Defense in need of fiscal discipline

Last Tuesday, House Budget Committee Chairman Paul Ryan (R-Wis.) proposed a 2012 budget that caves to the Pentagon bureaucracy and spares the Department of Defense from fiscal discipline. Ryan’s spending plan mimics Defense Secretary Robert Gates’s, which is more about the pretense of savings than actual prudence. It calls for $178 billion in reductions over the next five years, but most of these reductions are illusory and none of them lower the budget. Instead, they merely slow the growth that the department has said it would prefer.

{mosads}The larger part of this savings — $100 billion in efficiencies squeezed from the military services — will never leave the Pentagon’s coffers. Instead, as a reward for disciplining out-of-control programs like the Expeditionary Fighting Vehicle, the services will keep the money for reinvestment in weapons and personnel. Gates made this abundantly clear last August: “This is not about cutting the defense budget,” he commented. “This is about a reallocation internally.”

Cutting programs without returning the money to the Treasury is not savings. Nor is it fiscally disciplined.

Much the same goes for the additional $78 billion that Gates found elsewhere in the Pentagon. Although these savings are meant for debt reduction, they can be achieved only by speculating on uncontrollable events in the future.

Gates identifies $11 billion of this savings from unnamed “smaller efforts across the enterprise,” $11 billion by streamlining his office and other defense agencies, and $1 billion more from cutting back on public reports. But, as the Pentagon has confessed, its accounts are so disorganized as to be un-auditable. That doesn’t bode well for finding efficiency, especially after Gates leaves.

Meanwhile, the Pentagon claims $4 billion from delaying the F-35 fighter jet’s procurement while adding the same sum back into the program’s testing phase.

Another $12 billion comes from freezing the pay of defense civilians, a tough but fair measure consistent with what private-sector workers have experienced recently. This was Obama’s decision, though — an overture he made to Republicans last November, not a decision by Gates. And a further $6 billion of this savings hinges on the Army and Marines shrinking by 47,000 troops in 2015-2016. Even the secretary says this is conditional since no one knows what our ground commitments will look like then.

Yet the most intangible savings come from the Pentagon’s decision to lower its estimate of inflation. It is notorious for arguing that inflation grows especially quickly in defense, requiring its budgetary “cost-of-living” adjustment to be higher than that for other departments. Lowering that estimate magically wipes $4 billion off the next five years — a bookkeeper’s sleight of hand.

Some credit is due to Gates, however. Just over a third of this package ($29 billion) comes from modernizing the healthcare cost-sharing for working-age retirees ($7 billion), freezing the size of the civilian workforce ($13 billion), cutting back on services contractors ($6 billion) and closing unnecessary organizations like Joint Forces Command ($3 billion). A good part of this may be achievable and measurable.

Still, the American taxpayer demands more from Gates and much more from Rep. Ryan. As the budget chairman, Ryan is supposed to prioritize spending restraint and responsibility, neither of which is possible when parroting the interested position of the bureaucracy. Internal transfers and imagined cuts will not contribute to fiscal disciple.

As Republicans like Eisenhower, Nixon, Ford and Bush Sr. have shown, the United States has a national security interest in real budget discipline. Congress must insist that the savings Gates claims are in fact saved, that efficiencies left in the hands of the Services are returned to the Treasury, and that remaining Pentagon resources are scrutinized with the same rigor applied to other spending. Everything they find should be used to pay down the debt, allowing us to rebuild our economic strength on which national security depends.

Adams is a professor of international relations at American University’s School of International Service and a distinguished fellow at the Stimson Center. Leatherman is a research analyst at the Stimson Center and regular contributor to its blog, The Will and the Wallet.