Sat November 19, 2011
With Defense Budget Cuts Come Challenging Costs
The congressional supercommittee has only a few days left to come up with a plan to cut $1.2 trillion from the federal deficit. One of the areas on the chopping block is the nation's defense budget, and Pentagon officials are pushing back against any cuts beyond the $450 billion they've already been asked to make.
The defense budget is an easy target when it comes to cutting the deficit, because it makes up half of the federal government's entire discretionary budget, says Todd Harrison, a senior fellow at the Center for Strategic and Budgetary Assessments.
For this reason, he says, it's always a target. The second reason is that the budget is not just big, it's growing.
When including war funding, the Department of Defense grew by more than 70 percent over the past decade, says Harrison, an expert on the U.S. defense budget. And even excluding war funding, the budget still grew by nearly 40 percent.
The main reason for the increase isn't the number of active duty officers — which remained about the same over the past decade — but skyrocketing personnel costs, mainly incentives to keep service members from quitting during wartime. Congress added pay raises for troops every year and the Pentagon keeps paying more for health care and pensions.
"So as a result, the cost per person in the military increased by 46 percent in real terms over the past decade," Harrison says.
The Pentagon has already been asked to cut more than $450 billion from its budget, but if the supercommittee fails to make a deal, then automatic defense cuts kick in — up to an additional $600 billion. Even if there is a deal, the Pentagon could face a couple of hundred billion more in cuts.
A big part of the budget where there might be potential savings is war funding. The war in Iraq is drawing down by the end of 2011; the war in Afghanistan, by 2014. But Harrison says the savings are all about the baseline being used for comparison.
A baseline — basically, a starting point — assumes that the same amount of money will be spent every year. For example, last year, the U.S. spent more than $150 billion on the wars in Iraq and Afghanistan. That amount over 10 years gives you a projected cost of $1.6 trillion. But as the wars wind down, the costs will, too.
"War funding is projected to drop to $118 billion in [fiscal year 2012] and it will continue dropping in [fiscal year 2013] and beyond," Harrison says. "So in reality, we're not going to spend $1.6 trillion on the wars over the next decade. We're more likely to spend $300 billion or $400 billion."
When people say war funding is an area in which savings can be expected, Harrison says, laughing, it's "a gimmick because it's not real savings."
When it comes to the U.S. weapons programs and the number of planes, ships and tanks it acquires, Harrison says it's an attractive target when trying to find budget savings quickly and he believes the weapons-acquisition programs are going to bear the brunt of budget cuts.
But he says that doesn't make it the smartest place to cut. He says once building stops in some sectors of the defense industrial base, it's hard to jump-start them again.
"No private companies are buying nuclear-powered submarines or stealthy fighter jets," Harrison says. "So if the [Department of Defense] does not continue some level of steady funding for these industries, free-market forces will just eliminate them."
So, if all the savings can't come from ending the wars or cutting weapons purchases, where are the savings? Harrison points to the issue that inflated the defense budget in the first place: personnel.
Secretary of Defense Leon Panetta has said military health care premiums could go up and salaries may get scaled back. But Harrison says the military has to think bigger — anticipate the threats 10, 20 years down the line. Only then can the Pentagon decide what it can cut now and what it can't.