February 14, 2011

Why Pentagon Budget Cuts Might Not Be as Impressive as They Sound

As the Department of Defense rolled out its 2012 budget Monday, analysts were of one mind on this point: that the defense budget has been a public relations coup for the Pentagon and for Defense Secretary Robert Gates.

Much of the media coverage has emphasized that the Pentagon is grappling with tough defense budget cuts in the wake of America’s growing debt. Mr. Gates, too, has portrayed himself as embracer of a prudent middle course.

“You’ve got two ends to this debate,” Gates said during a January budget briefing with reporters. “Those who feel we’ve already gone too far, and those who feel like we haven’t gone nearly far enough. My view is that we’ve got it about right.”

But this fiscal narrative obscures important realities, according to analysts – including the reality that the defense budget is still growing. At $553 billion, the budget is some $13 billion less than the Pentagon expected for 2012, but still represents 3 percent growth over fiscal year 2011, and the Pentagon remains the largest single spender of federal dollars.

What’s more, Mr. Gates has announced that the Pentagon was going to cut its future expenditures over the next five years by $78 billion. Yet this represents only about 3 percent of the overall defense budget.

While the announced cuts will reduce planned future expenditures, they will not cut actual future spending, says Travis Sharp, a research associate at the Center for a New American Security. Indeed, cuts are not necessarily apt to produce future savings, since they rely on future economic assumptions that “tend to underestimate future costs.”

Plans are also subject to change based on perceived future threats. One of the major cuts touted by the Pentagon – and derided by defense hawks – has been planned cuts to the size of the Army and Marine Corps by 2015, when the US military is slated to be out of Afghanistan. But such reductions “are easier said than done,” says Lawrence Korb, senior fellow at the Center for American Progress. By 2015, “we don’t know who the defense secretary or the president is going to be, and what they’re going to have to say about it.”

Robert Hale, the Pentagon’s chief financial officer, confirmed this point during a briefing with reporters Monday. “I recognize that when you get out beyond fiscal ’12, the plans aren’t as detailed,” he said. “I’m pretty confident we’ll meet [the budget goals] in fiscal ’12. I think there’ll be more of a struggle as they get larger and we have less definite plans in the years beyond."

This is likewise true of the cuts predicated on the drawdown of US troops in Iraq. If the Iraqi government under President Hamid Karzai requests US troops to stay beyond December 2011, when they are slated to pull out, that could change spending priorities. “We would have to look at how to meet those resource needs,” Mr. Hale said.

The Pentagon recognizes, too, that the best defense of this budget may be a good offense. For example, he has decried as wasteful plans to build a second engine for the Pentagon’s Joint Strike Fighter jet. Some congressmen, whose districts have a financial interest in developing the engine manufactured by defense giant Lockheed Martin, are lobbying hard to keep it.

“We consider it an unnecessary and extravagant expense, particularly during this period of fiscal contraction,” Gates said. He estimated it would cost taxpayers “nearly $3 billion in a time of economic distress.”

He will face more questions when he travels to the House and Senate Armed Services Committees to testify later this week. In the meantime, he issued a challenge to fiscal conservatives on the Hill, particularly tea party-affiliated freshman. “My hope is that particularly the new members who are interested in fiscal responsibility will see this as an opportunity to save $3 billion for the taxpayers,” he said, “that can be put to better use.”