If President Obama is serious about controlling spending, he can’t exempt the Pentagon. In announcing a three-year spending freeze, he exempted all security-related funding. This exemption applies to the budgets of the Pentagon, Department of Homeland Security, foreign aid and the Department of Veterans Affairs. Because the budgets of these agencies, particularly that of the Pentagon, are responsible for a large and increasing share of the discretionary portion of the federal budget, the president’s spending freeze will have a marginal effect.
Rather than exclude these accounts from the freeze for fear of appearing weak on defense, the president should mandate that the baseline defense budget also be frozen.
Indeed, freezing the base defense budget at its current level of about $532 billion would not hinder the Pentagon’s ability to conduct the wars in Afghanistan and Iraq because they will be funded separately through a $160 billion supplemental.
Moreover, freezing defense spending would force the Pentagon to make the hard choices it has avoided over the past decade. In the last ten years, the baseline defense budget nearly doubled from $290 billion in FY2000 to $532 billion, an increase of $242 billion or 83 percent, or more than 8 percent a year. Even if one controls for inflation, the real growth amounts to nearly 50 percent, about 5 percent a year in real terms. By way of contrast, non-defense discretionary spending, which the administration proposes to freeze, has averaged only 5 percent annual growth, or 2 percent real growth during that same period.
Additionally, spending on future weapons systems has outpaced spending on our troops. The Center for Strategic and Budgetary Assessments has pointed out (pdf) that the operations and support portion of the base defense budget – which includes costs for recruitment, training, military and civilian personnel pay, and operating and maintaining equipment – has increased.
Yet it has risen less in real terms than the investment portion of the budget, which includes procurement, research and development, and construction. The operations and support part has increased by 3.5 percent a year in real terms over the past decade, while the growth in investment has exceeded 5 percent.
To keep the baseline budget level at $532 billion, the Pentagon could reduce the FY2011 projected budget level for weapons development and purchases from about $190 billion to $170 billion. This could be done through a number of reductions in baseline defense spending. In particular, the U.S. government could acquire $20 billion in savings by taking some of the following measures, which I recommended in my recent report, Paying for the Troop Escalation in Afghanistan (pdf):
-Cut missile defense, while maintaining funding for its continued research and development. Saves about $6 billion.This would still leave the FY 2011 baseline defense budget $15 billion higher in real terms than it was at the height of the Reagan buildup. And by using a unified approach to national security budgeting—which brings together national security spending from the Departments of Defense, Homeland Security, State, and the U.S. Agency for International Development—additional funds could be transferred from DOD to the Department of Homeland Security so that its budget is not cut.
-Keep the Virginia-class attack submarine production steady at one per year instead of ramping up to two per year in FY 2011. Saves about $2 billion
-Cancel the Zumwalt-class DDG-1000 at two ships. Saves about $1 billion
-Cancel the MV-22 Osprey and substitute cheaper helicopters while continuing production of the CV-22. Saves about $2 billion
-Cancel the Expeditionary Fighting Vehicle program. Saves about $294 million
-Cut the FY 2011 F-35 purchase to twenty, slow down production of the aircraft, cancel the alternate engine program, and replace the cut planes with drones. Saves about $4 billion
-Cut FY 2011 funding for the Army’s Future Combat Systems by one third. Saves about $763 million
-Continue offensive space-based weapons development at a low rate. Saves about $100 million
-Reduce the U.S. nuclear arsenal to 600 deployed warheads and 400 in reserve. Saves about $13 billion