In the coming weeks the Cato Institute foreign policy team will release its strategic analysis of the 2021 Budget. The newly released Trump Administration budget for 2021 only continues to exemplify many of the budget pathologies we identify as challenges to constructing a viable national strategy for defense. Instead of making hard choices, tepid moves are made that do not suit overall U.S. strategic posture.

The 2021 Defense budget alone requests $636 billion, an increase from $633 billion enacted by the 2020 National Defense Authorization Act. While not a dramatic increase from the 2020 request, the budget for the military is still increasing at time when we are trying to lessen foreign commitments and have reduced manpower needs. Further, use of Overseas Contingency Operations (OCO) funds represents a dishonest attempt to fund the military despite mandated budget caps.

Here, I highlight a few common pathologies common to the current U.S. budget process. The United States cannot continue to build mindlessly towards unclear future threats without delineating clear priorities to meet these challenges. The deficit is ballooning and not all blame can be placed on entitlement programs; instead the military has become an entitlement program itself.

The Threat of Cyber-Enabled Economic Warfare?

The 2021 White House Budget starts with a throat clearing exercise in outlining the threats to the nation, with cyber-enabled economic warfare a prime fear. Cyber-enabled economic warfare is a term coined by scholars at the Foundation for the Defense of Democracies. The idea is that rivals will use cyber tools to weaken the foundations of the economies to weaken an adversary.

Problem is that the term gives no real indication of the threat we face. Instead it is a nebulous catch-all that collects all covert operations against the United States into some grand strategic challenge to the economy. Of course, there is a very real threat to intellectual property, personal data, and critical infrastructure by cyber-capable adversaries, but the U.S. must not conflate normal practices of those seeking to rise with those who seek real economic destruction. By inflating the threat of cyber-enabled economic warfare and putting it on par with other more pressing challenges, like extricating the U.S. from endless wars, the United States fails to marshal its resources in a way that ensures domestic security.

The timing of the indictments on Monday of four Chinese PLA operatives for the hacking of Equifax in 2017 was not a mistake: it signifies that the United States takes cyber-enabled economic threats seriously. Yet the efficacy of an indictment strategy is open to criticism, with one suggestion being that it just limits the vacation destinations of those indicted.

The reality is simply indicting hackers, creating better bilateral trade deals, and supporting energy independence (actions suggested in the budget) are not solutions to the challenge of economic warfare. The issue goes deeper and requires a restrained response that focuses on collaboration with our allies, participation in regional and international trading institutions, and a return to regulatory leadership that can ensure American security. All these solutions do not require massive budgetary expenditures, but rather careful strategic planning.

Wither the 355 Fleet?

The Trump Administration and the U.S. Navy are committed to the United States building a 355-ship Navy to support American interests globally. Unfortunately, budget realities make this target unlikely, and instead of making a firm attempt to settle on some different target, the administration just continues to float on as if a 355 ship Navy is a realistic possibility.

The just-released budget requests 44 ships through 2025, when 55 were projected in last years budget. The Navy cannot maintain, support, and train its troops on the current platforms it already purchased, and instead of making a hard choice, it prefers to defer to the future the question of strategy.

As Secretary of Defense Mark Esper said in an interview, “What we have to tease out is, what does the future fleet look like? I think one of the ways you get there quickly is moving toward lightly manned [ships], which over time can be unmanned.”

The Navy clearly needs more unmanned vessels, but more importantly, the Navy needs a guiding strategy, not ambitions or an artificial target number. While the United States cannot decide on the number of ships in its fleet or if they should be manned, China takes a long range view of competition by building in massive military structures hidden within development projects.

Overseas Contingency Operations (OCO) Funding

The greatest budget pathology of all is the continued use of OCO funds to fund long term defense commitments. OCO funds are meant to be used in an emergency and in times of war to fund unexpected operations. Instead, the use of OCO funds to provide for planned costs betrays the intent of the budgetary process and Congressional oversight.

The 2021 proposed budget continues this process with a request for $69 billion to fund overseas contingency operations ($2 billion less than the $71 billion enacted in the 2020 budget). Yet many of these allocated funds represent costs associated with the normal maintenance of a major military, and the use of OCO funds is an attempt to skirt budget caps.

This practice of funding the military through OCO funds must conclude. The United States needs to rethink how it funds emergency combat operations, and the general failure to be honest about the costs associated with war represents a societal challenge. The burden of a forever war is lessened when the costs are hidden and spread throughout budgets. There are processes to ensure that the budget reflects a fair and considered application of U.S. funds, but the OCO funding loophole skirts these budget controls and represents needless continuing waste.