Yesterday, Secretary of Defense Chuck Hagel went before the House Armed Services Committee to answer questions about President Obama’s proposed FY 2014 military budget. The request for $526.6 billion for the base DoD budget is $3.9 billion lower than the 2012 enacted level. While this reduction is a positive step, it doesn’t go far enough given the nation’s fiscal state and changing military requirements, and it exceeds the spending caps mandated by the 2011 Budget Control Act by $55 billion.

For more insight on the budget numbers and what this means politically, see my colleague Ben Friedman’s excellent post from yesterday. I want to focus on an area of the budget that cries out for reform: rising personnel costs.

During his testimony, Hagel reiterated the need to rein in such costs, echoing themes from his speech last week at the National Defense University. The president’s budget aims to reduce these costs by cutting end strength, limiting the size of pay increases (to 1 percent), and making “benefit adjustments” to TRICARE. Such adjustments are critical to the department in the long term.

A political battle over these types of reductions is all but certain; however, some members of Congress—perhaps most—will resist. This is unfortunate, especially for fiscal conservatives who understand the need to reform entitlements like Medicare, Medicaid, and Social Security, yet fail to see the need to contain skyrocketing costs in personnel and benefits at DoD. The arguments are the same: the current path is unsustainable; reforms are needed or the costs will consume the rest of the budget; and if you implement the reforms sooner, they can be more incremental and less disruptive to the troops. But then again, farsightedness isn’t Congress’s strong suit.

Personnel costs, which account for approximately 32 percent of the budget request (over 45 percent when civilian pay and benefits are included), need to be addressed. The administration has proposed cutting conventional forces—mainly from within the Army and Marine Corps—by 100,000. Hagel has mentioned reducing the civilian workforce, but he hasn’t outlined specifically how he would downsize the “world’s largest back office.”

As Ben Friedman points out, it is also important to keep in mind that the $526.6 billion base budget request does not accurately represent the total cost of national defense. For instance, Overseas Contingency Operations (OCOs)—war funding—is a separate request. Many believe that as we draw down in Afghanistan, OCO funding will come down. But Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, explained in yesterday’s hearing that those costs are likely to remain fairly steady for the next few years. Despite the fact that many budget projections count the drawdown in Afghanistan as “savings,” the United States will remain in Afghanistan for years to come.

When you factor in the budgets of other the defense-related items—nuclear weapons management under the Department of Energy, the intelligence community, the Department of Homeland Security, and Veteran Affairs—total spending on national defense soars to over $900 billion.

There is plenty of room for further cuts in this massive total, especially if we rethink what we ask our military to do. Shedding security commitments and unnecessary missions would allow for a budget that reflects our level of security. But the administration can start by addressing the costs relating to personnel. Otherwise, the future does not look bright for Pentagon budgets. 

The Government Accountability Office has released its third annual report on fragmented, overlapping, or duplicative federal programs and activities. Proponents of making the government more efficient view the findings as an opportunity to achieve cost savings. While there’s obviously nothing wrong with the government spending less money than it has to, the goal should be to permanently shut the trains down – not just try to get them to run on time. 

Some examples: 

• The GAO says “Enhanced collaboration between the Small Business Administration and two other agencies could help to limit overlapping export-related services for small businesses.” The federal government shouldn’t be subsidizing export promotion for commercial interests, period. (See here and here.) 

• The GAO says “Federal agencies providing assistance for higher education should better coordinate to improve program administration and help reduce fragmentation.” The federal government should not be subsidizing higher education, period. (See here.) 

• The GAO says, “To achieve up to $1.2 billion per year in cost savings in the Federal Crop Insurance program, Congress could consider limiting the subsidy for premiums that an individual farmer can receive each year, reducing the subsidy for all or high-income farmers participating in the program, or some combination of limiting and reducing these subsidies.” Federal crop insurance subsidies and all farm subsidies should be abolished, period. (See here and here.) 

• The GAO says, “Federal support for wind and solar energy, biofuels, and other renewable energy sources, which has been estimated at several billion dollars per year, is fragmented because 23 agencies implemented hundreds of renewable energy initiatives in fiscal year 2010—the latest year for which GAO developed these original data.” The federal government shouldn’t subsidize renewable energy (or traditional sources of energy), period. (See here.)

There have been numerous attempts to “reinvent government,” “streamline the bureaucracy,” etc, over the decades as the government has expanded in size and scope. Perhaps the GAO report will spur another. But while the initiatives change, the result is always the same: we still end up stuck with a bloated Leviathan that continues to have its snotty nose in every facet of our lives. 

As I often point out, waste always comes with government the same way a Happy Meal always comes with a toy and drink. There is duplication and waste in the federal government because it has become massive and there are virtually no limits on what politicians can spend money on. 

I’m not suggesting that government waste should be ignored. Indeed, examples of waste should be held up as reasons to terminate entire government agencies and programs. But I believe that a myopic fixation on “eliminating duplication and waste” is itself a waste. That’s because duplication and waste are merely symptoms of the real problem of big government. 

The measure of our seriousness in helping children learn is not simply the number of dollars we spend, but rather the care and thought we invest in allocating them, and our openness to changing course when the evidence demands it. The education provisions of the President’s budget, released today, lack both seriousness and vision.

The FY 2014 budget overview emphasizes three educational initiatives: preschool for all, STEM and innovation, and school infrastructure.

As foreshadowed in his State of the Union address, President Obama proposes to federally subsidize statewide preschool programs. This approach seems designed to deal with the mounting evidence that the federal government’s own preschool programs, Head Start and Early Head Start, have essentially no lasting benefits. Though candidate Obama once said he would terminate ineffective programs, his latest budget retains them both, and actually grows Early Head Start. Additionally, the new budget would subsidize PreK programs like those in Oklahoma and Georgia that advocates have long touted as “high quality.” The evidence on those programs is, however, rather mixed. Relative to the national average, Oklahoma has seen modest declines on the 4th grade NAEP tests while Georgia has seen modest gains—and the declines are larger than the gains. A broader review of the evidence by early education expert Russ Whitehurst of Brookings finds the same lackluster results overall. 

Not only are these statewide programs failing to show a pattern of lasting and substantial benefits thus far, the addition of federal subsidies will likely impede efforts to improve them. Federal education dollars at the pre-college level always come with strings attached—strings that accumulate over time. That is likely to exert a homogenizing pressure on state pre-K offerings, eliminating variation and thereby preventing us from learning which approaches are effective and which are not.

On STEM, the President is keen to fund the hiring of 100,000 new Science, Technology, and Math teachers. But America does not have a teacher quantity problem, we have a teacher effectiveness problem. Over the past 40 years, we’ve grown the number of public school employees 11 times faster than enrollment [i.e., we’ve doubled the number of staff to serve only 8.5 percent more students]. This has added $200 billion annually to the cost of American public schooling, and two million of the three million new hires were instructional staff, so it’s not simply a problem of bureaucratic bloat. And yet, despite all those new teachers and teachers’ aides, achievement at the end of high school is largely flat as are real graduation rates.

In other words, our public schools have shown themselves incapable of harnessing the talents of these millions of additional educators. The solution is not to hire yet more teachers into that system, it is to liberalize the education sector, bringing it back within the free enterprise system. Only when schools have both the freedoms and incentives to make the most of their teaching staffs, will we see educators’ talents marshaled effectively.

Finally, President Obama’s proposed new infrastructure spending focuses only on the symptom (crumbling school facilities) and ignores its cause (mismanagement). I’ve analyzed school survey data on the condition of facilities and found that public schools are in a much worse state of repair than private schools, despite the fact that private schools spend far less per pupil, on average. The question is WHY are public schools in a worse state of repair, given that they spend more? According to a federal government report, it’s because districts repeatedly defer necessary routine maintenance. These deferrals increase the cost of maintaining school facilities and accelerate the deterioration of buildings and equipment. In other words, they postpone the ounce of prevention until the pound of cure becomes unavoidable—and they do this because they don’t have to pay for the cure. Once again, bringing schools back within the free enterprise system would provide administrators with the incentives to maintain their facilities so as to avoid the financial hit of costly repairs and replacements—a hit that they can now pass on to taxpayers at no cost to themselves or their careers.

Regrettably, seeing the root causes underlying our educational woes is beyond the vision of the present administration.