You've Never Seen a Defense Budget Like This

It's a whole new world for the U.S. military. The Obama administration has decided the war in Afghanistan will conclude by the end of 2014, and the weight of the Defense Department will turn to new threats, most notably in Asia and in cyberspace.

How the Pentagon plans to pay for all of this will fall under the microscope in the coming months. The threat of sequestration still looms until the new March deadline, pushing the regular budget for 2014—usually completed by early February—back as far as April.

If confirmed as the next secretary of Defense as many expect, Chuck Hagel will have to prepare for the kind of budget many Americans have never seen, experts say.

"This is going to be the first defense budget in a generation that is going to be shaped more by internal U.S. force than by external threats," says Loren Thompson, defense budget expert at the Lexington Institute.

"The external dangers are so diminished that domestic political concerns have now filled the vacuum and are determining the scale of military outlays," he says. "Without a threat to maintain robust military spending, the political system tends to respond by using the money for other purposes."

Secretary Leon Panetta's calls to break the cycle of post-war downsizing will likely fall on deaf ears in Congress, Thompson says, adding potential dangers are not enough for the government to allow defense spending at a high rate.

"It will need an urgent threat in order to be convinced the defense budget should remain about a half a trillion dollars a year," he says. "I don't see defense having the same claim on political priorities it did a decade ago."

Hagel likely would not depart from the strategic guidance report the Defense Department published in January, says Todd Harrison, senior fellow for defense budget studies at the Washington, D.C.-based Center for Strategic and Budgetary Assessments. It calls for a "smaller and leaner" force that will be "agile, flexible, ready, and technologically advanced," for new roles in the Asia-Pacific and Middle East.

This new strategy is starkly contrasted with the current fighting force designed to fight simultaneous wars in Iraq and Afghanistan, he says.

"If you look at the potential points of contact in the Pacific region, it's not likely to involve deploying large numbers of ground forces," says Harrison. "That suggests you might cut the ground forces disproportionately more than the other components of the force."

Squaring off against sophisticated allies like China requires new air and naval systems, such as long-range stealth planes, ships and submarines, as well as new missile shields that leverage advanced technologies like lasers.

"There are already plans in the works to build a lot of these systems," says Harrison. "For the most part, it's a matter of what gets cut more, and what gets cut less."

Cyber security and special operations forces may be the only areas that see some slight growth in the coming years, he adds, though they remain a relatively small segment of the overall budget.

A new sense of doing more with less will likely move to the forefront of defense spending, experts say, following years of gargantuan contracts to build 21st century weapons—such as the billions of dollars to build the F-35 Joint Strike Fighter, perhaps the largest single defense expenditure ever.

"The problem is you end up building systems that are optimized to do so many different things that they're not really good at any one thing," says Jacob Stokes, a military analyst with the Center for a New American Security. "[The F-35] was built for so many tasks and so many different services, that it's not a good long-range bomber. It's too expensive to do some of the more mundane tasks.

"You really don't need a high-end stealthy plane to do some of the things it's doing," he says.

The F-35 only has a range of a few hundred miles, adds Harrison, which requires air tankers if it needs to extend that range. The Pentagon will likely see the project through, he says, but it will lose out in additional funding to the new Air Force bomber and long-range stealth aircraft.

The military will likely return attention to older, cheaper fighters such as the F-15 Eagle and F-16 Fighting Falcon, says Stokes, for missions that don't require stealth capabilities, and save that money for the future.

The Navy has embraced this idea with it's designs for Littoral Combat Ships, he adds, designed to be "vanilla platforms" that can accommodate multiple missions such as mine-sweeping, anti-submarine warfare or land attacks.

Other systems could be classified as obsolete, including ground combat vehicles the Army plans to develop. That branch of the military is having an identity crisis of sorts, says Harrison.

"It's not clear if we're focusing on the Asia Pacific region, why you need a half million man army," he says. "What are you going to do with them, or 182,000 Marines?"

Determining where a potential Defense Secretary Hagel will cut is as important as what he'll save. Experts agree the driving public sentiment, as well as Hagel's own experience, points to protecting the benefits of a rapidly downsizing force.

"Hagel has unimpeachable credibility and will be unimpeachably dedicated to veterans," says Stokes.

The Defense Department must cut force structure to maintain readiness, he says. Having too much force structure means the Pentagon won't be able to invest in training and preparation for the forces it will need.

"[Hagel] will not want to cut pay and benefits to warfighters," says Thompson. "He will not want to trim veterans benefits."

The scale of future military spending is going to be driven largely by the credit worthiness and availability of resources the federal government has rather than the type of threat the United States faces, Thompson reiterates. This will likely produce a military force where soldiers and sailors are rewarded well, but the weapons they carry are relatively old and unevenly maintained.

"It reflects the fact that it's much easier to protect military pay and benefits in the political system than to protect weapons programs," he says.