VI: DEFENSE SPENDING

What, then, is the price of continued American geopolitical leadership and military preeminence?

A finely detailed answer is beyond the scope of this study. Too many of the force posture and service structure recommendations above involve factors that current defense planning has not accounted for. Suffice it to say that an expanded American security perimeter, new technologies and weapons systems including robust missile defenses, new kinds of organizations and operating concepts, new bases and the like will not come cheap. Nonetheless, this section will attempt to establish broad guide- lines for a level of defense spending sufficient to maintain America military pre-eminence. In recent years, a variety of analyses of the mismatch between the Clinton Administration’s proposed defense budgets and defense program have appeared. The estimates all agree that the Clinton program is underfunded; the differences lie in gauging the amount of the shortage and range from about $26 billion annually to $100 billion annually, with the higher numbers representing the more rigorous analyses.

Trends in Defense Spending

For the first time in 15 years, the 2001 defense budget may reflect a modest real increase in U.S. defense spending. Both President Clinton’s defense budget request and the figures contained in the congressional budget resolution would halt the slide in defense budgets. Yet the extended paying of the “peace dividend” – and the creation of today’s federal budget surplus, the product of increased tax revenues and reduced defense spending – has created a severe “defense deficit,” totaling tens of billions of dollars annually.

Use of the post-Cold War “peace dividend” to balance the federal budget has created a “defense deficit” totaling tens of billions of dollars annually.

The Congress has been complicit in this defense decline. In the first years of the administration, Congress acquiesced in the sharp reductions made by the Clinton Administration from the amount projected in the final Bush defense plan. Since the Republicans won control of Congress in 1994, very slight additions have been made to administration defense requests, yet none has been able to turn around the pattern of defense decline until this year. Even these in-creases were achieved by the use of accounting gimmicks that allow the government to circumvent the limitations of the 1997 balanced budget agreement.

Through all the accounting gimmicks, defense spending has been almost perfectly flat – indeed, the totals have been less than $1 billion apart – for the past four years. The steepest declines in defense spending were accomplished during the early years of the Clinton Administration, when defense spending levels fell from about $339 billion in 1992 to $277 billion in 1996. The cumulative effects of reduced defense spending over a decade or more have been even more severe. A recent study by the Center for Strategic and International Studies, Avoiding the Defense Train Wreck in the New Millennium, compared the final Bush defense plan, covering 1994 through 1999, with the defense plan of the Clinton Administration and found that a combination of budget changes and internal Pentagon actions had resulted in a net reduction in defense spending of $162 billion from the Bush plan to the Clinton plan. Congressional budget increases and supplemental appropriations requests added back about $52 billion, but that spending for the most part covered the cost of contingency operations and other readiness shortfalls – it did not buy back much of the modernization that was deferred. Compared to Bush-era budgets, the Clinton Administration reduced procurement spending an average of $40 billion annually. During  the period from 1993 to 2000, deferred procurements  – the infamous “procurement bow wave” – more than doubled from previous levels to $426 billion, according to the report.

The CSIS report is but the most recent in a series of reports gauging the size of the mismatch between current long-term defense plans and budgets. The Congressional Budget Office’s latest estimate of the annual mismatch is at least $90 billion. Even the 1997 Quadrennial Defense Review itself allowed for a $12-to-15-billion annual funding shortfall; now the Joint Chiefs of Staff, according to news reports, are insisting on a $30-billion-per-year increase in defense spending. In 1997 the Center for Strategic and Budgetary Assessments  calculated the annual shortfall at approximately $26 billion and has now increased its total to $50 billion; analyst Michael O’Hanlon of the Brookings Institution pegs that gap at $27 billion, at a minimum.

Perhaps more important than the question of which of these estimates best calculates the amount of the current defense shortfall is the question of what costs are not captured. All of these estimates measure the gap between current defense plans and programs and current budgets; they make no allowance for the new missions and needs of the post-Cold War world. They do not capture the costs of deploying effective missile defenses. They do not account for the costs of constabulary missions. They do not consider the costs of transformation. Nor do they calculate the costs of the other recommendations of this report, such as strengthening, reconfiguring, and repositioning today’s force. 

In fact, the best way to measure defense spending over longer periods of time is as a portion of national wealth and federal spending. By these metrics, defense budgets have continued to decline even as Americans have become more prosperous in recent years. The defense budget now totals less than 3 percent of the gross domestic product – the lowest level of U.S. defense spending since the Depression. Defense accounts for about 15 percent of federal spending – slightly more than interest on the debt, and less than one third of the amount spent on Social Security, Medicare and other entitlement programs, which account for 54 percent of federal spending. As the annual federal budget has moved from deficit to  surplus and more resources have become available, there has been no serious or sustained effort to recapitalize U.S. armed forces.

As troublesome as the trends of the past decade have been, as inadequate as current budgets are, the longer-term future is more troubling still. If current spending levels are maintained, by some projections, the amount of the defense shortfall will be almost as large as the defense budget itself by 2020 – 2.3 percent compared to 2.4 percent of gross domestic product. In particular, as modernization  spending slips farther and farther behind requirements, the procurement bow wave will reach tsunami proportions, says CSIS: “By continuing to kick the can down the road, the military departments will, in effect, create a situation in which they require $4.4 trillion in procurement dollars” from 2006 through 2020 to maintain the current force.

After 2010 – seemingly a long way off but well within traditional defense planning horizons – the outlook for increased military spending under current plans becomes even more doubtful. In the coming decades, the network of social entitlement programs, particularly Social Security, will generate a further squeeze on other federal spending programs. If defense budgets remain at projected levels, America’s global military preeminence will be impossible to maintain, as will the world order that is secured by that preeminence.

Budgets and the Strategy Of Retreat

Recent defense reviews, and the 1997 Quadrennial Defense Review and the accompanying report of the National Defense Panel especially, have framed the dilemma facing the Pentagon and the nation as a whole as a question of risk. At current and planned spending levels, the United States can preserve current forces and capabilities to execute current missions and sacrifice modernization, innovation and transformation, or it can reduce personnel strength and force structure further to pay for new weapons and forces. Despite the QDR’s rhetoric about shaping the current strategic environment, responding to crises and preparing now for an uncertain future, the Clinton Administration’s defense plans continue to place a higher priority on immediate needs than on preparing for a more challenging technological or geo-political future; as indicated in the force posture section above, the QDR retains the two-war standard as the central feature of defense planning and the sine qua non of America’s claim to be a global superpower. The National Defense Panel, with its call for a “transformation strategy,” argued that the “priority must go to the future.” The two-war standard, in the panel’s assessment, “has become a means of justifying current forces. This approach focuses resources on a low-probability scenario, which consumes funds that could be used to reduce risk to our long-term security.”

If defense spending remains at current levels, U.S. forces will soon be too old or too small.

Again, the CSIS study’s affordability assessments suggest the trade- offs between manpower and force structure that must be made under current budget constraints. For  example, CSIS estimates that the cost of modernizing the current 1.37 million-man force would require procurement spending of $164 billion per year. While we might not agree with every aspect of the methodology under-lying this calculation, the larger point is clear: if defense spending remains at current levels, as current plans under the QDR assume, the Pentagon would only be able to modernize a little more than half the force. Under this scenario, U.S. armed forces would become increasingly obsolescent, expensive to operate and outclassed on the battlefield. As the report concludes, “U.S. military forces will lose their credibility both at home and abroad regarding their size, age, and technological capabilities for carrying out the national military strategy.” Conversely, adopting the National Defense Panel approach of accepting greater risk today while preparing for the future would  require significant further cuts in the size of U.S. armed forces. According to CSIS, a shift in resources that would up the rate of modernized equipment to 76 percent – not a figure specified by the NDP but one not inconsistent with that general approach – would require reducing the total strength of U.S. forces to just 1 million, again assuming 3 percent of GDP were devoted to defense spending. Thus, at current spending levels the Pentagon must choose between force structure and modernization.

When it is recalled that a projection of defense spending levels at 3 percent of GDP represents the most optimistic assumption about current Pentagon plans, the horns of this dilemma appear sharper still: at these levels, U.S. forces soon will be too old or too small. Following the administration’s “live for today” path will ensure that, in some future high-intensity war, U.S. forces will lack the cutting-edge technologies that they have come to rely on. Following the NDP’s “prepare for tomorrow” path, U.S. forces will lack the manpower needed to conduct their current missions. From constabulary duties to the conduct of major theater wars, the ability to defend current U.S. security interests will be placed at growing risk.

In a larger sense, these two approaches differ merely about the nature and timing of  a strategy of American retreat. By committing forces to the Balkans, maintaining U.S. presence in the Persian Gulf, and by responding to Chinese threats to Taiwan and sending peacekeepers to East Timor, the Clinton Administration has, haltingly, incrementally and often fecklessly, taken some of the necessary steps for strengthening the new American security perimeter. But by holding defense spending and military strength to their current levels, the administration has compromised the nation’s ability to fight large-scale wars today and consumed the investments that ought to have been made to preserve American military preeminence tomorrow. The reckoning for such a strategy will come when U.S. forces are unable to meet the demands placed upon them. This may happen when they take on one mission too many – if, say, NATO’s role in the Balkans expands, or U.S. troops enforce a demilitarized zone on the Golan Heights – and a major theater war breaks out. Or, it may happen when two major theater wars occur nearly simultaneously. Or it may happen when a new great power – a rising China – seeks to challenge American interests and allies in an important region.

By contrast, a strategy that sacrifices force structure and current readiness for future transformation will leave American armed forces unable to meet today’s missions and commitments. Since today’s peace is the unique product of American preeminence, a failure to preserve that preeminence allows others an opportunity to shape the world in ways antithetical to American interests and principles. The price of American preeminence is that, just as it was actively obtained, it must be actively maintained. But as service chiefs and other senior military leaders readily admit, today’s forces are barely adequate to maintain the rotation of units to the myriad peacekeeping and other constabulary duties they face while keeping adequate forces for a single major theater war in reserve.

An active-duty force reduced by another 300,000 to 400,000 – almost another 30 percent cut from current levels and a total reduction of more than half from Cold-War levels – to free up funds for modernization and transformation would be clearly inadequate to the demands of today’s missions and national military strategy. If the United States withdrew forces from the Balkans, for example, it is unlikely that the rest of NATO would be able to long pick up the slack; conversely, such a withdrawal would provoke a political crisis within NATO that would certainly result in the end of American leadership within NATO; it might well spell the end of the alliance itself. Likewise, terminating the no-fly- ones over Iraq would call America’s position as guarantor of security in the Persian Gulf into question; the reaction would be the same in East Asia following a withdrawal of U.S. forces or a lowering of American military presence. The consequences sketched by the Quadrennial Defense Review regarding a retreat from a two-war capability would inexorably come to pass: allies and adversaries alike would begin to hedge against American retreat and discount American security guarantees. At current budget levels, a modernization or transformation strategy is in danger of becoming a “no-war” strategy. While the American peace might not come to a catastrophic end, it would quickly begin to unravel; the result would be much the same in time.

The Price of American Preeminence

As admitted above, calculating the exact price of armed forces capable of maintaining American military preeminence today and extending it into the future requires more detailed analysis than this broad study can provide. We have advocated a force posture and service structure that diverges significantly both from current plans and alternatives advanced in other studies. We believe it is necessary to increase slightly the personnel strength of U.S. forces – many of the missions associated with patrolling the expanding American security perimeter are manpower-intensive, and planning for major theater wars must include the ability for politically decisive campaigns including extended post-combat stability operations. Also, this expanding perimeter argues strongly for new overseas bases and forward operating locations to facilitate American political and military operations around the world.

At the same time, we have argued that established constabulary missions can be made less burdensome on soldiers, sailors, airmen and Marines and less burdensome on overall U.S. force structure by a more sensible forward-basing posture; long-term security commitments should not be supported by the debilitating, short-term  rotation of units except as a last resort. In Europe, the Persian Gulf and East Asia, enduring U.S. security interests argue forcefully for an enduring American military presence. Pentagon policy-makers must adjust their plans to accommodate these realities and to reduce the wear and tear on service personnel. We have also argued that the services can begin now to create new, more flexible units and military organizations that may, over time, prove to be smaller than current organizations, even for peacekeeping and constabulary operations.

Even as American military forces patrol an expanding security perimeter, we believe it essential to retain sufficient forces based in the continental United States capable of rapid reinforcement and, if needed, applying massive combat power to stabilize a region in crisis or to bring a war to a successful conclusion. There should be a strong strategic synergy between U.S. forces overseas and in a reinforcing posture: units operating abroad are an indication of American geopolitical interests and leadership, provide significant military power to shape events and, in wartime, create the conditions for victory when reinforced. Conversely,  maintaining the ability to deliver an unquestioned “knockout punch” through the rapid introduction of stateside units will increase the shaping power of forces operating overseas and the vitality of our alliances. In sum, we see an enduring need for large-scale American forces.

But while arguing for improvements in today’s armed services and force posture, we are unwilling to sacrifice the ability to maintain preeminence in the longer term. If  the United States is to maintain its preeminence – and the military revolution now underway is already an American-led revolution – the Pentagon must begin in earnest to transform U.S. military forces. We have argued that this transformation mission is yet another new mission, as compelling as the need to maintain European stability in the Balkans, prepare for large, theater wars or any other of today’s missions. This is an effort that involves more than new weaponry or technologies. It requires experimental units free to invent new concepts of operation, new doctrines, new tactics. It will require years, even decades, to fully grasp and implement such changes, and will surely involve mistakes and inefficiencies. Yet the maintenance of the American peace requires that American forces be preeminent when they are called upon to face very different adversaries in the future.

The program we advocate – one that would provide America with forces to meet the strategic demands of the world’s sole superpower – requires budget levels to be increased to 3.5 to 3.8 percent of the GDP.

Finally, we have argued that we must restore the foundation of American security and the basis for U.S. military operations abroad by improving our homeland defenses. The current American peace will be short-lived if the United States becomes vulnerable to rogue powers with small, inexpensive arsenals of ballistic missiles and nuclear warheads or other weapons of mass destruction. We cannot allow North Korea, Iran, Iraq or similar states to undermine American leadership, intimidate American allies or threaten the American  homeland itself. The blessings of the American peace, purchased at fearful cost  and a century of effort, should not be so trivially squandered.

Taken all in all, the force posture and service structure we advocate differ enough from current plans that estimating its costs precisely based upon known budget plans is unsound. Likewise, generating independent cost analyses is beyond the scope of this report and would be based upon great political and technological uncertainties – any detailed assumptions about the cost of new overseas bases or revolutionary weaponry are bound to be highly speculative absent rigorous net assessments and program analysis. Nevertheless, we believe that, over time, the program we advocate would require budgets roughly equal to those necessary to fully fund the QDR force – a minimum level of 3.5 to 3.8 percent of gross domestic product. A sensible plan would add $15 billion to $20 billion to total defense spending annually through the Future Years Defense Program; this would result in a defense “topline” increase of $75 billion to $100 billion over that period, a small percentage of the $700 billion on-budget surplus now projected for that same period. We believe that the new president should commit his administration to a plan to achieve that level of spending within four years.

In its simplest terms, our intent is to provide forces sufficient to meet today’s missions as effectively and efficiently as possible, while readying U.S. armed forces  for the likely new missions of the future. Thus, the defense program described above would preserve current force structure while improving its readiness, better posturing it for its current missions, and making selected investments in modernization. At the same time, we would shift the weight of defense recapitalization efforts to transforming U.S. forces for the decades to come. At four cents on the dollar of America’s national wealth, this is an affordable program.

It is also a wise program. Only such a force posture, service structure and level of defense spending will provide America and its leaders with a variety of forces to meet the strategic demands of the world’s sole superpower. Keeping the American peace requires the U.S. military to undertake a broad array of missions today and rise to very different challenges tomorrow, but there can be no retreat from these missions without compromising American leadership and the benevolent order it secures. This is the choice we face. It is not a choice between preeminence today and preeminence tomorrow. Global leadership is not something exercised at our leisure, when the mood strikes us or when our core national security interests are directly threatened; then it is already too late. Rather, it is a choice whether or not to maintain American military preeminence, to secure American geopolitical leadership, and to preserve the American peace.

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