Navy leaders have been making herculean efforts since the end of the Cold War to ensure that the Navy is provided adequate resources to carry out its many challenging missions. Despite those efforts, they have had only limited success in gaining the level of funding needed to meet the service's requirements for executing the National Military Strategy. Like the other services, the Navy has suffered major budget reductions to pay a "peace dividend" that helped swing the federal budget from deficit to surplus while sustaining popular domestic programs.
At the same time, the Navy is busier than ever maintaining a strong, credible forward presence and responding to a wide range of contingencies in support of U.S. foreign policy. The strain brought by the unrelenting pace of naval operations in an era of "violent peace" and declining resources is evident in the readiness and personnel challenges faced by the Navy. Yet, in the face of mounting evidence of a serious mismatch between strategy and resources, all that has been done on the budget front is to arrest the precipitous decline. Small funding increases over the past few years have not been sufficient to provide the force structure the Navy needs to carry out its missions, procure enough new ships and aircraft to ensure that modernization proceeds adequately, and maintain readiness at acceptable levels without placing an unreasonable burden on the backs of sailors.
How could such a situation arise? Certainly not from lack of effort on the part of Navy leaders to gain sufficient funding. The mismatch between strategy and resources that exists today arises from an ambiguous post-Cold War international security environment that makes it difficult to justify the need for defense spending, and from the way that the planning and budgeting process works in Washington.
We Have Been Here Before
This is not the first time the Navy has faced the challenges of prolonged peace. Figure 1 compares Navy appropriations in the period since the end of the Cold War with those of two previous postwar periods in which defense spending was slashed: 1865 to 1899, from the end of the Civil War to the Spanish-American War; and 1919 to 1941, from the end of World War I to the start of World War II. The three trend lines are normalized for comparison by setting the Navy budget in the first year of each period equal to one and calculating subsequent budgets as a fraction of that first year.
Comparison of the three periods reveals that the current drawdown is not nearly as drastic as it was in the previous two periods. In the current period, appropriations bottomed out at about 75% of their level at the end of the Cold War; after the Civil War and World War I, they bottomed out at about 15% to 20% of their previous wartime levels. Relative to prior periods of prolonged peace, then, the Navy is faring much better today than it did in the past. There is a vast difference in the level of effort represented by the starting point for each period: the Cold War versus two large-scale wars involving extensive naval operations. But Figure 1 warns that the Navy budget situation could worsen if the current period of prolonged peace stretches out for another decade or two and public support for defense spending declines further.
The two earlier periods shown in Figure 1 illustrate two very different ways of coping with prolonged peace. The Navy got it wrong after the Civil War, suppressing innovation for decades and clinging to its traditional way of doing business by focusing on an ambitious forward presence abroad with increasingly antiquated ships. Meanwhile, many of the world's navies pressed on with expansion and modernization of their fleets. Luckily, official stagnation did not stifle the creative energies of a small cadre of officers who clearly saw the Navy's dire situation. Their efforts led to establishment of the U.S. Naval Institute and the Naval War College, and eventually to procurement of the new steel-hulled, steam-powered warships that came into service in time for the Spanish-American War, The key lesson of that period is that operational demands and belief in the superiority of the existing way of accomplishing missions must not be allowed to suppress innovation and postpone modernization.
The Navy did much better in the period between World Wars I and II. Although its budget was slashed again, the Navy managed to find ways to innovate and experiment on a shoestring. The results included development of carrier aviation and amphibious assault techniques, both of which proved critical to victory in the next war. Innovation and experimentation in the interwar period were made easier by international naval treaties that put limits on numbers of battleships. Relief from the burden of maintaining a large force structure made it easier to find funds to innovate despite severe budget constraints. The key lesson of the interwar period is that innovation, experimentation, and modernization are possible—indeed essential—under severe budget constraints.
The International Security Environment
The post-Cold War international security environment is marked by a wide range of ambiguous, constantly changing threats, very few of which are perceived as representing imminent danger to vital U.S. interests. They range from "transnational threats" that do not respect national boundaries—such as terrorism and drug trafficking—to a variety of problems arising from the collapse of weak states and ethnic conflicts, to the danger of major theater wars arising from aggression by rogue nations. Added to this complex array are rapid technological, political, and social change, economic globalization, weapons proliferation, and perennial foreign policy issues with developing countries as well as major powers. The number and diversity of threats is perplexing because they are difficult to use as a rational basis for military planning. They do not allow clear, credible links to be drawn from strategy to requirements to resources. Thus, it overtaxes the Pentagon's already cumbersome planning, programming, and budgeting system that was designed to deal with the relatively simple Cold War threat.
Notably absent from the current international arena is what Pentagon planners call a "peer competitor," a nation whose aspirations appear destined to bring it into conflict with the United States and that is building military power to counter U.S. forces on at least a regional basis. Is a peer competitor likely to arise in the near future? That question cannot be answered on the basis of any empirical evidence available today. Although the point is arguable, there are no visible trends to suggest that a peer competitor will emerge inevitably in the next two or three decades. Nevertheless, civilian and military leaders must ensure that the government and people of the United States appreciate the danger inherent in a world that is more uncertain than ever.
Strategy and Resources
The planning and budgeting process is itself the other cause of the mismatch between strategy and resources. The war colleges teach that strategy determines requirements, which in turn drive decisions on the level and allocation of resources. In practice, the process does not work in such an orderly, linear fashion. It is iterative and at certain points designed deliberately to operate in reverse, so that the level of resources becomes the starting point for decisions on resource allocation, programming, and strategy. Planning purists react in disgust at the notion. The 1997 Quadrennial Defense Review (QDR) was criticized for being "budget constrained" rather than deriving its recommended force structure solely from the requirements of the strategy it articulated. Alas, the purists are wrong. Budget constraints always have been a reality—even in wartime—and there are important reasons why that is so.
A defense strategy that overreaches available resources is not sustainable and therefore doomed to failure. A concerted effort to fund an unaffordable strategy can have disastrous consequences for a nation that falls into that trap—as did the Soviet Union. Resources devoted to the military were far in excess of what could be sustained indefinitely, creating fatal distortions in the economy that reinforced societal forces working against Soviet rule. At the same time, the United States kept defense spending more or less constrained throughout the Cold War, but at a level that could be sustained indefinitely. One of the prime reasons the United States won the Cold War was that its strategy was subdued by fiscal realism. Once defense planners and budgeters accept the legitimacy of budget constraints as an independent variable in the planning process, the setting of defense resource levels becomes extremely complex. A wide range of external factors comes to bear on decisions. Executive and legislative leaders must balance defense spending against numerous domestic programs that need funding and weigh carefully the effect of taxes on the economy and individual citizens. Because the federal budget process is inherently political, defense resource decisions are perforce influenced strongly by the mood and priorities of the people and their elected officials.
The Domestic Context
Resource level and allocation are not driven by which political party controls Congress and the White House. In a period of prolonged peace, differences between the two major parties on the appropriate level of defense spending are relatively narrow, and both parties may be unwilling to fulfill what the services view as necessary. The nation relishes the unprecedented peace and prosperity of the post-Cold War world. To the extent that the people perceive threats, their primary concern is about threats at home, not abroad—especially as regards terrorism—hence the rise to the top of the national security agenda of domestic security issues, such as critical infrastructure protection, cyber security, and incidents involving biological or chemical weapons. Beyond anxiety over this kind of domestic danger, there is no overall consensus on foreign and defense policy among U.S. citizens. They hold the military in high regard and support a strong national defense. But general opinions do not translate necessarily into support for certain programs or increased defense spending overall.
Absent broad public consensus on defense policy, the average civilian wants the armed forces to be victorious in wartime and cheap in peacetime. This view is deeply rooted. At times, the public has held more focused views in peacetime, such as the enthusiasm for naval power in the late 19th and early 20th centuries. But such support is unusual in the grand sweep of American history and certainly not evident today. While many civilians believe that the United States must remain the world's preeminent naval power, there are just as many who believe it must be the world's leading aerospace power or have the most powerful army. During prolonged peace, disparate views like these do not tend to aggregate into broad support for all services. Rather, they merely accentuate the lack of consensus on defense policy.
The relatively high level of defense spending during the Cold War violated the "cheap in peacetime" dictum. The public grudgingly accepted the costs because of the exceptional circumstances of that era, although often the services received resources below the level requested—sometimes well below. Even the clear and present danger of the Soviet Bloc proved insufficient to overcome the desire for military parsimony. Today, to the extent there is consensus on defense policy, "cheap in peacetime" is it. The problem, of course, is that victory in wartime and cheapness in peacetime are mutually exclusive prescriptions. Military forces that are not properly funded in peacetime are not apt to have the requisite force structure, weapons, and combat readiness for victory—at least not at the onset of war. This problem may seem evident, but any military leader who has fought to fend off budget cuts knows that it can be very difficult to explain to the public and their elected representatives.
How long will this mood last? A similar frame of mind lasted for 32 years after the Civil War and for 20 years after World War I. In both periods, it took a catalytic event—sudden emergence of grave threats to U.S. security—to forge a new consensus on defense policy. And in both periods that consensus led to rapid increases in defense spending and rapid expansion of the services. No other events and arguments offered by Army and Navy leaders had a strong enough effect to overcome the "cheap in peacetime" principle.
The same pattern applies today. In a period of prolonged peace like the one we are in now, it would take a shocking event to build consensus behind greatly increased defense spending. Is something such as the German sinking of the Lusitania or the Soviet launching of Sputnik likely to occur in the near future? It cannot be ruled out; but no international trends indicate that such a catalytic event is inevitable in the next 20 years or so. To forge a new consensus, it obviously would have to be more dramatic and threatening than the 1990 Iraqi invasion of Kuwait. Diminishment of the U.S. armed forces continued unabated after the Gulf War, which suggests that it would take a threat greater than a rogue nation attack on its neighbors to forge new consensus on defense policy.
The mood in Congress toward defense and other policies reflects the mood of the people. There is not consensus on defense policy in either political party or the Congress as a whole. Most members of both houses pay little attention to defense policy, and threat perceptions vary widely. Those who do so are divided into a multitude of factions focused on specific defense policy issues, such as national missile defense, readiness, and the revolution in military affairs. These congressmen are to be applauded for their statesmanship in pursuing important policy matters that, by and large, are not on the public's agenda. Unfortunately, when there is scarce public support for increases in defense spending, they often must compete for scarce defense dollars rather than work together as a coalition to gain funding for a broad range of defense programs.
Former House Speaker Tip O'Neal used to say, "All politics is local." His perceptive adage explains the politics of defense when there is no consensus on defense policy: "All defense politics is local." Every member of Congress is accountable to his or her constituents and those constituents care deeply about jobs. Thus, protecting bases and promoting the fortunes of defense contractors must rank high on the list of priorities of those politicians whose states or districts have them. In a period of prolonged peace, when the lack of a clear threat reduces the public's willingness to make local sacrifices for the broader good and constrained defense spending can cover fewer local interests, the intensity of local defense politics and its impact on policy outcomes are accentuated. This makes it extremely difficult to build a consensus in Congress on defense policy or support for increased defense spending.
Future Budget Challenges
The Defense Department cannot base force structure, readiness, and modernization decisions on unrealistic budget projections. If the economy remains strong and budget surpluses accrue as projected, constraints on the defense budget should be less stringent over the next several years than they were over the past decade; however, we cannot escape the reality that defense spending will continue to be constrained. The 1997 QDR added to the budget difficulties that DoD will face over the next two decades. The last QDR deliberately pushed the procurement "bow wave"—the large increase in procurement spending needed to replace Cold-War equipment and modernize the services—beyond fiscal year 2003. The Defense Department does not have the option of pushing the bow wave even farther into the future. Moreover, potential increases in defense spending made possible by the budget surplus are unlikely to be large enough to fund everything the services request. Painful decisions on priorities will have to be made soon.
It should be remembered that the nation must come to grips with a wide range of thorny budget issues in addition to defense funding. Programs such as Social Security, Medicare, and education will require enormous outlays for decades to come. The Social Security Administration predicts that the program will be bankrupt by 2037. However, given the political clout that aging baby boomers will have by virtue of sheer numbers, that is a highly unlikely event. And so it will be with any number of government programs unrelated to national defense. Absent a catalytic event that forges national consensus for increased defense spending, the armed forces could be facing another 30 years of constrained funding on top of the decade of cuts they have endured already.
Implications for the Navy
Does this mean the will Navy languish in the doldrums as it did after the Civil War? Not necessarily. The Navy could make great strides during this long, dry period. It must strive to understand and adapt rapidly to the ambiguous international environment. Above all, it must maintain vigorous efforts to explain to the people and their elected representatives the Navy's roles in peace and war, and the risks inherent in insufficient funding. No matter how hard the Navy tries to merchandize its budget, it is unlikely to receive all the resources it needs. Therefore, Navy leaders must master the art of coping with long-term budget constraints, which means striking a delicate balance between current readiness, force structure, and modernization. None of the three can be emphasized to the detriment of the others without creating risk for the Navy's ability to carry out its mission now and in the future.
Sacrificing readiness is imprudent; doing so can lead quickly to a downward spiral from which it is difficult to recover. Hence, the Navy's choices must focus on tradeoffs between force structure and modernization—between choosing a larger force that can be modernized at a slower pace or a smaller force that can be modernized at a faster pace. Either approach affects the Navy's ability to carry out its mission. Emphasizing force structure could restrict capabilities in the future; emphasizing modernization of future capabilities could restrict the ability to perform today. This trade-off also has implications for readiness, in that a larger force being modernized at a slower pace will incur escalating readiness costs.
Advocates of seeking as large a force structure as possible sometimes warn that a smaller force could lead to "mission erosion," which is reassignment of specific tasks to other services because the Navy no longer has the capability to perform them. Founded on fear that allocation of resources among the services is subject to sudden, large shifts, this concern appears to be greatly exaggerated. Although every service has at times been openly predatory toward the others, the underlying claims tend not to carry much weight in the Defense Department and Congress. The allocation of resources among the services has been remarkably stable. The reality is that each of them is hard-pressed to carry out their existing missions, much less assume the missions of others.
The Navy cannot avoid the issue of affordability in this period of prolonged peace. Sooner or later, budget constraints and the procurement bow wave will compel the Defense Department and Congress to start asking hard questions about the cost of procurement programs—and imposing priorities ultimately. A case in point is the current shortfall in the shipbuilding account and Navy insistence that its force structure is too small. During the 1970s, in the wake of the Vietnam War, the Navy rejected proposals to procure a "high-low mix" to keep fleet numbers up. Toward the end of the Cold War, it had, in effect, resolved to build an "all high-end" fleet. That strategy will not be sustainable much longer because the Navy no longer has the Soviet threat to fend off the budget axe. Navy planners need to think long and hard about the implications of "cheap in peacetime" for Navy procurement plans.
If numbers matter—as we insist—then the time has come to move beyond out-of-date conceptions of what constitutes "high-end" versus "low-end" ships. The most advanced warfighting technology in the world was unable to prevent a simple, cheap terrorist bomb from crippling an expensive high-end warship. Such threats are at least as probable as the Cold War threats that the fleet was designed to counter, if not more so. "High end" no longer means large, expensive, and the best of every conceivable capability. It means platforms that have great utility against adversaries who do not think or fight the way we do, who strive to make our modern fleet a national liability rather than a national asset. If the current period of prolonged peace were to last another 20-30 years, would the Navy rather have a fleet of 150-200 "high end" ships that are too valuable and scarce to be sent into the areas where their presence is most needed? Or would it rather have a fleet of 300-350 ships that we are willing to send in harm's way in the chaotic littorals? Given the fundamental mission is to be wherever needed—whether for presence, sea control, or power projection—a strong argument can be made that numbers are the way to go.
As the negative lesson of the post-Civil War period illustrates clearly, innovation and experimentation are critical during prolonged peace. Today, beleaguered Navy programmers and budgeters are prone to conclude that the Navy cannot afford an aggressive program of innovation and experimentation because it would divert too much money from procurement programs. That view could have emerged from the 1860s and1870s, when Navy leaders turned their backs on the revolutionary technology introduced during the Civil War and tried to turn the clock back to the age of sail.
The Navy is innovating and experimenting today; but the demands of forward presence and the cost of procurement are making it overly cautious, limiting the risk officers are willing to accept, and creating an atmosphere in which potentially revolutionary concepts are viewed as threats to procurement programs. As much as the Navy would like to blame Congress or allegedly predatory sister services for making radical innovation too expensive to pursue, the problem is largely the Navy's own making.
Navy leaders have the power to make this period of prolonged peace one that will be viewed in retrospect as the most innovative and revolutionary in U.S. naval history. The Navy has survived much worse conditions in the past. Whether the next three decades are years of drudgery and stagnation or an era of excitement and transformation is up to them. In peace as in war, fortune favors the bold.
Captain Bouchard is commanding officer of Naval Station Norfolk. Previously, he served on the National Security Council as director for defense policy.