Sequestration forces defense experts to examine hardware expenses, escalating costs of troop pay and benefits
By Jeanette Steele
The amphibious assault ship, USS Makin Island, the first U.S. Navy ship to be powered by gas turbines and an electric drive system, making it possible to go farther on less fuel, makes its way through San Diego Bay near the San Diego Skyline after leaving Naval Base San Diego on its maiden deployment. — Howard Lipin
The U.S. defense budget was $297 billion in 2001. By 2012, the base budget had increased 79 percent to $531 billion, not including the cost of fighting the Iraq and Afghanistan wars.
What the nation got for its treasure was a better-paid military and a new generation of high-tech but pricey hardware, including a few failures.
Now, with the two wars ended or nearly over, the battle over the across-the-board sequestration budget cuts is prompting the question: How much should the United States spend on defense in peacetime?
After World War II, military spending dropped 38 percent, according to Pentagon figures. After Vietnam, it was 30 percent; after the fall of the Berlin Wall, 32 percent.
During the past decade, the peak year for overall military spending was 2010, when the total bill — including $162 billion for the wars — was $691 billion.
From that high, a 30 percent correction would mean a defense budget of $484 billion. A 35 percent correction would drop it to $449 billion.
Those are the kind of numbers that military officials are warning against.
Sequestration, which was automatically triggered Friday, thanks to the deficit-cutting Budget Control Act of 2011, is a less than 10 percent “haircut” for the Defense Department budget for a decade. That’s a $55 billion-a-year chunk out of the military budget, though in the first year the cut would be roughly $47 billion thanks to a confluence of details.
In theory, that would reduce the proposed 2013 base Defense Department budget from $525 billion to $480 billion. War costs, proposed at $88 billion for this year, would come on top of that.
In future years, the base defense budget would be capped at less than $600 billion through 2021, according to an analysis by the Center on Budget and Policy Priorities.
Pentagon leaders have spent the past few months warning that the price in military capability would be high if Congress allowed sequestration to begin.
In San Diego in late January, Joint Chiefs of Staff Vice Chairman Adm. James “Sandy” Winnefeld said that he foresees instances when the U.S. military is asked to respond in a crisis and the answer has to be no.
Last week, the Pentagon said that 60 percent of Army brigade combat teams won’t be properly trained for battle. The Navy already canceled a scheduled deployment of the Harry S. Truman aircraft carrier group.
There’s concern about a “hollow force,” which is a reference to the 1970s, and to some degree the 1990s, when the military had planes and ships but sometimes lacked trained crews or money to run them.
In what might be called the Pentagon school of thought, the proper spending level for national defense is the status quo — the $525 billion that the Defense Department proposed as its 2013 base budget, after agreeing to cut spending growth by $487 million over a decade.
In that strategy, unveiled in early 2012, President Barack Obama and military leaders said it would be a smaller but more high-tech and flexible military, with an emphasis on special-operations troops. It would end the nation’s ability to fight two ground wars at once — long the gold standard for American defense.
Larry Blumberg, director of the San Diego Military Advisory Council, is roughly in this camp. So is Vern Clark, chief of naval operations from 2000 to 2005. At a SDMAC panel discussion in the fall, the retired four-star admiral called $500 billion a “pretty good number.”
Blumberg, another retired Navy officer, argues that the nation’s new defense blueprint is based on the current funding.
“I believe that the defense strategy that (former Defense) Secretary (Leon) Panetta and the president put out, and was agreed to by the service chiefs, made a heck of a lot of sense,” Blumberg said. “They resourced the Defense Department to support that. … So if you are going to cut the defense budget, then you need to go back and redo the defense strategy.”
Rep. Duncan Hunter, R-Alpine, is also in this camp, but for different reasons.
The Marine Corps officer who served in Iraq and Afghanistan said he believes the Pentagon hasn’t done a credible assessment of global risks. And it has been spending money on side projects — such as the Navy’s biofuels effort, which Hunter has opposed. Now instead of canceling those, military officials are scratching aircraft carrier deployments, he said.
Don’t lower military spending until a global threat assessment is better realized, Hunter said.
“Then, this is my best guess, even with the DOD spending the $500 billion it has right now and actually putting it toward operational capability — even doing that, I think we will accepting certain risks in certain parts of the world,” he said.
In the East County Republican’s point of view, the 30 percent cut in military spending that the United States saw after World War II and Vietnam isn’t realistic because of the rise of radical Islam.
“Al-Qaeda popping up on every continent is having an effect on how many deployments and where America has to be right now, compared to one or two giant European countries or Japan,” Hunter said.
Meanwhile, at progressive and budget-hawk think tanks in Washington, D.C., some defense analysts say that budget cuts the size of those coming under sequestration aren’t a bad idea after a decade of undisciplined spending.
Still, no one seems to endorse the method behind sequestration, which has been described as an indiscriminate “meat cleaver” and a “budget ax.”
Larry Korb, a Reagan administration assistant secretary of defense now with the Center for American Progress said a defense budget of $475 billion could get the job done. Winslow Wheeler of the Center for Defense Information, a part of the Project on Government Oversight, said the sequester cut is far less than the so-called peace dividend that the United States took after past wars. Wheeler said the United States should think about returning to the post-World War II average, which would be $425 billion in 2012 dollars.
Advocating a slightly smaller budget knife, Michael O’Hanlon of the centrist Brookings Institution said defense reductions of $100 billion to $200 billion over a decade are reasonable.
Reasons for rise
Most analysts attribute the post-Sept. 11 defense base budget increase largely to two factors — aside from inflation, which accounts for roughly $75 billion in growth since 2001.
First, the United States poured money into new hardware as the military pushed to modernize Cold War-era equipment. And, in a highly politicized time of war, Congress raised military pay and benefits to more than rival the corporate world, while health care costs also skyrocketed.
The main culprit in terms of pricey gear is probably the Joint Strike Fighter. Doubling in cost, it is the Pentagon’s most-expensive program ever with a total purchase cost of almost $400 billion.
But sometimes the Defense Department invested in equipment that never saw battle.
According to the Center for Strategic and Budgetary Assessments, the Pentagon spent more than $50 billion on 12 major modernization programs that were canceled over the last decade before any equipment was fielded.
They include the Army’s Future Combat Systems — a family of next-generation tanks and infantry carriers, killed off in 2009 — and the Air Force’s Transformational Satellite Communications system, shelved the same year.
Todd Harrison, a senior defense analyst at CSBA, points out that other programs — such as the Navy’s DDG-1000 class of destroyers and the Air Force’s F-22 Stealth Fighter — suffered schedule delays and major cost overruns that forced the Pentagon to cut the number purchased.
“You had this gusher of spending, and they weren’t as careful as they should have been,” said Korb of the Center for American Progress.
Military personnel costs — comprised of pay, health care and retirement benefits — have nearly doubled since fiscal year 2001 and now consume one-third of the Pentagon’s base budget, according to the Center for American Progress. The Congressional Budget Office pegs it at 28 percent.
The size of the force has stayed fairly constant, growing by roughly 16,000 troops between 2001 and 2013. The 100,000-person increase in the Army and Marine Corps was offset by a shrinking Air Force and Navy.
For several years in the mid-2000s, Congress gave the troops larger raises than the Pentagon asked for, despite high retention numbers.
Pay is just one factor. Basic pay accounts for about a third of all military compensation.
Because of a restructured housing allowance, by 2005 the average military family was paying nothing toward housing costs. As a result of that and other changes between 2002 and 2010, the CBO calculates that basic pay for the average service member increased by 42 percent before adjustment for inflation, housing allowances increased by 83 percent, and the food allowance increased by 40 percent.
All told, military cash compensation increased by 52 percent during that period, while private-sector wages and salaries rose by 24 percent, according to the CBO.
A 2011 Defense Department report concluded that while military compensation had grown substantially over the prior decade, wages for equivalent civilians had dropped slightly during the same period.
Critics say that a better way to reward those fighting and dying would have been targeted bonuses.
“This was for everybody wearing the uniform, whether they are a pastry chef for the chairman of the Joint Chiefs of Staff or a machine-gunner. They were blindly, wildly indiscriminate,” said Wheeler of the Center for Defense Information.
The Pentagon’s health care budget increased 300 percent between 2001 and 2012, according to Center for American Progress data. The main factor is not medical care for uniformed troops but care for military retirees and their families.
The military retirement, or pension, program now costs taxpayers more than $100 billion per year.
Critics say it’s a big price tag for a flawed system that allows people to start collecting as early as age 38 and provides nothing for non-career troops. The cost of military retirement is projected to double by 2034, according to the Center for American Progress.
Where to cut
Looking now at where to cut, budget hawks call for fewer ships and planes.
And they advocate shrinking raises — which the Pentagon has called for, though not until 2015 — and morphing into a 401(k)-style retirement plan instead of the current pension after 20 years of service. They also recommend asking military retirees to pay more toward what is now very low-cost health care.
Wheeler’s rationale is that the size of the American defense budget is disproportionate to real-world security challenges.
“During the Cold War, we were facing both the Soviet Union and a hostile Communist China. Now China is our biggest trading partner, and Russia is almost a nobody,” he said.
As for terrorist threats, “we spend more in a day than al-Qaeda spends in an entire year,” Wheeler said.
Duncan Hunter said he too is casting a critical eye on overall troop compensation and benefits, adding that, “It’s not supposed to be, ‘Let me go to work for Microsoft or the Air Force. Oh, the Air Force is better.’”
Those who want to protect military funding point out that overall federal spending grew from $1.83 trillion in 2001 to $3.6 trillion last year. That 97 percent increase overshadows the 79 percent increase in Pentagon funding, and in dollar terms was seven times more.
If current trends continue, they worry that domestic spending will hamper the country’s ability to adequately fund the military.
If there are more cuts to be made, they say, the social programs that helped drive up the spending are an obvious place.
“The country has to decide where it wants to spend its money,” Blumberg of the San Diego Military Advisory Council said. “I happen to believe we have got to get ahold of those entitlements. … We look at these entitlements and see what’s fair.”
The Pentagon has said there will be no noticeable change at military bases this week, the first under sequestration. Child care centers, schools and base grocery stores will be open.
But a Defense Department spokesman said the impact will soon be seen at U.S. bases around the world.