The U.S. Defense Budget: Choices for the Next President

When the next president and the next Congress begin to shape future defense policies, they will face serious budgetary constraints despite the growing federal budget surplus. Washington will spend slightly more than $280 billion on defense during fiscal year 2000. But according to current plans, it will have to spend considerably more in the years ahead. Even if the Pentagon gets its "fair share" of the federal budget surplus, it may come up short of funds—mostly because it intends, partly for sound reasons and partly for less wise ones, to greatly increase spending on new weaponry.

Under current plans, procurement spending would probably have to grow from around $50 billion a year today to roughly $80 billion annually over the next few years—and then stay there indefinitely. With the post–Cold War defense drawdown nearly complete, funding this huge increase for hardware is no mean feat, since it cannot easily be done by cutting spending on military personnel or operations. Under defense plans crafted by the Clinton-Gore administration—and criticized by many Republicans as inadequate to the nation's security needs—the Pentagon is implicitly assuming an annual real defense budget of at least $300 billion and probably $310 billion next decade (in constant 2000 dollars). Even more will be needed unless excessive bases are closed and other reforms made; more would also be required if new programs were added to those already on the books or if costs like those for military health care continue to escalate.

Al Gore appears prepared to provide somewhat greater funding for defense, as does John McCain. But neither Gore nor McCain appears likely to provide enough additional money to permit this huge increase in procurement. Bill Bradley and George W. Bush do not appear likely to increase spending on defense at all. Bradley's big health care and poverty initiatives would likely leave little of the non–Social Security surplus for other programs. Bush's tax cut plan would eliminate most or all of that "on-budget" surplus, and although he has proposed targeted increases in several areas of defense spending, press reports quoting top campaign aides suggest that he is also likely to make cuts in response to budgetary pressures. Under either Bradley or Bush, the Pentagon would do well to keep its budget at current real levels.

In short, the defense debate over the coming election season will take place against the backdrop of a Pentagon plan implying annual defense budgets of at least $300 billion, while spending proposed by the major presidential candidates is insufficient to fund that plan. Moreover, some candidates have proposed initiatives with real merit in areas such as military research and development and missile defense that could exacerbate the resource shortfall. The central challenge in future defense planning is solving this budgetary problem. The two central matters of contention are U.S. overseas military commitments and weapons modernization.

Overseas Commitments

Unlike most nations, the United States does not spend most of its military budget defending its own territory. Convinced by two world wars that an ounce of prevention is worth a pound of cure, the United States tries to protect its overseas interests and allies. The U.S. active-duty military force of roughly 1.4 million is organized principally around the so-called two-war framework, which envisions the (remote but not implausible) possibility of simultaneous major conflicts in both Korea and the Persian Gulf. To help deter these and other conflicts, as well as to reassure and train with friends and allies, Washington bases or deploys some 260,000 U.S. troops overseas at a time. Roughly 45 percent are in Europe, 37 percent in the Western Pacific, 11 percent in the Middle East, and most of the rest in Latin America. Some observers, including candidates Bradley and Bush, have concluded that reducing these commitments may save money as well as offer other benefits to the American military.

That may be tougher than it sounds. U.S. interests in Persian Gulf oil and in maintaining stability as well as impeding the proliferation of weapons of mass destruction make it hard to contemplate American military disengagement there or in Northeast Asia. Keeping a force of 55,000 in Germany may seem nonessential, but it is also inexpensive (assuming those forces would be retained in the military even if based at home), because Berlin helps foot the small additional bill for keeping U.S. troops on its own soil. U.S. commitments in the Balkans may strike some as a distraction from the military's main missions, but most Americans wisely appear to support such peacekeeping missions—which are not that expensive anyway. During the 1990s, the United States spent an average of about $3 billion a year on peace operations, or 1 percent of the defense budget. Today fewer than 20,000 U.S. forces are deployed in the Balkans (out of a total of 75,000 international peacekeepers there).

Still, there may be ways to save money—or at least reduce operational strain from high deployment rates—here and there. For example, U.S. participation in Bosnian peacekeeping, which has settled into a relatively routine mission, might be further curtailed or turned over to American allies. The no-fly zone over Iraq, which clearly does little to weaken Saddam's grip on his own country, might be ended, particularly if the Iraqi dictator agrees to allow meaningful arms inspections to resume. To deter Iraqi moves against its neighbors, the United States would still want to keep fighter aircraft in the Persian Gulf and Turkey, but fewer could suffice. Finally, most of the nearly 20,000 Marines on Okinawa, less critical militarily than the U.S. naval and air capabilities in Japan or than U.S. forces in Korea, could be sent home and replaced with larger stocks of equipment and munitions, to speed a possible deployment to Korea or elsewhere in the region in a crisis.

Larger savings in personnel and in operating accounts could come only from changes in the two-war strategy, in the way the Navy operates abroad, and in U.S. nuclear posture. A revised two-war strategy that recognized improvements in South Korea's armed forces and the weakening of the North Korean and Iraqi threats could pare U.S. forces modestly and save $5–$10 billion a year. Homeporting Navy ships overseas—or leaving ships in a given theater for a year or two at a time, rotating crews by airlift—could save $3–$5 billion a year. Unilaterally reducing U.S. nuclear forces to START II levels of 3,500 strategic warheads and maintaining those levels inexpensively could also save $3–$5 billion a year. None of these ideas is radical, but all would be hard to push through the military services or Congress. In other words, they are just the kinds of things that should be considered by a new, serious administration.

Modernizing the Military

The other large Pentagon dollar decisions lie in modernizing the military.

As noted, current Pentagon plans would drive up procurement spending roughly $30 billion a year. Even if the Pentagon made every single change in its overseas commitments, two-war strategy, and nuclear posture specified above, the real defense budget would probably still need to grow as a result. For a president who is unwilling to make all those changes, who does not wish to increase the defense budget, or who wants to devote more defense dollars to new military missions such as homeland defense, rethinking weapon modernization may be in order.

Some increase in procurement is essential, as weapons built mostly in the 1970s and 1980s will wear out en bloc in coming years. But much of the projected spending increase springs from plans to replace old weapons with more expensive and modern equipment—such as the Air Force's F-22 fighter aircraft, the Marines' V-22 tilt-rotor transport aircraft, advanced submarines and destroyers for the Navy, two new types of attack helicopters for the Army, a joint strike fighter for three of the services, and various defenses against ballistic missiles.

McCain and Gore hope to afford this agenda, given their relatively generous planned defense budgets. But they may not be able, if the costs of new weapons exceed expectations. And Bradley and Bush almost certainly cannot afford it at the defense spending levels they appear to anticipate.

Another approach, popular within much of the defense policy community and reportedly with Bradley and Bush as well, would be to recognize the absence of a major strategic competitor to the United States and to reduce the premium placed on modernizing major weapons systems. Instead, the Pentagon would emphasize R&D, military experimentation, and targeted modernization that maximizes use of modern computers, electronics, sensors, and munitions. Among major defense technologies, these are not only making the fastest progress, but also are relatively inexpensive, and can make existing large weapons like fighters, destroyers, and tanks much more effective.

This agenda would itself not be cheap, because aging weaponry would still have to be replaced. But replacing F-16s with F-16s rather than joint strike fighters, transport helicopters with similar helicopters rather than V-22s, and so on, could cut at least $10 billion off the annual price of modernizing the U.S. military.

Facing Budget Realities

The continually improving fiscal and budget picture in the United States has alleviated, but not eliminated, the resource constraints on the Pentagon. Even given the government's increased surplus projections, the Pentagon is still planning to keep too large a force and too expensive a weapons shopping list. The non–Social Security surplus is not that big and will probably not allow real defense spending to increase very much, if at all.

But while the mismatch between budgetary requirements and budgetary resources is considerable, it is not huge. The problem is not insurmountable. The Pentagon has the means to scale back its plans to make them more affordable. Ideas that have been under serious scrutiny and development in the defense policy community for years could eliminate or greatly reduce the resource shortfall without requiring a major change in America's global role or weakening its armed forces. The task, however, will be difficult. And it will require the next president to have good working relationships with both the armed services and Congress. Such things will be possible in the post-Clinton, post-Gingrich era, but not without considerable effort.