CSBA: If Historical Trends Applied, Defense Budget Would Drop to $415 Billion In Drawdown | Defense Daily

By Megan Eckstein

Pentagon officials and many lawmakers agree that constrained spending due to sequestration cuts is harmful to military readiness and to the defense industrial base, but that spending level actually represents a less painful drawdown than the military has seen in recent history, according to the Center for Strategic and Budgetary Assessments.

Presenting his new report, “Chaos and Uncertainty: The FY2014 Defense Budget and Beyond,” CSBA senior fellow for defense budget studies Todd Harrison told reporters that, based on historical data, the drawdown should be steeper and last longer than sequestration-level projections represent. Applying past trends to the drawdown from Iraq and Afghanistan would create a budget scenario that bottoms out at only $415 billion in annual defense spending.

CSBA’s Todd Harrison said that despite spending so much money during operations in Iraq and Afghanistan for equipment like MRAPs, the fleet the military will carry forward is still older and smaller than before the war. Photo courtesy U.S. Army.
“I’m not predicting it will happen,” Harrison said. But, “a lot of people are looking at this and thinking this is the floor of defense spending, that surely we’ll do no worse than sequester. And a lot of people at the Pentagon think they can do better even though they got sequestered in [fiscal year 2013]…I look at this and, compared to previous budget cycles, this doesn’t look right to me. I think that the sequester-level budget caps might actually be a ceiling, not a floor, for the defense budget in the coming years.”

Current budget projections, based on Defense Department plans and assuming that sequestration will stay in place for its full 10 years, show FY ‘14 having the lowest spending levels–about $475 billion–and then spending creeping back up.

But Harrison said that if this drawdown were like the past three, military spending would continue to slope downward until FY ’21, when the Pentagon would have a budget of only about $415 billion.

In that scenario, procurement accounts would total only $62 billion, consistent with levels seen after the last two drawdowns. Research, development, test and evaluation accounts would stay at their current levels, since RDT&E funding has already fallen 25 percent since FY ’10, the same percent seen during the last drawdown.

Military personnel costs would rise about 2 percent a year–a slower rate than during past drawdowns, but Harrison said they rose so rapidly over the past decade that it is hard to imagine how they could continue to grow much more. The size of the active duty force would drop by a third, from 1.5 million to 1 million service members, which Harrison said would be the smallest active duty force since 1940. And operations and maintenance costs would increase by 2.8 percent per person but go down overall since the force would be so much smaller.

Those accounts, plus about $10 billion for military construction and a few other assorted costs, would total $415 billion–a spending level that would wipe out both capacity and capability in the military and be “catastrophic” for procurement programs and the industrial base.

Harrison again stressed he didn’t predict this would happen, but he said it was conceivable that spending would move this direction if the economy worsened.

“If the economy gets worse, revenues go down, deficit goes up–and during a recession or a period of slow economic growth, you don’t want to raise taxes to increase revenues, so your only other option if you want to reduce the deficit is cutting spending–it’s hard to do that without cutting defense spending,” Harrison said.

Or, he said, if sequestration continues to appear not too painful–the sequester in FY ’13 was mitigated by draining reserves of money, using unobligated prior-year funds and deferring work to FY ’14–some lawmakers may push for more cuts.

“As you cut the defense budget, if they don’t see the effects and more members of Congress start to think, ‘hey, this is not so bad, maybe I can cut more and get away with it,’ and it’s little by little, year by year after year you chip away at the defense budget,” then it could begin to dip closer to the historical trends scenario.

But, he said, “reasons this wouldn’t happen are, if you look at the end of the 80s drawdown…the Cold War had ended and we were in a significantly improved security situation. And so we looked at our defense and said, ‘hey, the world has gotten safer for us, so we can actually cut back some more.’ So that’s why we see the continued decline in defense budgets. We’re not in that kind of situation now. I don’t think anyone would say, ‘hey, all the sudden the world has gotten much safer for America than it was just a few years ago.’”

Harrison noted that in the 1980s drawdown, the Reagan administration continued to request increased spending levels in its budget submissions, but Congress chose to appropriate less money each year.

Harrison added that applying past drawdown trends to this one would produce unfavorable results for national security because the ramp-up at the beginning of the war in Afghanistan looked so different than other ramp-ups. Spending spiked dramatically since 2001, but the size of the force stayed about even–the Navy and Air Force shrank even as the Marine Corps and Army grew–and many of the ground vehicles and unmanned aerial vehicles bought for the wars are either not being brought home or are essentially irrelevant in future operations in the Pacific and against more sophisticated defenses.

“Now we’re at a point where, after this decade or so of increasing defense budgets, we have a military that in many ways is smaller–we have fewer ships in the Navy, we have fewer airplanes in the Air Force; it’s older–the average age of aircraft in the Air Force inventory is the oldest it’s ever been; and it’s just more expensive. We’re smaller, older and more expensive. So that is a different position to be starting a drawdown than in these previous post-war periods.”

via CSBA: If Historical Trends Applied, Defense Budget Would Drop to $415 Billion In Drawdown | Defense Daily.