Defense’s Death Spiral: The Increasing Irrelevance of More Spending

The most striking feature of this year's defense budget debate was that there was none. One reason for the absence of the usual acrimony accompanying the authorization of billions of federal dollars was congressional exhaustion from the impeachment proceedings. Another and more important reason was that the military's problems -- the "three Rs" of readiness, recruiting, and retention -- were well reported. President Clinton could not afford to be caught cutting defense dollars while bombing Iraq and Kosovo. The administration's unease with traditional defense-cutting arguments has spread across both aisles on Capitol Hill, where almost any vote on three-R spending is treated as a litmus test for patriotism. Thus in February, after only one day of debate, the Senate voted 91-8 for a military pay raise that by itself could amount to $55 billion over ten years. The House of Representatives, which could not even pass a resolution supporting the air war in Kosovo, voted overwhelmingly for a $13.1 billion emergency military spending bill only days later.

Hawks should find President Clinton's proposed $112 billion increase in military spending over the next six years cause for celebration. The armed forces have simultaneously been downsized and run ragged by an unprecedented number of protracted overseas deployments. The Pentagon has managed thus far by robbing funds intended for future programs and equipment, but even that tactic has lost its useful life. With combat readiness near a 20-year low, morale suffering, and acquisition sorely underfunded, the military could use the cash.

Even hawks should be troubled, however. The defense budget crisis that forced the president's hand did not happen by accident. True, top generals and admirals downplayed their readiness woes until they were too obvious to hide and then sprang them on Congress when the government surplus became evident, giving the crisis a sudden and random character. The capricious winds of budgets and strategies had apparently collided to the Pentagon's disadvantage. But the truth is that the groundwork for the military's budget crisis was laid long in advance and was fully predictable. And the same system that gave us this defense "train wreck" will suck up and waste even more substantial increases in military spending for the foreseeable future unless Washington makes significant changes.

The Pentagon is locked in a budgetary death spiral simply because the way it thinks about the world has not caught up with the way it spends money. The process is the problem. The military programs, strategies, and weapon systems funded by the $270 billion annual defense budget match neither the administration's national security strategy nor the Pentagon's own blueprint for future military operations.

THE BLURRED VISION THING

Since its inception in 1947, the Pentagon has existed as a loose confederation of the armed services. The Army, Navy (which also budgets for the Marine Corps), and Air Force are obligated to recruit, train, equip, and organize their own forces. For this they receive around 85 percent of the Pentagon budget in seemingly fixed (and fairly equal) proportions, together with the legal authority to spend it as they will. Periodic reforms and reorganizations have tried to centralize planning authority within the Pentagon, leaving behind an alphabet soup of some 30 procedures intended to marry budgeting with strategy. But these attempts have dented neither the basic prerogatives of the services nor the incentives that influence their decisions. The system has proven amazingly resistant to changes and reallocations based on U.S. strategy or the international environment. In the 1970s, when then Secretary of Defense James R. Schlesinger was asked why the military continued to fund itself this way despite changes in national strategy, he reportedly replied, "Because it is too hard to do it any other way." His successors would undoubtedly agree.

Compared to the services, the president, the secretary of defense, the chairman of the Joint Chiefs of Staff, the Pentagon's elite Joint Staff, and the war-fighting commanders spread around the world have almost no budgetary authority. Yet they must not only devise U.S. military strategy but also control American forces in the field. Strong presidents and defense secretaries have sometimes managed to bend the services' budgets to their strategy. But the extent to which those officials may take control of money and programs is determined more by personality than statute, and today that formal and informal authority is largely unused.

For the past five years the services have mostly been left to their own devices, spending their money and planning their forces as they see fit. As might be expected, they have produced individual "visions" and spending plans to fit their distinct worldviews. These visions are not especially complementary. For instance, the Army and Air Force both structure their future doctrines and programs to fight Operation Desert Storm again, but not necessarily alongside each other. The Air Force vigorously advocates its "Halt Phase" strategy, which claims that air power alone can stop ground invasions, while the Army formally labels this concept invalid and puts most of its energies into improving the same weapons and strategies used in the Iraqi desert eight years ago.

The real problem for the Department of Defense is not age-old interservice rivalries. Instead, it is the lack of supervision and coordination of the services, which will bankrupt an even bigger defense budget without addressing the country's true security concerns. The powerful but faceless forces behind the budget process make strategic decisions by default, tending to favor marginal modifications of past strategies and systems rather than bold departures, even though the latter might be more appropriate for the new international security environment.

FIGHTING TO NOT FIGHT

This conundrum has been haunting the Pentagon for decades, but there are serious reasons to be especially concerned about it now. First, the services are focused not on fighting but on not fighting. This is an important twist on the interservice rivalries of the past, when they competed to dominate in wars and built systems accordingly. Today, the services are interested in neither the White House's new wars (peacekeeping, terrorism, organized crime, and the like) nor the Joint Staff's futuristic technological blueprint (Joint Vision 2010). Neither vision is compelling enough to induce the services to change on their own nor specific enough to narrow debate on what the services actually require. As a result, the Army, Navy, and Air Force plan for the wars they would like to fight. These future wars, unsurprisingly, look remarkably like those of the past except that the same old type of adversaries have slightly upgraded equipment -- as do we.

Since the first days of the Clinton administration, top civilian officials have warned that conflicts such as Somalia, Haiti, Bosnia, and Kosovo will be the order of the day. Nonetheless, with the exception of the Marine Corps (which has historically specialized in fighting "small wars"), the services have hardly adjusted at all. The Army has sunk its money into upgrading the world's heaviest tank and a new heavy artillery piece -- neither of which could be shipped to Kosovo, for example, in time to make a difference. The Air Force, meanwhile, has concentrated on stealthier, faster, more precise, and longer-range technologies rather than the mundane close-support systems that might have stemmed the ravages of Milosevic's forces on the ground. Even personnel decisions reflect an implicit rejection of what the military calls "operations other than war." Despite the fact that its officers represent dozens of specialties, in 1997, 9 out of 11 four-star Air Force generals were fighter pilots -- and the other 2 were bomber pilots. And in the Army, extensive graduate schooling, language training, and assignment as a foreign area specialist guarantee that one will not rise above colonel.

It is understandable, given the thankless and protracted nature of Kosovo-type missions, that the services are in denial about post-Cold War interventions. What is more surprising is that the services put little money behind the Pentagon's own war-fighting blueprints. The Navy, for example, has been told by several high-level strategy documents and blue-ribbon commissions that the aircraft carrier's age is soon over. Yet it recently canceled production on an arsenal ship -- a stealthy barge bristling with precision munitions -- and plans yet another carrier. The Navy's single most expensive program is the upgrade of f-18 fighter jets for carriers. The Air Force knows that its future is in unmanned aircraft and space yet it clings maniacally to the super-expensive f-22 fighter plane as its flagship program. And while the Army has criticized itself for being too heavy, cumbersome, and unwieldy, it has canceled its light armored gun system, has suspended tests of more agile formations, and continues to spend the lion's share of its budget on tanks and heavy artillery pieces.

None of these systems are without merit, but they are invariably created and advanced incompletely, without consideration for other Pentagon programs, future war-fighting concepts, or even the White House's national security priorities. The incongruities eventually seep into the "joint" level, at which the services supposedly think together rather than separately. Planners will acquire three new, separate short-range tactical aircraft, at a total cost of some $350 billion, despite numerous Pentagon warnings that future U.S. forces must be able to operate without allied bases nearby. Taken together, the services will demand some 125 percent of any conceivable future budget and yet still may not be able to tackle future challenges.

A second reason why traditional interservice rivalries are more important today is the services' "all eggs in one basket" acquisition strategy. The modern military has always prepared for a range of operations but never faced such a strategic vacuum. The budgetary stakes are much higher now and weapons systems more complicated and more expensive, making the cost of failure much higher. The military services have responded by staking everything on one or two expensive flagship items. This means that losing a big program to other defense priorities is tantamount to remaking the service. The result has been needless specialization rather than the operational flexibility that the strategic environment demands.

A FEW CONFUSED MEN

Because they cannot compel the services to think and act any differently, the secretary of defense and the president are reduced to rubber-stamping programs conceived 10 or 15 years ago and funded well into the future -- where they will drive defense's chronic underfunding to crisis proportions. Last year, at the insistence of Senators Joseph Lieberman (D-Conn.) and Daniel R. Coats (R-Ind.), the Pentagon reluctantly established a system for experimenting with minor programs within a wider context. The new plan seeks to give the Department of Defense an intelligent way of judging competing programs. The idea is sound and has received some inside-the-Beltway visibility, but its minuscule bureaucratic power and budget authority reduce it to window dressing.

The armed forces are strained by their multiple missions around the globe. But the real military budget crisis stems less from this increase in operations than from the lack of money for upgrading and transforming the military's rapidly aging weapon systems and equipment. Each service has laid out an expensive but mundane agenda for acquiring new and marginally improved ships, tanks, planes, trucks, and other equipment. Few of these needs are seriously questioned, at least not during an organized process on Capitol Hill or in the Pentagon that might actually make a difference.

The Pentagon's decision-making process exists in principle but not in practice, as shown by the plans to purchase three similar fighter aircraft. Quite apart from their questionable utility in some future strategic environments, everyone knows the Pentagon cannot possibly afford them all. Yet no one bothers to resist because the services hold all the cards. At most, the secretary of defense, after a long internal review, will hand down a lukewarm order to cut five or ten percent across the board. These sorts of decisions represent not leadership but its absence. Congress, for its part, adds or takes away money (these days, mostly adds) but reflects pork-ridden congressional agendas more than important national security needs. Many of the "add-ons" in the Kosovo emergency spending bill were congressional members' pet projects that had fallen out of past defense bills.

As a result, the services stretch the envelope a little more every year, presenting a wish list to fill the planning vacuum created by the absence of a meaningful White House national security strategy or strong Pentagon leadership. Between 1999 and 2003, the Congressional Budget Office and the Center for Strategic and Budgetary Assessments estimate that service requests will exceed the projected defense budget by $20-25 billion per year. The Center for Strategic and International Studies estimates that the shortfall could be three or four times that figure. The Pentagon simply cannot afford what its services say they must have to succeed.

Defense budgets are historically underfunded, critics might respond. The General Accounting Office predicted dire funding problems for defense budgets put forth by Presidents Reagan and Bush as well as Clinton. But both the Reagan and Bush administrations had to cancel major weapons programs to balance the books, so the Clinton administration should be preparing for that contingency now. The real question is not whether programs will be canceled but which will be, and whether the decision will be based on the strategic needs of the nation. The national security strategy produced by the White House does not prioritize very much, but it does clearly emphasize new security threats such as intrastate conflict, terrorism, nuclear proliferation, organized crime, and drug trafficking. The Pentagon's own plan for future war-fighting concepts suggests radical changes to achieve a high-tech "revolution in military affairs." The services, on the other hand, are all figuring out how to fight the next Desert Storm better (and far less jointly than they proclaim).

REVERSING THE EQUATION

The military does not need to break the whole machine to fix the budget process. It needs to take advantage of what it has. Planning should first catch up with budgeting and then actually drive it. Officials should recognize that the services are not analytically prepared to decide everything by themselves -- but they will if given the chance.

Current White House and Pentagon plans are too vague and ambiguous to command the attention or respect of the services. When the Joint Staff proudly released its 1997 National Military Strategy -- intended to guide all service planning -- it seemed unaware that the document was already irrelevant. The services had submitted five-year programs two months earlier. While the staffs of the secretary of defense and chairman of the joint chiefs were planning for the future, the Department of Defense Comptroller distributed almost 90 percent of the defense budget directly from the Office of Management and Budget to the services. In general, when the secretary's staff goes back to review service programs, it rarely changes them. A Pentagon review of the 1999-2003 service plans directed changes that amounted to about 0.5 percent of the programs' value.

To reverse the budgeting-planning equation will require confident, timely, and disciplined leadership from the president and the secretary of defense. National security strategies driven by platitudes will not lasso and corral the budget. Planning must be synchronized -- not parallel -- if strategic needs are to drive the budget. To prevent the traditional budget allocation among the services from limiting or determining U.S. strategy, some budget authority must be shifted to the Joint Staff or Joint Commands. Reducing each service's procurement budget by 20 percent and letting competition between programs determine allocation would restore some sanity to the planning process.

Transferring 20 percent of service procurement budgets for major programs to joint authority would leave intact the training prerogatives, developmental authority, and organizational wherewithal of the services. At the same time, it would give a joint authority the necessary means to make some hard choices about redundancy. Currently there are no real incentives for the services to do anything but mind their own interests. In times of finite resources and wildly expensive programs, a more dispassionate system is necessary. Besides, if the services are confident they have been planning and procuring in the country's best interest all along, they should get their 20 percent back in full, if not more.

Despite a potpourri of defense reforms, including the landmark 1986 Goldwater-Nichols Act, a fundamental disconnect remains. The "thinking" elements of the national security establishment have no money or budgetary authority, so the bureaucratic and parochial elements call the shots on programs, systems, and technologies. Very soon, this situation will both drive even an extravagantly funded military into debt and cripple its utility against tomorrow's threats. Planners can take some comfort in the fact that the system, in the absence of strong civilian leadership at the Pentagon or the White House, is functioning the way it was intended. Unfortunately, the nation cannot afford it. In order to buttress an American foreign policy that is growing more imperial by the day, the Pentagon will need significantly increased defense spending -- but the process must be fixed so that national security needs, not budgetary inertia, lead the way.