Defense sequestration: America's strategic cliff

DoD photo by Sgt. Aaron Hostutler

Secretary of Defense Chuck Hagel answers a senator’s question as he testifies before the Senate Armed Services Committee in the Senate Hart Office Building in Washington, D.C., on April 17, 2013. Chairman of the Joint Chiefs of Staff Gen. Martin E. Dempsey and Under Secretary of Defense-Comptroller Robert Hale joined Hagel for the testimony. Hagel is testifying on the Defense Authorization Request for Fiscal Year 2014 and the Future Years Defense Program.

Article Highlights

  • With sequester, estimates are that we lose a 25% of ground forces, third of strategic bombers, 2 carrier groups

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  • Defense spending is only 18% of national budget, but bears 50% of cuts to date

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  • Remember every president since Reagan has found himself engaged in at least one war they never wanted - or expected - to fight

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Editor's note: The following speech was made during the Domenici Institute Forum on New Mexico State University's campus on April 18, 2013.

Thank you Governor Carruthers and the Domenici Institute for this invitation to speak today.

I’ve already had a great day: this morning I met with Aggie ROTC cadets and then had the opportunity to teach two classes on the presidency and the Constitution.

Maybe if my first academic job had been here at New Mexico State, I would have stayed an academic.

But, as is happened, I wound up in Washington, DC, working first in the Senate in the early 1980s.  My boss was the late, great senator from New York, Daniel Patrick Moynihan, from whom I learned much.   And of course, it was in the Senate where you could meet the other giants of the day--such as your own former senator, Pete Domenici.

It’s also wonderful to be back in the Southwest.  I grew up next door in Texas.  And when I worked in the White House, I used to love coming to New Mexico to visit White Sands, and the labs at Sandia and Los Alamos…I also loved getting my fill of red and green chilies, blue corn and sopapillas.

Those were interesting times.  The late '70s had been a period in which our economy was in terrible shape, and on the world stage, and we seemed to be in the face of an ever-expanding threat from the Soviet Union and its proxies.  But, in little over a decade, our economy rebounded, the military had been rebuilt, and the Soviet Union had collapsed. 

Today, like the 70s, we appear to be in dire straits, as well. We have an underperforming economy, expanding deficits, and an apparent desire to do less when it comes to national security and America’s role in the world.  

It is this last point that I want to discuss today.  

In particular, I will be talking about the implications for national security of sequestration—the automatic, across-the-board cuts to the defense budget mandated by the Budget Control Act of 2011.  I will first try and explain what’s happened; then move on to discussing sequestration’s impact.  I will then argue why I don’t think those cuts are justified; and I will conclude with a few remarks on the larger implications of those cuts.

As you can probably guess from the talk’s not-so-subtle subtitle -- “America’s Strategic Cliff” – I’m not likely to be in favor of us jumping off.

But, first things first, how did we get here?  

Faced with mounting deficits and debt, in August of 2011, Congress passed, and the President signed, the Budget Control Act.  As part of the deal to raise the nation’s debt limit ceiling, the bill mandated there be $917 billion in cuts over ten years, divided between the budgets for national security and domestic programs.  However, entitlement programs, such as Medicare and Social Security were essentially exempted from any cuts.

Then, to help bring government spending under more control, the law also established a special House-Senate committee, the so-called “super committee,” whose job it was to cut another $1.5 trillion from the government’s budget over the coming decade.  

To provide an incentive to the committees’ members to reach an agreement, the act stipulated that, if no agreement was reached, there would be additional, automatic cuts to the budget totaling $1.2 trillion over ten years.  And, again, these cuts would come almost exclusively from the federal government’s budgets for defense and non-entitlement domestic programs. 

The theory was that, the fallout from such cuts would be so horrendous -- both programmatically and politically -- that the members of the “super committee” would surely reach an agreement.  

But they didn’t, and the result is that, starting this past month, the law requires nearly $500 billion more to be taken from the defense budget over the next decade…starting with a cut of more than $40 billion to this year’s defense budget.

But, wait a minute, you say, neither the Senate nor the House budget resolutions, nor the President’s just released federal budget, has these mandated defense cuts in them.  Isn’t there a bipartisan agreement then to avoid this second round of cuts?

Well, no.  If an agreement isn’t reached on a federal budget before the start of the fiscal year in October, then, regardless of what the president or Congress have proposed for next year, the law’s mandated cuts—sequestration—will still kick in.  

And a deal on taxes and spending with the Congress seems unlikely, given that President Barack Obama and the Republican-controlled House of Representatives have been trying for two years to achieve one.  I’m typically an optimist, but, right now, I think you might get better odds on the Houston Astros making it to the World Series this year than a budget agreement being reached.

So, where does that leave us?  Well, first, as a result of the initial $487 billion in cuts to defense required by the Budget Control Act starting in 2012, a significant change was made in January 2012 to our military’s strategic posture.  Ever since World War II, we have asked our military to be prepared to fight two major conflicts at once.  

The logic was that, if the nation was engaged in one war, on one side of the globe, we didn’t want our adversaries believing they could take advantage of that situation while we were engaged elsewhere.  

For national security purposes, it was the equivalent of a family having both a savings account for the unexpected, and an insurance policy for the truly unexpected.  However, in January 2012, with something called the Defense Policy Guidance, the administration announced that, because of the cuts to defense, we would no longer hold to that two-war standard.  

We would, still have the capacity to fight one major conflict, but would only be capable of handling a smaller disturbance elsewhere--and, even then, only for a limited period. 

But, of course, this is the situation before the second set of mandated cuts—sequestration—has occurred.  What’s in store for the men and women of the military, and the civilians who work in government and the defense industry, as this next $490 billion in cuts kicks in?  The short answer is that there will be a dramatic drop in military readiness over the rest of the year, furloughs for government workers, and unemployment for many working in the defense sector.

And because sequestration was delayed until April, the Pentagon will have to make this full year’s cut over the next half-year.

For the Army, this means limiting combat training only for those units on their way to Afghanistan.  For the Navy, out of a total of 10 carrier air wings, 6 will either be grounded or have their flight time restricted to less than combat proficiency.  And instead of two aircraft carriers operating in the Persian Gulf Theater -- as we have had for the last several years -- there will be only one, or possibly even none.  

And, instead of having two or three carriers capable of “surging” in case of an unexpected crisis, as traditionally has been the case, the Navy will be down to one carrier for much of the next two years.  

As for the Air Force, it is grounding 17 combat air squadrons—that is, about a third of its active-duty combat aircraft, including, ironically, the F-22 squadron that just recently was flying over South Korea in an effort to send a message of deterrence to North Korea’s new leader, Kim Jong-un.  

And let’s be clear, military readiness always costs more, and takes longer to regain, than to keep up in the first place.

That’s today’s bad news.  But it doesn’t stop there if the full amount of the ten-year’s worth of sequestration cuts is not rolled back.  

As former Secretary of Defense Leon Panetta bluntly put it: these cuts will have a “devastating effect” on our defense capabilities.  He warned lawmakers after the Budget Control Act was first passed, that sequestration would likely result in a “[t]he smallest ground forces since 1940,” “[t]he smallest tactical fighter force in the history of the Air Force” and “a fleet of fewer than 230 ships, the smallest level since 1915,” – a fleet size I might add that 70 to 80 ships short of what even the most optimistic Naval officer thinks the Navy needs to carry out its global duties.

As a result of sequestration, estimates are that we would have to eliminate, for example, a quarter of our ground forces, a third of our strategic bombers, and at least 2 battle carrier groups.  As, Chairman of the Joint Chiefs General Martin Dempsey said last year, “Anything beyond” the first round of cuts mandated by the Budget Control Act, will force us to go “back to the drawing board” when it comes to our national security strategy.

Nor should we ignore what sequestration will do to the defense industrial base.  We still talk about the defense industry as though it were the character and size of the so-called “defense industrial complex” described by President Eisenhower in the 1950s.  But, in fact, if you were to look at a list of the 100 largest companies by market capital in 2012, America’s largest defense company, Lockheed Martin, wouldn’t appear on the list.  

Or, if you were to look at the Fortune 500 annual ranking of America’s largest corporations, Lockheed would crack the list, but do so at number 58, far behind companies such as Exxon, Wal-Mart, Apple, and United Health.  

This is not an advertisement for rushing out and giving charitable contributions to Lockheed, but just a reminder that defense cuts have already had, and will have, an impact on a defense industry that we once called “the arsenal of democracy.”  As the budget declines further, personnel will be let go, accelerating the loss of skills and knowledge necessary to produce the best weapon systems in the world and, in turn, reducing the number of large and small companies that think that there is a future in the defense business.  And, like military readiness, rebuilding that industrial capacity, should the nation require it, is a lot more difficult than preserving it in the first place.

But, many of you might well ask, how can the situation be so dire?  Didn’t the defense budget essentially double during the Bush years?  Hasn’t the secretary of defense referred to this a “gusher” of money?

The answer is that it did, and he did indeed say that…but one has to put that increase in context to understand why it’s not as impressive as it first seems, or why speaking of the increase as a “gusher” is somewhat misleading.

First, almost two-thirds of that increase has been spent to fight the wars in Iraq and Afghanistan and pay for the increase in salaries and benefits for the men and women that have been fighting those wars.  The base defense budget—that is, the defense budget minus the monies spent on the wars—actually grew at an average real rate of 4.4% annually.  An increase to be sure, but hardly a gusher.

Moreover, by just looking at the growth in the defense budget that occurred from 2001 to 2009 we leave out another important fact.  When President Clinton was leaving the White House, the country’s defense burden had fallen to a post–World War II low—3 percent of the nation’s GDP.  The prior eight years had been marked by what defense analysts called the “procurement holiday”—a prolonged period in which too few new military platforms—planes, helicopters, ships and the like—were being bought to replace aging inventories of military equipment. It was also a period in which the general readiness of the Navy and the Army to go to war if necessary was low. 

In short, when one talks about the increase in the defense budget, one has to remember the hole the American military was in.  And, even so, the defense burden of the base defense budget at the end of President Bush’s term in 2009 stood at approximately 3.5 percent of the GDP… a percentage still quite low by post World War II standards and about average for the post-Cold War period.

But shouldn’t the military, given our fiscal problems, pay its fair share in fixing that problem?  Doesn’t everyone have to chip in?  Well, the reality is that the military has more than paid its due.  Defense spending represents only 18% of our national budget but, under the Budget Control Act, the Pentagon has absorbed 50% of the cuts to date. 

In addition, the next $490-plus billion that is sliced from defense comes on top of the nearly $1 trillion already cut since 2009.  In other words, more than the equivalent of two full years of current DoD budgets—war expenses included—will have been cut from planned spending over the next decade if sequestration is not reversed. 

Those cuts have led to the cancellation of dozens of weapon programs—increasing the existing problem of recapitalizing the military.  As former Secretary of Defense Robert Gates said prior to his stepping down from that post, “When it comes to our military modernization accounts, the proverbial ‘low-hanging fruit’…have not only been plucked, they have been stomped on and crushed. What remains are much-needed capabilities.”

To take just two specific examples from the Air Force: first, the fleet of air-refueling tankers we use to keep our bombers and fighters in the air and on patrol date from the late 1950s and early 1960s.  The civilian version of those tankers—the Boeing 707—hasn’t flown in decades.  No passenger in his right mind would climb in one today.  

Similarly, the Air Force’s current main front-line fighter, the F-15, flew for the first time in 1972.  Now retired Air Force General David Deptula recounts how he flew one particular F-15 when it first came off the assembly line in 1978 and, then, two decades later, found himself making an emergency landing in Turkey in the same plane as old, disintegrating wiring caused his control panel to go haywire.  But then he discovered, a decade later in 2008, that his son, Lt. Deptula was now flying the same exact plane while stationed at a base in Japan.

Both planes need replacing; both planes are increasingly costly to keep flying; but the planned replacements for them may well be on the chopping block if sequestration is not reversed.

Finally, sequestration does little to address the real, long-term source of the federal government’s fiscal problem—the unchecked growth in spending on social entitlements.  In 2012, Medicaid, Medicare and Social Security accounted for more than $1.5 trillion in federal spending…3 times what the country will spend on base defense needs this year.  And, as the graph up on the screen indicates, entitlement growth is increasingly squeezing out all so-called discretionary spending, both domestic and defense.

According to the president’s just released budget, spending on entitlements will increase by some $1 trillion from 2014 to 2023.  Put another way, the amount “saved” from defense sequestration will essentially pay for the increase in entitlement spending over the next decade.

But, come on, you might say: Doesn’t the Pentagon waste money and, even with these cuts to defense spending, don’t we spend more on defense than the next six major powers combined?  And the answer to both questions is yes.

The fact is that all government agencies waste money.  They are not for-profit entities, and it is inevitable that money will be wasted.  But we shouldn’t kid ourselves that, even if we were to cut defense to the bone, inefficiencies will go away.

This doesn’t mean that efforts to reform the Pentagon’s acquisition practices, or reform the increasingly costly military benefits programs, or reduce overhead and staffing, shouldn’t be addressed.  But there is no silver bullet here, and the savings in many of these cases, while perhaps significant over time, will not fix the current problem.

As for outspending others, the real questions should be: What do we ask our military to do? What role in the world do we want to play as a nation? And who will our enemies and adversaries likely be?

That China’s defense budget is estimated to be only $170 billion is cold comfort.  First, imagine what that budget would be if the Chinese military had to pay its soldiers, airmen and sailors salaries comparable to what their counterparts in the U.S. military earn—or imagine what their military research budget would be if they weren’t able to steal so much of our own R & D work?  Also, let’s keep in mind that China’s military expenditures are focused primarily on gaining military leverage in one, distinct region of the world—East Asia—while the US has global responsibilities.

In addition, we don’t always know what the future holds.  Every president since Ronald Reagan has come into office saying he intended to have a more modest foreign policy.  Yet every president since Reagan has found himself engaged in at least one war that he never wanted to, or expected to, fight.  As the saying goes, when it comes to national security decisions, the world gets a vote too.

In 2010, a congressionally-mandated, bipartisan panel led by Bush national security advisor Stephen Hadley and Clinton defense secretary William Perry were asked to review the Pentagon’s last Quadrennial Defense Review.  In their report, they concluded that, instead of letting the budget drive strategy, we should recognize that, since World War II, the US military has had four enduring tasks: defend the homeland, assure access to the great commons (the sea, the air, space and, now, cyberspace), preserve a favorable balance of power across Eurasia and provide for the global common good through such actions as disaster relief when needed, and when we can.

What the commission also concluded is that we were no longer providing the military with the planned resources so that it can safely, and effectively, carry out those core tasks.

As this second chart shows, defense has become far less a national priority when it comes to what we are willing to spend our tax dollars on.

My concluding point is that these tasks, and the associated forward-leaning military strategy that has framed it since the end of World War II, has given us more than six decades of peace between the great powers—something the world has not seen in some time.  

As a result, it has also helped set the conditions for both a ten-fold expansion around the word in democratic states and an international economic order—which whatever its current problems—has raised hundreds and hundreds of millions out of poverty, and created more prosperity, for more people, than in anytime in history.  

Now, American military preeminence is not the only reason for these gains, but it surely is a critical one.  And while we know what today’s costs for keeping this global preeminence are, I’m afraid, we are losing sight of what the much larger bill might be, should we lose it.  

Sequestration is, indeed, to my mind, forcing America off the strategic cliff.

Thank You.


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