published last year by Benjamin Zycher. To wit, from Barro and de Rugy’s abstract:

While the impact of across-the-board federal defense spending cuts on national security may be up for debate, claims of these cuts’ dire impact on the economy and jobs are grossly overblown…

[A] dollar increase in federal defense spending results in a less-than-a-dollar increase in GDP when the spending increase is deficit-financed…

[O]ver five years each $1 in federal defense-spending cuts will increase private spending by roughly $1.30

The Barro-de Rugy paper should be of particular interest to Republican politicians and those who advise them. 2012 GOP presidential candidate Mitt Romney and his fellow Republicans attracted considerable scorn (including from yours truly) during a campaign in which they railed against government spending, but also wailed against military spending cuts. His critique was not primarily, or even chiefly, about the potential impact of sequestration on national security; rather, echoing the hardly objective estimates flogged by the Aerospace Industries Association and the National Association of Manufacturers, Romney asserted that cuts in military spending would result in the loss of hundreds of thousands of jobs. 

Defense Spending Hasn’t Been Cut by $600 Billion

Beltway politicians like to pretend that smaller spending increases amount to spending “cuts.” As Dan Mitchell has pointed out numerous times (see here for one example), that’s baseline budgeting baloney. Now that the 2011 Budget Control Act’s spending caps are in place, politicians are making an even more ridiculous claim: the so-called “cuts” have already occurred.

The caps apply to spending over ten fiscal years – the last year being 2021. We are obviously not in the year 2021, so it’s impossible for the so-called “cuts” to have already been implemented. Yet here are two examples from a recent Politico article where politicians suggest that to be the case:

“There are people that think we need to cut more,” House Armed Services Committee Chairman Buck McKeon (R-Calif.) acknowledged in an interview. McKeon said he’s been pushing back against budget hawks in the GOP conference by pointing to the nearly $600 billion in spending cuts that the Pentagon has already absorbed in recent years — and that’s before sequestration would even begin.

“I think there’s spending that can be taken out of all departments,” said freshman Rep. Ted Yoho (R-Fla.). “And I’ve talked to people from the Pentagon. There’s just areas that, yeah, we can pull back a little more, even though they did their $470 billion already. They said it hurt, but we possibly could.”

I’ll cut Rep. Yoho a little slack because the article indicates that he’s open to cutting defense. Rep. McKeon, on the other hand, deserves no such leniency. (Why McKeon said $600 billion and Yoho $470 billion I have no idea.)

The following chart illustrates why it is ridiculous to act as if smaller future increases in projected spending amount to realized spending cuts. The chart shows the Congressional Budget Office’s August 2001 baseline estimate of defense spending from 2002 to 2011 versus the actual outlays:

The combined difference turned out to be $1.8 trillion.

But, you might respond, those estimates were published a month before the attack on September 11th, 2001, so of course they turned out to be way off!

And that’s my point. With the exception of Keynesian economists, no one can predict the future. All it will take is another major terrorist attack or another war and it’s adios spending caps. I would argue that such unfortunate scenarios are a distinct possibility given the Beltway crowd’s love for empire, but I’ll leave that topic to Cato’s foreign policy experts.

Spending Cuts and National Security

An op-ed by Peter Singer and Michael O’Hanlon in today’s Politico questions the impact of spending cuts on the military. “Substantial defense budget cuts are possible, make no mistake,” the Brookings’ scholars concede, “But they could mean loss of capability, and some may increase security risks.”

Another Brookings scholar, Robert Kagan, is more emphatic, telling Jennifer Rubin of the Washington Post that “[The proposed cuts are] utterly irresponsible and dangerous to national security.” Max Boot agrees. Cuts of up to $1 trillion over the next 10 years “would be nothing short of a disaster.” Lawmakers who are considering such cuts, Boot claims, “are flirting with eviscerating American combat capabilities — and with it the role of the United States in world affairs.” AEI’s Tom Donnelly wails: “Nobody has defense as a high priority. It’s increasingly looking like everybody wants to toss the military overboard.”

Wow. Sounds scary. What is actually going on here?

For starters, the military’s budget has still not been cut. As I noted yesterday at the National Interest’s “The Skeptics”:

The Department of Defense has enjoyed an unbroken streak of rising budgets since 1998. In real, inflation-adjusted terms, U.S. taxpayers now spend more on national security than at any time since the end of World War II. An effort led by South Carolina Republican Mick Mulvaney to hold the DoD base budget to last year’s levels failed. Mulvaney’s amendment, which would have cut $17 billion from the budget voted out of committee, attracted support from more than a quarter of the House GOP caucus, but was ultimately defeated. So the DoD base budget that emerged from the House continues its growth.

Second, the various proposed cuts to future spending are just that: proposed. As with everything else associated with the debt negotations, the details matter a lot. The cuts might never materialize; future Congresses might simply renege on deals made this summer. More importantly, in nearly every case, they aren’t actual cuts. They are projections based against certain assumptions about future spending. And depending on inflation, the growth of the economy, and a host of other factors, those assumptions will change.

Up to this point, Kagan, Boot, Donnelly, and others have succeeded in fending off cuts to military spending. But it was never realistic to believe that one could cut government spending while leaving more than 50 percent of the discretionary budget off the table.

To her credit, Kori Schake is beginning to look past the immediate discussion over whether to cut the Pentagon’s budget, and is thinking about how to do so. The headline at Foreign Policy blares, “Out Come the Long Knives for Defense,” but the gist of her argument is more sophisticated, and far more realistic than the “no military cuts, no way” crowd:

Given the magnitude of our defense spending and the relatively advantageous position we occupy compared to the magnitude of threats facing the United States, we can afford to accept near-term risk by cutting defense spending in order to solve the larger strategic problem of our national indebtedness.

Though Schake likely opposes cuts in military spending along the lines that Ben Friedman and I sketched out here and here, she implores national security planners to begin thinking seriously about which missions are absolutely essential to U.S. national security and which missions that our military has been performing for decades can and should be handled by others. That is the approach that Friedman and I take in proposing a force structure guided by the lessons of the recent past: we should avoid costly and counterproductive nation-building missions; fighting terrorism does not require a massive military deployed in dozens of countries around the world; our allies can and should do more to defend themselves; and we should retain the ability to bring power from the air and sea in those very rare instances when distant crises might pose a direct threat to U.S. national security.

I hope that Schake sketches out more clearly which roles and missions we can afford to shed. And I hope that the claims that all missions are essential, and that any cuts in military spending will pose an intolerable risk, are shown for what they are: indefensible.

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