Some people may think one consequence of the ongoing United States financial crisis would be increased pressure for cuts in military spending. But that is unlikely to happen. While the crisis will increase fiscal pressure to reduce military spending, as it is the largest pot of discretionary funding in the federal budget, other countervailing political factors will ensure that there likely will be no significant reduction.
Consider that on September 24, during the fight over the Wall Street bailout, the House of Representatives passed by a vote of 392-39 a $612 billion defense authorization bill for 2009, which includes both baseline military spending and funding for the wars in Iraq and Afghanistan and other counter-terrorism operations. The fact that the bill was approved without public or congressional protest indicates there is unlikely to be any significant pressure to cut military or related national security spending.
The latter category includes nuclear weapons spending at the Energy Department, plus the State Department, as well as Veterans Affairs, and the intelligence agencies. All together that totals exceeds a trillion dollars annually.
It is a truism, but the primary reason for continued high levels of military spending is that the United States is at war. Unlike the situation at the end of the 1980s and early 1990s, no factors are comparable with the collapse of the Soviet Union and the end of the Cold War, which drove a significant reduction in US military spending.
Today, the situation is reversed. The United States is fighting the "war on terror" and politically both the incumbent administration and the opposition party are reluctant to cut military spending at such a time. In fact, nothing in the campaign platforms of either Republican Senator John McCain or Democratic Senator Barack Obama suggests they plan to significantly reduce military spending.
McCain says the United States must enlarge the size of its armed forces. That alone will guarantee that operational and support costs, traditionally one of the highest categories of US military spending, stay high. Likewise, Obama supports plans to increase the size of the army by 65,000 soldiers and the marines by 27,000 troops.
Finally, there is the longstanding congressional tradition that by voting for more military spending, they are providing "jobs" for their economy, not to mention their constituents, as a more general Keynesian pump-priming mechanism.
It is true, however, that some military officials see the administration-proposed financial bailout of Wall Street as a direct threat to the military budget.
Pentagon comptroller Tina Jonas said the US financial crisis may lead to lower defense budgets and more public demand for accountability over spending. "Any crisis of this nature is going to affect - must affect - other federal spending," Jonas, the Defense Department's top money official since July 2004, said on September 26 in an interview on her last day in office. Any analysis that suggested defense budgets would escape impact was too sanguine, she added.
Yet a few days later she said the US military wanted an increase of $57 billion in fiscal 2010, about 13.5% more than this year's budget of $514.3 billion. While that request would include costs that to date have been paid by supplemental appropriations it would still be a real increase.
In the long term, another factor that could reduce spending is a step away from the technology heavy hardware which was a mainstay during former defense secretary's Donald Rumsfeld's tenure.
Defense Secretary Robert Gates said in a speech on September 29 at the National Defense University in Washington that the military must understand the limits of combat power and its leaders must be skeptical that technology can bring order to the battlefield.
He cautioned against efforts to reorganize the Pentagon around buzzwords like "transformation", and challenged those who advocate investing in smaller numbers of higher-technology weapons in a belief that war can be revolutionized. "Be modest about what military force can accomplish, and what technology can accomplish."
Gates said the Pentagon had placed too much emphasis on high-technology weapons systems aimed at potential state adversaries such as China and Russia, which take years to develop. He noted that the 2009 budget contained more than $180 billion for such conventional systems.
Given US military dominance in air, land and sea power, the Pentagon can safely shift away from building small numbers of highly advanced ships, aircraft and other systems and instead purchase larger quantities of simpler, cheaper equipment.
Army secretary Pete Geren, a former four-term congressman from Texas, also cautioned last Monday that the proposed $700 billion rescue plan could take a toll on the army's budget in the coming years. The financial crisis could exacerbate the fact that defense budgets traditionally are cut drastically at the end of wars, he said.
Because of its high personnel costs, the army does not have the flexibility of other services to spend on new weapons systems. Thus it will face substantial pressure to cut back on its troubled flagship modernization program, the Future Combat Systems, and its new helicopter programs.
Last week, as it has each year since the mid-1990s, the US Army sent its "wish list" (in which it seeks to supplement its own budget with "extracurricular" money) that it, as well as the other services, sends to Congress each year after.
Given that it bears the largest share of combat operations in Iraq and Afghanistan, the army only sought $3.9 billion. Although, when you take into account the amount by which the 2009 army budget already has been increased over and above the extrapolated 2001 plan for 2009 it is apparent that the army actually is seeking a $54.5 billion "wish list plus-up". Even so, the army leadership said it would seek larger overall budget requests in future years.
Ironically, this indicates that the basis for each of the services' "plus-ups" is not war-related; instead they are an artifact of the post-September 11, 2001, political environment. Specifically, as noted above, in times of war politicians in the executive branch and Congress are willing to support a generally rising tide of defense spending, even when it is not spent on problem areas, such as a smaller force structure or reduced readiness.
Even if the US withdraws a large number of its forces from Iraq relatively soon, the costs will continue to rise for some time. The war in Iraq will cost far more in the next year than the Iraq portion of that $68.6 billion Congress has provided in the in the new military.
Thus, some time in 2009, the direct costs of the war there, that the Bush administration once predicted would cost perhaps $50-60 billion in total, will cost more than $800 billion, or $100 billion above the cost (in the best-case scenario) of the bailout of the financial system now being proposed in Washington. This excludes long-term costs such as payments of health care and veterans benefits, which ultimately could total somewhere between one-and-a-half and seven times the bailout money.
Yet as long as the United States remains at war nobody expects to see a decline in military spending. Despite large war costs there is nothing comparable to the end of the Cold War, or the Great Depression that would drive military spending significantly downward.
According to Larry Korb, an assistant secretary of defense in the Ronald Reagan administration and a senior fellow at the Center for American Progress Action Fund in Washington, "The budget has been projected to go up. Will it go up as fast as projected is the question?"
A similar opinion was given by Steven Kosiak, vice president of Budget Studies, at the Washington-based Center for Strategic and Budgetary Studies. "In the future the budget, at worst, will likely stay flat and grow more slowly than projected. The only real question is what the rate of growth will be."