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Will the Pentagon Fall Off the Fiscal Cliff?

Jan 03 , 2013

The recent agreement between the Congress and President Barack Obama has postponed but not resolved the U.S. financial crisis. Most of the planned budget cuts have been deferred but not eliminated. The compromise does little to tackle the main problem: the United States suffers from an enduring budget deficit and accrued national debt due to the government’s spending too much and receiving too little revenue.

To help reduce the gap, the Department of Defense (DOD) made major cuts in 2011 to its planned budgets for the next decade, amounting to more than $450 billion. Even so, the aggregate DOD budget will continue to increase during these years in line with inflation.

If the maximum spending cuts envisioned by the 2011 Budget Control Act (BCA) take effect over the next decade, DOD would lose another $500 billion over the next ten years, resulting in a net real reduction in U.S. defense spending after inflation and requiring major cutbacks in defense procurement and other DOD activities.

Regardless of how the president and Congress solve this year’s budget crises, U.S. national defense spending is expected to decrease substantially in coming years as the U.S. military ceases involvement in major foreign wars such as Iraq and Afghanistan. The United States is in a long-term defense drawdown complicated by the rising costs of weapons systems and services (healthcare) that is squeezing manpower, operations, and investment.

Meanwhile, the Asian Pivot has seen changes in the relative distribution of spending among the Services, with the shares of the Navy and Air Force decreasing at the expense of the Army. The United States does not plan to establish new Army military bases in East Asia, so it will rely more on forward deployed ships sailing the Pacific and airplanes that can fly from the United States and other distant locations from the Asian mainland.

Acquiring these new capabilities will be expensive. DOD officials have warned that fully implementing planned budget cuts for 2013-2022 would disrupt an entire generation of U.S. military modernization, potentially including terminating some major weapons procurements (such as Virginia Class attack submarine and the F-35 Joint Strike Fighter), curtailing new procurements (such as the hoped-for next-generation bomber  and planned military space initiatives), and preventing modernization of key systems such as ground combat vehicles and Army helicopters.

With these effects, a $1 trillion cut in DOD defense spending in the next decade would increase the gap between U.S. goals and means, likely forcing a change in U.S. global strategy; delay military response time to crises, conflicts, and disasters by decreasing  military readiness due to reduced training, maintenance, and equipment resets; increase operational risks of failed military actions; and reduce the U.S. forward military presence, seen as essential for deterring and defeating adversaries as well as reassuring friends and bolstering U.S. global influence.

In a November 2011 letter to the Senate, DOD Secretary Leon Panetta calculated that all these reductions would result in an 18 per cent decrease in DOD funding over the next ten years, which would result in the Pentagon having the smallest Navy since before World War I, the smallest tactical fighter force in Air Force history, and the smallest civilian workforce in DOD history.

But as Obama pointed out in the final presidential debate, the latest-generation weapons systems are much more effective than their previous versions, so the quality improvements arguably outweigh the quantitative decreases. Reductions in the defense workforce may likewise be balanced by greater efficiencies due to improved information technologies, robotics, and other systems as well as decreased bureaucracy.

Lower defense spending could arguably have some positive results for U.S. national security, broadly defined, by decreasing U.S. budget deficits, lowering U.S. foreign debt, and perhaps raising U.S. economic growth by simulating cost-saving innovations term, which would generate additional resources available for later defense spending and yield other national security benefits.

The U.S. government must address several fundamental questions to close the gap between defense ends and means, including:

What should be ultimate U.S. national security goals?
How best can the government achieve them?
What is the Pentagon’s appropriate role in this endeavor?
What military capabilities are needed to empower the Pentagon to play its role effectively?
What risks must be accepted in order to rely on allies and hope that no major near-term wars will occur?

China is relevant to this process in several respects. A defense drawdown of this magnitude would make it difficult for the Pentagon to acquire all the capabilities needed to implement an effective Asian Pivot strategy. In the absence of a strong U.S. presence, other Asian countries might seek to balance China’s growing military capabilities on their own, such as by acquiring nuclear weapons.

Yet, China would be the country that perhaps most benefits economically from having the U.S. budget deficit and aggregate debt reduced, since that would best sustain the value of all the dollars owned by Chinese and would help keep the United States a good partner for Chinese trade and investment.

Richard Weitz is a Senior Fellow and Director of the Center for Political-Military Analysis at the Hudson Institute. His current research includes regional security developments relating to Europe, Eurasia, and East Asia as well as U.S. foreign, defense, homeland security, and WMD nonproliferation policies.

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