FPI Analysis: Don’t Throw National Defense Off the Fiscal Cliff

December 10, 2012

As the White House and Congressional Republicans continue negotiations to avoid the fast-approaching “fiscal cliff”, the Department of Defense’s fiscal future remains uncertain.  President Obama and congressional leaders must hammer out an agreement and amend current law before January 2013.  If they fail, current law not only will increase taxes, but will also trigger 10 years of automatic sequestration cuts mandated by the August 2011 debt-limit deal that will indiscriminately slash $500 billion—in addition to the $487 billion that is already being cut by the Obama administration—from defense spending.

There is strong and widespread opposition to sequestration cuts to national defense.  Secretary of Defense Leon Panetta repeatedly has warned that sequestration will be “devastating” to members of the U.S. military.  General Martin Dempsey, Chairman of the Joint Chiefs of Staff, has cautioned that sequestration will be “very high risk” to national security and international stability.  During a presidential debate, even President Obama bluntly declared that sequestration “will not happen.”

Yet it remains unclear whether—and precisely how—the Obama administration and lawmakers will actually avoid sequestration’s massive cuts to defense.  While the Republican-controlled House of Representatives passed a bill in May 2012 to replace the first year of sequestration cuts with 10-year reductions to spiraling domestic mandatory spending and other programs, the White House and Democrat-controlled Senate rejected that legislation due to its lack of revenues.  As an alternative to sequestration, Senate Armed Services Chairman Carl Levin (D-MI) suggested in June 2012 that a deal to avoid the fiscal cliff could instead include $100 billion in cuts to the Pentagon’s regular annual budget.  More recently, news reports suggest that some lawmakers have floated the alternative of slashing defense spending (excluding war funding) by as much as $200 billion.

A closer examination, however, shows that further spending cuts—even in the range of $100 billion to $200 billion over the next decade—to the military’s regular annual budget are not only unwarranted, but also untenable, especially if the United States seeks to sustain its global leadership.  It is important to keep a few facts in mind.

(1) Further Cuts to Pentagon Spending Risks Imperiling National Security

Contrary to the conventional wisdom, further cuts to Pentagon spending risks imperiling national security. 

First, it will not be trivial for the men and women of the U.S. Armed Forces to sustain an additional $100 billion-to-$200 billion over a 10-year period.  Reductions of this magnitude would effectively slash roughly $10 billion-to-$20 billion annually from the Pentagon’s regular annual budget.  To make more concrete yearly spending reductions of this magnitude, a $10 billion cut roughly equals:

  • what the Navy seeks to annually spend on shipbuilding over a five-year period ($11.8 billion),
  • what the Navy seeks to annually spend on Navy and Marine aircraft in the next two decades ($13 billion), or
  • what the Air Force proposes to spend on purchases of new aircraft and major modifications to existing aircraft in FY 2013 ($8 billion). 

Second, the Pentagon’s leaders have repeatedly warned that President Obama’s defense budget for FY 2013—which cuts $487 billion from core annual spending over 10 years—is the absolute floor for funding the military’s current strategy to defend the United States.  As General Dempsey, the Chairman of the Joint Chiefs of Staff, cautioned congressional lawmakers in February 2012:  “Anything beyond this [$487 billion in defense cuts], we have to go back to the drawing board on the strategy.” Secretary of Defense Panetta added that “if additional efforts are made to go after the defense budget, I think it could have a serious impact in terms of our ability to implement” the Pentagon’s stated defense strategy.

What’s more troubling is, in the views of many critics, the Pentagon’s current strategy for national defense—which was unveiled in January 2012, dropped U.S. military’s traditional “two-war” planning concept to accommodate the $487 billion spending cut in favor a more of off-shore balancing or light-footprint concepts—is not adequate to fully meeting the world’s evolving threats.  As DEFENDING DEFENSE, a coalition consisting of the Foreign Policy Initiative, American Enterprise Institute (AEI), and the Heritage Foundation, argued

“The two-war standard has long been a way to measure America’s global reach and deter potential adversaries.  The world is no less dangerous today than it was twenty years ago—so why is the Obama administration planning for an era of decreased conflict?  Our world was changed on September 11th because of an act of war for which America was not prepared.  With diffuse and growing threats, the world can ill-afford American complacency.”

And as AEI’s Thomas Donnelly elaborated:

“Offshore balancing” in the emerging Middle East will be very much like shelling the continent of Africa, as Joseph Conrad put it: emotionally satisfying but without purpose or result.  Some of the satisfaction will be lost when we balance the human cost of letting local conflicts run their course, as in Syria.  But beyond what our moral sense can tolerate, there will be more tangible consequences.  No one can predict with precision what they will be, but it’s a pretty good bet that the one thing worse than trying to put out all the fires will be letting them burn.”

Third, President Obama’s current defense budget trajectory already will increasingly strain the U.S. military’s readiness, especially in the face of potential contingencies.  For example, Senator Joe Lieberman recently noted in the Wall Street Journal:

“Consider that the Navy's 285-ship fleet is already slated to decline by nine ships by 2015. That means longer cruises with less time between deployments for ships to receive needed maintenance and for sailors to recuperate. Thus the U.S.S. John C. Stennis Carrier Strike Group completed a seven-month deployment to the Persian Gulf in March, spent five months at home, then began an eight-month deployment in August. The U.S.S. Enterprise and U.S.S. Carl Vinson strike groups have faced similar schedules in the past two years—a pace that senior Navy officials have said is wearing out ships and straining crews.”

In May 2012, the Pentagon’s Vice Chiefs of Staff warned the Senate Armed Services Committee that the military was already suffering from degrading readiness, and making risky decisions in the face of a more austere budget.  General Joseph Dunford, Assistant Commandant of the Marine Corps, reported that the Marines were making “some hard choices inside to extend some of our equipment out past what might have been its normal service life by service life extension programs.”  On a worrisome note, he added:  “67 percent of our units at home station were in degraded readiness… Units report the lowest level of their readiness in manning, training, and equipping. And so 61 percent of those units that report degraded readiness report that degraded readiness as a result of equipment shortfalls.”  As General Philip Breedlove, the Air Force Vice Chief of Staff, testified in the same hearing, the Air Force will lose 200 airplanes in 2013, and added that “the average age of our fighters at 22 years, bombers at 35 years, and tankers, the oldest of the fleet, at 47 years.”

Degraded equipment puts the lives of our servicemen and servicewomen, as well as their missions, at risk.  Additionally, there comes a point where the cost of maintenance and upkeep exceeds the cost of replacing old equipment.

Fourth, the President’s FY 2013 budget proposal and revised defense strategy already create risky gaps in manpower and short-change efforts to field next-generation weapons platforms and other modernization programs.  As DEFENDING DEFENSE explained:

“Ground forces are facing a massive cut, with the Army losing 80,000 active duty soldiers and the Marine Corps losing some 20,000 active-duty personnel.  A larger force has already faced severe strain due to numerous deployments.  A smaller force means that when duty calls, troops will face increased stress, increased danger, and more time away from their families.

“The Air Force is in the middle of a modernization crisis.  The administration has announced yet another delay in F-35 production at the same time as cuts to six fighter squadrons.  A 2009 RAND study has the United States losing an air war with China because the U.S. simply does not have enough fighters to compete with overwhelming Chinese numbers.  These cuts do not help the situation.

“The U.S. Navy, which also faces a modernization crisis, will maintain 11 aircraft carrier groups, but the total number of surface ships and submarines will decrease dramatically.  For an administration supposedly focused on the Pacific, a defense budget that decreases shipbuilding and fleet size simply does not make sense.”

In sum, America’s economic and national security interests span the globe, so it is critical that the United States continue to make investments in national defense commensurate with its strategic objectives.  What’s troubling, though, is that the Obama administration and its congressional allies already have repeatedly used the military as a bill-payer, especially for domestic spending, and may seek to do so again.  To do so—even with a $100 billion-to-$200 billion cut to the Pentagon’s regular annual budget—would be a strategic blunder.

(2) Defense Spending Has Been Repeatedly Cut in Recent Years

Contrary to the prevailing wisdom, defense spending has been repeatedly cut in recent years. 

First, President Obama and Congress have repeatedly reduced actual appropriations to the Department of Defense (051 budget function).  In FY 2012, they reduced regular and war-funding appropriations for the Pentagon by $41.3 billion in non-inflation-adjusted nominal dollars (~$55.2 billion in inflation-adjusted constant dollars) relative to the previous year—which represents roughly an 8 percent spending cut in real terms.  In FY 2011, they also reduced total Pentagon appropriations by $4 billion in nominal dollars (~$18.8 billion in constant dollars)—nearly a 3 percent spending cut in real terms.

Second, President Obama has repeatedly slashed the Pentagon’s long-term spending plans.  In February 2011, the Obama administration’s proposal for Defense Department’s regular budget for FY 2012 cleaved roughly $289 billion in non-inflation adjusted dollars over a 10-year period relative to the previous year’s budget.  In February 2012, the President’s pre-sequestration defense budget proposal for FY 2013 slashed an additional $487 billion in non-inflation adjusted dollars over a 10-year period relative to the previous year’s budget.  In total, these specific reductions will reduce the military’s core budget by $776 billion non-inflation-adjusted dollars over the next decade.  With this track record, it is possible that the White House will propose further long-term defense cuts in February 2013, when the President unveils his proposed defense budget for FY 2014. 

(3) Defense Spending is Not the Main Driver of America’s Debt and Deficit

U.S. federal spending has dramatically grown in recent decades.  However, contrary to the claims of many advocates of massive Pentagon cuts, defense spending is not the main driver of America’s debt and deficit.

First, while federal spending outlays on domestic programs have historically spiraled in growth, outlays on national defense (050 budget function) have stayed comparatively stable—even when the last decade’s supplemental funds for the wars in Afghanistan and Iraq are included.  Figure 1 (see below) compares, in inflation-adjusted constant dollars, federal outlays on national defense (including war funding) with federal outlays on mandatory and discretionary domestic programs since the end of World War II.

Federal spending on domestic programs is mostly consumed by the so-called “big three” mandatory entitlement programs—namely, Social Security, Medicare, and Medicaid.  Roughly 96% spending on all national defense programs is consumed by the Pentagon, with the remainder consumed by the Department of Energy’s nuclear weapons activities in the National Nuclear Security Agency (NNSA), intelligence community activities, and other defense-related programs elsewhere in the Federal Government.

As Figure 1 shows, spending on mandatory and discretionary domestic programs, especially on entitlements, has had nearly continuous growth, and increased almost exponentially since the 1970s.  To help illustrate the point, the U.S. government ended up spending over $5 trillion more on non-defense programs between 2000 to 2010 than what the Congressional Budget Office had originally projected it would spend over that period.  If one adjusts for inflation, then that number climbs to approximately $5.6 trillion in constant dollars.  However, Figure 1 also shows that national defense spending, in contrast to the spiraling growth of federal spending on domestic programs, has remained comparatively stable.

Second, domestic spending—not national defense spending—has been and continues to be the primary driver of total federal spending, and therefore the primary driver of America’s federal debt.  Figure 2—which further refutes the false stereotype of national defense spending’s spiraling historical growth—compares, as a percentage of annual total federal spending, federal outlays for national defense programs (including war funding) with outlays for mandatory and discretionary domestic programs since the end of World War II. 

As Figure 2 illustrates, spending on national defense as a percentage of the U.S. federal budget has trended downwards historically—in contrast to spending on domestic programs, which have trended upwards.  Since the end of the Cold War, defense spending has remained roughly at or below 20 percent of total federal spending, even when the last decade’s war funding is included.  More to the point, when outgoing President Dwight D. Eisenhower warned of the so-called “military-industrial complex” in 1961, 51 cents out of every dollar spent by the federal government went to national defense, while 37 cents went to domestic programs.  In contrast, today less than 19 cents of every dollar spent by the federal government goes to national defense, while more than 72 cents now goes to domestic programs—including Medicare, Medicaid, and Social Security.

The Heritage Foundation has shown that if the United States does not institute major reforms to domestic spending, especially the “big three” mandatory entitlements, then they will eventually consume every dollar of revenue paid by the taxpayer.  As the Heritage Foundation further illustrated, even if the U.S. Government were to immediately eliminate all defense spending, that extreme measure would neither balance the budget nor halt the steady growth of total federal spending.  That’s why Secretary of Defense Leon Panetta (who earlier served as President Clinton’s budget director) has urged policymakers and lawmakers to focus on controlling spiraling mandatory entitlements to mitigate the debt crisis:

“If you’re serious about dealing with the deficit, don’t go back to the discretionary account [which includes defense spending].  Pay attention to the two-thirds of the federal budget that is in large measure responsible for the size of the debt that we’re dealing with.”

Conclusion:  The World Remains a Dangerous Place

It appears that President Obama and Congress prefer to prevent the $500 billion in 10-year defense sequestration cuts from beginning in January 2013.  But as this FPI Analysis has argued, it would be a mistake for policymakers and lawmakers to believe that a substitute $100 billion-to-200 billion in additional defense cuts will be harmless.  They will be consequential.

Although the United States does not face the threat of a rival superpower like the Soviet Union, the absence of a singular apocalyptic threat does not alone make the world a less dangerous place.  In many concrete ways, the security environment of the post-Cold War era is even more demanding on the United States.  As the Brookings Institution’s Robert Kagan, a Member of FPI’s Board of Directors, wrote in the Washington Post:

“The international environment is becoming more, not less, challenging. Iran continues to move closer to obtaining a nuclear weapon, and the prospect of a conflict cannot be dismissed. The outcome of the Arab revolutions remains uncertain. The tumult in Syria threatens to embroil the entire region. The future of Afghanistan and nuclear-armed Pakistan remains worrying. Terrorists continue to expand their efforts in the Middle East and Africa. China’s military is growing, and at a time of changing leadership some forces in the Chinese system are pushing for greater assertiveness in the South China Sea and elsewhere.”

Indeed, General Martin Dempsey frankly told lawmakers that, “In my personal military judgment, formed over 38 years, we are living in the most dangerous time in my lifetime right now.”

As the White House and congressional leaders seek to negotiate a compromise to avert defense sequestration and avoid the looming fiscal cliff, it is imperative therefore that they reject any proposal to cut national defense spending below current levels, and instead seek to protect the Pentagon’s budget with a firewall to prevent from further raiding by the Obama administration or from liberal and libertarian lawmakers.  Failure to do so will strain our current force structure, place the U.S. military on an accelerated path of steep decline, and severely constrain America’s capacity to respond to foreseeable and unforeseeable threats abroad.  With the clarity of retrospect, it is clear that the massive defense cut contained in the Budget Control Act of 2011 was bad policy.  Washington should not make the same mistake again.  The men and women of the U.S. Armed Forces—who tirelessly work to keep America safe and defend our way of life—and the country’s citizens deserve better.

Mission Statement

The Foreign Policy Initiative seeks to promote an active U.S. foreign policy committed to robust support for democratic allies, human rights, a strong American military equipped to meet the challenges of the 21st century, and strengthening America’s global economic competitiveness.
Read More