Welcome to the Defense Download! This new round-up is intended to highlight what we at the Cato Institute are keeping tabs on in the world of defense politics every week. The three-to-five trending stories will vary depending on the news cycle, what policymakers are talking about, and will pull from all sides of the political spectrum. If you would like to recieve more frequent updates on what I’m reading, writing, and listening to—you can follow me on Twitter via @CDDorminey.
- "Trump, Heading to the Border, Suggests He Will Declare and Emergency to Fund Wall," Michael Tackett. The most pressing story of this week is undoubtedly the continued government shutdown, and President Trump's threat to declare a state of emergency. This would allow the president to bypass Congress and the process of authorization and appropriation to instead use military funds to begin construction on a southern border wall. The money would draw from accounts that have already been earmarked for other urgent needs, like military construction.
- "A Shut Down Government Actually Costs More Than an Open One," Jim Tankersley. Every day that this government shut down continues, it costs taxpayers more money in the long run. A government shut down is not like when a household goes on a self-imposed temporary spending ban. The government still needs to pay contractors and furloughed workers once they return to work—in some instances with the accrual of interest or fees on outstanding payments.
- "Shutdown's economic damage: $1.2 billion a week," Victoria Guida. The government shut down is also a drag on the economy because 800,000 federal workers don't get paid, they restrict individual spending that would otherwise be contributing to the economy. President Trump's Chief Economist estimates the cost to be as much as $1.2 billion every week that the government remains closed and workers remain furloughed. Private contractors that won't recieve payment on contract work and other lost business contributes to this figure.
- Depending on how long it lasts, this shut down could also impact those on food stamps, leave new parents in the lurch, and have an outsized impact on veterans who make up to 25 percent of the workforce in some government agencies.
By a vote of 89-8, the Senate yesterday passed a $700 billion defense budget. That isn’t particularly newsworthy. As the New York Times reported, “The vote marked the 56th consecutive year that Congress has passed the defense policy bill—a point of personal pride for Senator John McCain, the Arizona Republican who chairs the Senate Armed Services Committee.”
The important story is that Sen. McCain et al. have no plan for actually raising the necessary funds, either through more taxes, cuts elsewhere, or more debt. Previous budget fights played by the rules—compromising to abide by the bipartisan Budget Control Act caps on discretionary spending. Willfully ignoring the BCA elephant in the room, as the Senate just did, runs the risk of a government shutdown and/or sequestration.
The Trump administration opened the Pentagon funding floodgates when it debuted a $668 billion budget request earlier this year. Trump made good on his promise to rebuild the military by cutting deeply from non-defense accounts, thus creating the illusion of fiscal discipline. But he also called for increasing the BCA defense caps.
At the time, Sen. John McCain declared Trump’s budget “dead on arrival” because it cut too deeply from these other programs. He also declared the Defense Department increase to be insufficient. It was never clear how McCain would square that circle.
It still isn’t. It appears that he expects someone else to solve the BCA problem, or that it will magically disappear.
But he isn’t alone. Many in Congress took Trump’s budget as a signal to spend even more on the military. Until now, Congress used its favorite loophole—the cap-exempt Overseas Contingency Operations account—to offset perceived funding shortfalls at the Pentagon. Congressional abuse of OCO was predictable but shortsighted. It allowed Congress to maintain the fiction that it was adhering to the BCA caps without actually doing so.
Last night’s vote dispensed with the charade. In the just-passed NDAA, funding for the base budget exceeds the $549 billion cap by $91 billion and puts $60 billion in OCO. The House version passed last month also put a majority of its plus-up in base funding, exceeding the BCA cap by $72.5 billion. The Trump administration’s budget seems almost sane in comparison by asking for $54 billion over the cap—which, to be clear, is unnecessary in order to keep Americans safe and maintain the U.S. military as the finest fighting force in the world.
89 Senators, not merely McCain and a handful of outspoken hawks, apparently believe that the Pentagon needs a 16 percent increase over the BCA caps in order to function next year alone. Plus another $60 billion for OCO. But no senator knows where those extra billions will come from.
The BCA was enacted in 2011 to impose some fiscal discipline by providing an upper bound for defense and non-defense discretionary spending. Since then, members of Congress found ways to either budget under or raise (2013, 2015) the caps. The one time they failed to avoid sequestration—the October 2013 government shutdown—lasted only 16 days.
As much as members of Congress bemoan the budget caps and fear sequestration for its damaging effects, you would think they would take the risk of a government shutdown more seriously. Senator Tom Cotton offered the only amendment to the NDAA that would have altered the Budget Control Act for this fiscal year. Rather than trying to strike a bipartisan deal to increase the caps or repeal the legislation entirely, Cotton sought to render the BCA toothless by partially repealing the automatic sequestration mechanism.
Cotton’s amendment was a political non-starter because it failed to reassure Democrats worried about caps on spending for non-defense programs. Even if it miraculously passed in the Senate, the amendment would have faced a tough fight from some House members while in conference. Predictably, Cotton’s proposal, along with several other controversial amendments, was never granted a vote.
Congress can’t afford to ignore the political and fiscal reality forever. A military budget that exceeds the BCA caps, and offers no plan for undoing those caps, should be—as Sen. McCain said of President Trump’s first budget submission— “dead on arrival.”
* Thanks to Cato research associate Caroline Dorminey for her assistance.
CSBA's Katherine Blakeley has published a brief but highly informative analysis of the prospects for a major military spending boost.
Bottom line up front: The combination of "procedural and political hurdles" in Congress make an increase along the lines of what the Trump administration requested (approx. $54 billion) unlikely. The substantially larger increases passed out of the House and Senate Armed Services Committees (roughly $30–33 billion more than the president's request) seem even more fanciful.
The wide gulfs between the political parties, and between the defense hawks and the fiscal hawks, will not be closed soon. Additionally, the full legislative calendar of the Congress before September 30, 2017, including Obamacare repeal, FY 2018 appropriations, and an impending debt ceiling debate, increase the likelihood that FY 2018 will begin with a several-month-long continuing resolution, rather than a substantial increase in defense spending.
This aligns with what I've suspected all along -- but Blakeley provides critical details to back up her conclusions.
For years now, we've heard defense hawks say that adequately funding the defense budget shouldn't be a struggle for a country as wealthy as the United States. A mere 4 percent of GDP, for example, should be a piece of cake. And, at one level, that is absolutely correct. It should be easy. But when you dig into it, as Blakeley has done, you discover that even 3 percent is a real struggle. After all, $50 billion -- a rounding error in a $19 trillion economy -- threatened to bring the entire budget process to a screeching halt in late June, and may do so again.
If and when a final budget deal is hammered out, the Pentagon's Overseas Contingency Operations (OCO) account may provide at least some of the additional billions that the HASC and the SASC want. Because OCO is exempted from the bipartisan Budget Control Act's spending caps, additional defense dollars do not have to come at the expense of non-defense discretionary spending, as President Trump's budget proposed.
But many billions from the Pentagon's base budget (i.e. non-war spending) have been shoved into the OCO for years now, and the gimmick is starting to wear thin -- after all, the wars in Iraq and Afghanistan peaked years ago. The voices in Congress and beyond who pushed the BCA in the first place, and who remain committed to reducing the deficit (e.g. current OMB chief Mick Mulvaney), are likely to feel that they're being played.
The defense vs. non-defense spending debate is, and always has been, about politics, not math. And it isn't obvious that the Pentagon will win this political battle. Given this uncertainty, we should adapt our military's objectives to the means available to achieve them. We should prioritize U.S. security and defending vital national interests, and approach foreign adventures that don't advance these interests with great caution. Expecting our soldiers, sailors, airmen and Marines to do the same -- or more -- with less money isn't fair to them, and isn't likely to work.
The incoming Trump administration and the Congressional majority plan a push to repeal federal spending caps in order to boost military spending. A key talking point for this push claims that the Obama administration’s anemic military spending has caused a “readiness crisis,” where the U.S. military lacks the men, weapons, and funds to do its job. On the campaign trail, or Hannity, the claim became that the Obama is “gutting the military.” The president-elect typically went further, calling the U.S. military a “disaster” and in “shambles.”
In a recent presentation, embedded below, I raised three problems with these claims. One is that military spending remains high. The recent drawdown cut military spending by more twenty percent in real terms, but it came after buildup of nearly fifty percent. It’s now around Cold War peaks, in real terms.
Second, the military is shrinking partly because of its heightened quality. Rising personnel costs reflect the heightened professionalization of American troops. Similarly, U.S. weapons systems have grown deadlier, more complex, and costlier to maintain. The net result is forces are fewer but substantially more capable than previously possible.
Here I’ll focus on the third problem with complaints of a readiness crisis, which is that they’re mostly complaints about other issues. Overall, U.S. military readiness is alright, better when it comes to fighting current wars. Complaints about readiness mostly accompany requests for higher military spending. What readiness shortfalls exist could be solved without increasing the existing Pentagon budget. Those that complain the loudest about readiness, like the majority of the House Armed Services Committee, could improve it through reallocation, but they prefer to hype the crisis as a way to push for a higher total budget and stave off sacrifices
In the U.S. military, readiness generally refers to “the ability of forces to perform the missions and tasks assigned to them,” as Todd Harrison puts it. That metric depends on variables like whether units are adequately manned, the quality of training, equipment condition, and overall morale. The Pentagon tracks readiness through two internal tracking systems and classified reports to Congress.
With the exception of some military leaders, those complaining of a readiness crisis rarely mention these scorecards. Pentagon insiders and outside analysts largely agree that official readiness ratings are a poor guide for actual performance of military missions, especially in combat. Various unmeasured factors, like enemy capabilities, impact how those missions go. Questions of the military balance thus invade real readiness discussions. The vagueness and variability of readiness means that, as Brad Carson and Morgan Plummer note, debates occur without a shared definition, and the sides talk past each other.
For example, last summer, in two articles, David Petraeus and the Michael O’Hanlon attacked the idea of a readiness crisis by arguing that U.S. military forces remain well-trained and equipped for the fights they face. They note that readiness is far from perfect, especially in areas like Marine Corps aviation, but that ships and planes are mostly well-operated, and in good shape, especially compared to possible enemies. The torrent of responses chose to focus on other things: complaining that spending should be higher, worrying that preparation for future wars should be better, in some instances even acknowledging the absence of a readiness crisis before discussing various shortfalls.
Likewise, the service chiefs, whose cries about the dangers of sequestration (by which they mean budgets restrained by spending caps that Congress has annually increased and augmented with alleged war funds) inflame the “gutting the military” crowd, avoid the word “crisis” when pressed. They highlight areas of future risk or capabilities they would like, note problem areas, request more money, and mostly reject politicians’ contentions that U.S. forces are broken and weak.
To the extent that there is a readiness problem, it is partly the fault of those that most lament it: the Armed Services Committees, especially in the House, which has held numerous hearings on the topic. Its chairman, Rep. Mac Thornberry of Texas, recently blamed the Obama administration for a helicopter crash in Hawaii that killed twelve Marines. He argued that because the administration was “playing political games” and limiting operational funds needed for flight training, it bore responsibility for the crash.
It’s true that investigators believe that low readiness in terms of training and morale helped cause the crash. But Thornberry is himself guilty of using readiness as a political game. Though his committee has less say than appropriators, it could push to shift funds into the operations and maintenance accounts that fund readiness at the expense of some acquisition spending. However, acquisition is generally of greater interest to Congressmen because the money goes to their local production facilities and creates jobs in their districts. Thornberry prefers to keep the readiness issue as a lever to push for higher military spending. Meanwhile, the administration has tended to push for operations and maintenance funding at some cost to acquisition.
A review of the debate about the readiness crisis reveals not only that there’s little real crisis, but also that’s there’s no real debate about it. The debate is actually a vehicle for other issues, like how much we ought to spend and what we ought to do to meet threats. Readiness has become a kind of synonym for a strong defense—a concept so capacious and positive that everyone uses it to mean what they want. It’s best to discard the term and recognize that military spending choices are largely about what you want to be ready for, not how ready you are for everything.
A new study from the Center for Strategic and Budgetary Assessments, “How Much is Enough? Alternative Defense Strategies,” reports on military spending plans produced by teams from five think tanks, including Cato. CSBA asked each team to use its “Strategic Choices” software to make hundreds of choices amounting to a ten-year budget plan for the Pentagon and to provide a brief statement of their strategic rationale. The report includes those rationales, summaries of each budget, and comparative analysis of them.
As you can tell from the chart below, the Cato team’s answer was that way less is enough. We cut $1.1 trillion over the period. We’d have cut even more had the software allowed us to target all the spending going to “Overseas Contingency Operations,” intelligence programs and nuclear weapons. You can also see that our plan was the outlier. The others all raised spending—in AEI’s case, massively, by $1.3 trillion.
Why did our budget so diverge from the others? The simple answer is that our defense strategies diverge. Our teams’ choices follow a grand strategy of restraint. The others differ on details but accept the current grand strategy of primacy or liberal hegemony, which holds that U.S. security requires global stability maintained everywhere by U.S. military activism—alliances backed by garrisons and threats, naval patrols, and continual warfare, at least. As we put it in the report, the restraint strategy follows from four underlying claims:
First, U.S. geography, wealth, and technological prowess go far to secure the United States from attack, especially considering our historically weak enemies. Second, we should generally avoid wars meant to stabilize fractured states or to liberalize oppressive ones because they tend to backfire at tragic cost. Third, while allies can be useful in balancing the power of a threatening hegemon, like Nazi Germany or the Soviet Union, alliances should not be permanent. Today no such threat exists, and vast chunks of U.S. military spending goes to maintaining forces meant to defend states that can afford to defend themselves. Our protection can also encourage allies to avoid accommodating rivals and instead to heighten conflicts that can entangle U.S. forces. Fourth, while U.S. forces, especially the Navy, should protect trade routes from disruption during conflict, almost nothing threatens peacetime trade. Overseas garrisons and naval patrols are not needed to protect it.
The other groups’ shared desire to increase spending reflects rejection of those claims—with some dissent on the second.
Their budgets also suggest a deficiency of primacy. Strategy, by definition, is logic for choice, a means to prioritize resources. In defense, that means choosing among threats to confront, types of warfare, and weapons programs. Because primacy sees U.S. military power as necessary to peace everywhere, it suggests a force that is always busy and nearly ubiquitous—either present or capable of being there fast. Primacy is then less a strategy than a sophisticated way of answering “faster, better, more” whenever military spending choices arise. That’s one reason why the other groups increase spending and say little about what our military can safely not do.
A more general explanation for the plans’ divergence is the complexity of defense budgeting. It is impossible to precisely calculate how much defense is enough, let alone achieve agreement on a figure. In his classic work on the subject, Warner Schilling attributes the difficulty to uncertainty—about future threats, what defense goals best meet threats, which military means best serve those goals, and how to compare the value of military and other spending. The result of this complexity, Schilling writes, is that:
A multiplicity of answers, all of them “right,” must be admitted to the question of how much it is rational to spend on defense. The opportunities for reasoned and intelligent conflict with regard to the factual premises involved are legion. The questions of value involved are, in the final analysis, matters of personal preference…Choice is unavoidable: choice among the among the values to be served, and choice among the divergent conceptions of what will happen if such and such is done. It is for this reason that the defense budget, while susceptible to rational analysis, remains a matter for political resolution.
The report’s competing expert advice shows why the question of how much defense is enough is best answered through democratic politics, not military judgement or expert analysis, even ours. Outside expertise is useful less as guidance for policy choice than to frame it by revealing tradeoffs that political rhetoric obscures.
The report’s conclusion points to a current example. Congressional leaders and the president-elect suggest that global military dominance and fiscal prudence, even liberally defined, are compatible. They aren’t. That’s one point of agreement among the report’s contributors, at least.
General David Petraeus and Brookings Fellow Michael O’Hanlon recently took to the Wall Street Journal to assure the American people that, despite sequestration, there is no military readiness crisis. A few days later, Thomas Donnelly and Roger Zakheim published a rebuttal in the National Review claiming that the challenges of too few personnel and aging, overextended equipment induced a “wasting disease.” They alleged that the size of the defense budget was a misleading statistic without context.
So, here’s some context. After a rapid demobilization following World War II, the United States slowly rebuilt its forces to balance against the Soviet Union. Spending remained far above pre-World War II levels for the remainder of the decades-long conflict, and ever since. The Pentagon budget averaged $462 billion from 1948–1990 (in FY2017 dollars), with notable spikes for the Korean War, Vietnam War, and the Reagan build up in the 1980’s (See Figure 1). With the end of the Cold War, we see a fairly steep decline in military spending during the H.W. Bush and Clinton years. In the aftermath of the 9/11 terrorist attacks, the reductions of the 90s gave way to much larger Pentagon budgets, as the George W. Bush administration embarked on the wars in Afghanistan and Iraq. Defense spending during the early years of the Obama administration remained above $750 billion as the president ramped up the war in Afghanistan while working to end the war in Iraq. In constant, 2017 dollars, annual Pentagon spending during Bush 43’s eight years in office averaged $612 billion; under Obama, the average is $675 billion (See Figure 2).
One side-note regarding the grouping by presidential administration: Taken alone, the picture can be misleading, in that Reagan inherited Carter’s final budget, Clinton inherited H.W. Bush’s, etc. And, besides, Congress, not any single president, makes the final decision on what the government spends. It is also true, however, that Congress has typically deferred to presidential preferences, particularly when it comes to military spending. Had Clinton wanted more, he likely would have gotten it (and did, starting in 1999); Obama, meanwhile, could have requested less (and, eventually, did). Those variations within four- or eight-year terms get lost in a graph that lumps all the years together in one fat bar for each president.
With respect to whether current spending levels are far too low, far too high, or somewhere in between, the Budget Control Act (BCA) of 2011 and its threat of sequestration tried to rein in spending on both defense and non-defense discretionary spending, but has been only partly successful. Congress has found ways around the defense caps, in part by funneling extra money to the base budget through the Overseas Contingency Operations (OCO) account, which is exempted under the BCA. And, under the BCA caps revised late last year, estimated military spending would average at least $551 billion from 2017 to 2021 (.pdf, see page 15) -- and likely more than that if Congress doesn’t kick its OCO addiction. That’s 28 percent higher than in 2000, and 19 percent higher than the Cold War average.
In short, if there is a readiness gap, it’s not due to lack of funding. The BCA, by itself, has not resulted in significant cuts in military spending. In inflation-adjusted dollars, we spend more today than during the average Cold War year, and more than we spent at the start of the War on Terror. It would appear that we are mostly getting less “bang for our buck” than during previous generations.
Defense acquisition and compensation reform would help the Department of Defense to better channel scarce resources to its priorities. Similarly, the Pentagon has repeatedly requested the authority to close unneeded military bases, which a short-sighted Congress refuses to allow. But such common-sense reforms, that are supported by a broad bipartisan coalition of defense budget experts (including O’Hanlon, Donnelly and Zakheim), would not be enough to close the means/ends gap.
We also need to revisit the military’s requirements, which are a function of the nation’s overly ambitious grand strategy. We should shift away from primacy, which expects the U.S. military to meet all dangers, in all places, at all times, and instead pursue a strategy that expects other countries to address urgent threats to their security before they become threats to their region, or the globe. Restraining U.S. policymakers’ impulse to use the U.S. military might induce greater self-reliance on the part of U.S. allies, but, as important, it would reduce the likelihood that the United States will become involved in foreign conflicts that sap our strength and undermine our values.
Graphs prepared by Caroline Dorminey and James Knupp
Source: FY2017 Green Book, includes OCO funding
I've written a few things here and elsewhere about the need to close military bases, about how we should go about closing them, and about the possible civilian reuses for these sites. Later this month, I'll be discussing some examples around the world, drawing from cases in a new book, Sustainable Regeneration of Former Military Sites published by Routledge.
I wrote a chapter covering two cases in Philadelphia -- the Frankford Arsenal and the Philadelphia Navy Yard -- and co-wrote another on the Brooklyn Navy Yard. Other places featured in the book include the Brunswick Naval Air Station in Maine, and an arts community in Marfa, Texas, once home to Fort Russell, a German POW camp in World War II. My friend and former colleague Connor Ryan wrote about the Base Realignment and Closure (BRAC) process. But the volume mostly addresses non-U.S. cases, including former defense sites in the UK, Croatia, the Netherlands, Finland, Sweden, China, and Taiwan. The experiences are as varied as the sites themselves, but common challenges include environmental cleanup, jurisdictional disputes (i.e. who controls the process, and who benefits), and local resistance to change. Eventually, these former military facilities do find other uses that provide clear benefits for their surrounding communities. And some recover quite quickly.
I'll be speaking at the Association of Defense Communities' National Summit here in DC, in the morning on Tuesday, June 21st. Then, on the afternoon of Wednesday, June 22nd, I'm traveling to New York City for an official book launch with the co-editors Celia Clark and Samer Bagaeen at historic Governors Island. A flyer with more details about that event, and the book, is featured below.