Analysts See Early 2015 As Window To Reform Defense Spending | Defense Daily Network

By Megan Eckstein

There is a short window of time early next year when the White House, Pentagon, Congress and advocacy groups could get together and work out a comprehensive plan to rein in defense spending, several analysts said Thursday morning, but they’d need to tackle difficult issues and do it quickly.

Speaking at a Peter Huessy Congressional Breakfast Series event, American Enterprise Institute resident fellow Mackenzie Eaglen said contrary to the popular idea that major reform can only be tackled early in a presidency, “the third year of the second term of this president is the perfect time to do it.” That’s especially true given the dire budget situation the Defense Department finds itself in and Congress’s unwillingness to agree to any DoD-proposed cost savings such as pay and compensation reform or equipment divestment, she added.

For it to work though, she said, the White House would have to bring in the joint chiefs of staff, House and Senate leadership from both parties, and veterans service organizations such as Military Officers Association, Reserve Officers Association, Veterans of Foreign Wars and others who have fought vehemently against any decreases to benefits.

Todd Harrison, director of defense budget studies at the Center for Strategic and Budgetary Assessments, said he agreed, adding “I think there is a narrow window of opportunity early next year. So once we get past the mid-term elections – maybe even in December, but probably going through February or March” leadership needs to begin laying the foundation for a reform effort. He noted that the Military Compensation and Retirement Modernization Commission would report back to Congress with its recommendations in February, making the timing an even more natural fit.

“It is such a narrow window: I think when you get to the summer of next year, I think that window starts to slam shut because people are already thinking about 2016,” Harrison said.

Harrison said he’s hopeful and optimistic that this kind of concerted effort might take place. But Arnold Punaro, CEO of the Punaro Group, was quick to point out that this kind of effort cannot happen in isolation.

“I don’t think you’re going to see people that are more on the conservative side willing to make fundamental change on the military side until they see some give on the domestic entitlement side,” Punaro said. Because it is so easy for military officials to point to mandatory spending like Medicare as the runaway cost in the budget, not defense spending, the Obama administration may need to resurrect the “grand compromise” negotiations from 2010, he said.

Within the defense budget, all three speakers agreed that pay and compensation was the main area ripe for trimming. Harrison said that, with budgets being tight, he often hears calls to cut the nation’s strategic nuclear defense assets – its ballistic missile submarines, bombers and intercontinental ballistic missiles.

“We’re talking $100 million savings from cutting a sub, $100 million from an ICBM or $100 million from 10 B-52s,” he said during his presentation. “That’s pocket change, that doesn’t make a dent. When we’re talking about changing Tricare, we’re talking about billions of dollars that we can save by making modest adjustments to Tricare, as an example.”

To have any real impact on long-term spending trends in the Pentagon, Harrison said “we’re going to have to tackle some of those difficult third-rail issues. All the talk about, oh we can balance the budget by cutting back on the strategic forces, or we can balance the budget by cutting back on Program X or Program Y or you name it, whatever the flavor of the day is – or generic acquisition reform that people like to talk about, this mythical, magical fix to acquisition and that will save all our money – it’s actually not that easy. We need to do some of the hard, politically hard things upfront, and then we can get to the point where we can talk about what do we want to cut in the force.”

And when DoD makes those tough decisions, he said Congress needs to agree to them instead of trying to save their favorite programs. In its FY ’15 request, Do D proposed a plan that would save about $31 billion over five years.

“Very little of that is saved in FY ’15 because these savings grow over time and it takes time to implement,” he explained. “And then if you look out over a 10-year period, DoD hasn’t given me a number on this although I’ve asked, but my estimate is the savings for that second five-year period would be an additional $50 billion. So we’re talking close to $80 billion.”

“Unfortunately,” he continued, “I think that folks in the House Armed Services Committee, they just focused on just the FY ’15 number. We only need to find $1.5 billion in offsets to not do these cuts. What they aren’t looking at is the five-year and 10-year costs.”

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