Reducing the DOD budget is one, but not the only, means for lowering the budget deficit and the national debt. That budget has doubled in real terms since 2001, and is greater in real dollars than at any time since World War II. Moreover, according to a February 2011 article in Foreign Affairs by Gordon Adams and Matthew Leatherman, the Pentagon’s budget is equivalent to the budgets of the rest of the world’s militaries combined. Defense budgets now account for approximately 54 percent of U.S. federal discretionary spending.
Calls for reduced defense spending have come from a number of panels, including President Barack Obama’s Commission on Fiscal Responsibility and Reform, led by former Senator Alan Simpson (R-WY) and former White House Chief of Staff Erskine Bowles; an independent commission led by former Senator Pete Domenici (R-NM) and Brookings Institution economist Dr. Alice Rivlin; an independent study led by Dr. Gordon Adams at the Stimson Center; and a Brookings Institution study led by Dr. Michael O’Hanlon. In other words, the belief is widespread that DOD must bear some of burden in restoring the nation’s fiscal health. The November 2010 Domenici-Rivlin commission and the Brookings study independently recommended an approximately 10 percent reduction in defense spending.
Now, in late summer, it is no longer speculation that DOD must bear part of the burden. According to a paper by Cindy Williams of MIT, the Budget Control Act of 2 August 2011, reached between President Obama and Congress, mandates three rounds of deficit reduction:
• Round 1: Imposes caps on total discretionary budget authority each year from Fiscal Year 2012 to FY 21. It would reduce the ten-year deficit projection by $917 billion compared with a Congressional Budget Office baseline. The likely impact on DOD is a $30 billion reduction for FY 2012 and an additional $50 billion for FY 13.
• Round 2: Establishes a joint select committee of Congress to identify additional cuts of $1.2 trillion to $1.5 trillion. If the committee cannot agree or falls short of the target, or if Congress fails to approve the committee’s recommendation by 15 January 2013, then:
• Round 3: Imposes automatic spending cuts equally divided between security and non-security discretionary budget authority to bring the total to $1.2 trillion if Round 2 is unsuccessful. This would return the defense base budget in 2013 to its FY 07 level and hold it there for the next eight years.
To be clear, it will not be possible to reduce defense spending by the amounts cited here without some impact to the current force and its capabilities. That said, current defense spending, apart from the cost of the wars in Iraq and Afghanistan, is higher than at any time since the last world war, and the nation faces no known existential threat. Accordingly, while defense reductions must be carefully juxtaposed against the nation’s strategic interests, one can also view budget reductions as an opportunity to reassess what DOD and the Department of the Navy accomplish—and how they do it.
Such a review may actually identify strategic opportunities for improving the force and its capabilities. As British Prime Minister Winston Churchill once said, “Gentlemen, we have run out of money. Now we have to think.” Between 1947 and 1960, when the U.S. Air Force received the lion’s share of the DOD budget and the Navy commissioned fewer than 30 new surface combatants, our Navy’s leaders conceived, developed, and built the ballistic-missile submarine force that transformed strategic deterrence. Scarcity can lead to real innovation. We can do the same again, if we put on our thinking caps.