Bush’s Massive Defense Budget Misses an Opportunity

When the Bush administration took office a year ago, leaders boldly promised to reform the military?to shift it from one ready to fight the Cold War to one ready to fight the kinds of battles envisioned in the 21st century and to do so with fiscal restraint. But last week, the administration proposed a budget for the Pentagon that made no mention of retiring any weapons systems and no mention of forcing the military to prioritize its needs.

Instead, the 2003 budget gave the military a spending increase so huge that it will help tip the country into deficit spending and hamstring national debates on other priorities ranging from expanding health care to improving our diplomacy and foreign-aid programs also needed to stop terrorism.

The $48 billion increase would also push spending above the average we spent during the Cold War, when the threat was an even higher-stakes global war against a superpower rival. Next year alone, if the president’s proposals were adopted, the national security budget would hit $396 billion.

There is no question that we need to spend more on the military, especially given the new challenges made clear Sept. 11. The question is whether we need to spend this much more.

Will throwing money at the military help us or hurt us in the long run if it removes the pressure for the military to make tough choices?especially if defense budgets subsequently wind up insufficient in future years to fund all the weapons and forces we have retained? And are we learning enough from the war in Afghanistan, a war that clearly shows the promise of some relatively inexpensive, high-tech weapons?

On Sept. 30, Defense Secretary Donald Rumsfeld released a defense plan that largely preserved the basic size and composition of the military and weapons modernization agenda endorsed by President Clinton. Rumsfeld’s plan also added a few programs like a large-scale missile defense, but for the most part it simply blessed what its predecessors had bequeathed it. The review was silent, however, on costs.

Now, we have the bill for this defense plan. And that is where the big changes arise. The Clinton administration’s defense budget had grown to about $300 billion annually by the end of eight years, including about $15 billion in annual funding for nuclear weapons activities at the Department of Energy.

Incorporating the effects of Sept. 11 and the war in Afghanistan, President Bush’s budgets are now as follows: $329 billion in 2001, $351 billion for 2002 and $396 billion proposed for the next fiscal year. The budget would continue to grow to $470 billion by 2007.

Even factoring out inflation, the annual defense budget will have grown by more than $100 billion between 2001 and 2007. Yet this year, the annual costs of the war on terrorism are less than $30 billion.

Why does Bush wish to restore defense spending to such high levels? He does not plan to increase the size of the military, which remains one-third smaller than in Cold War times (2.1 million active-duty personnel during the 1980s, compared with 1.4 million now).

Moreover, with the exception of missile defense, which will cost $7.8 billion this year, Bush administration officials have not yet added any major weapons systems to the modernization plan they inherited from their predecessors.

Instead, the administration claims that it is fully funding only the force structure and weapons-procurement agenda that was laid out in the 1997 Quadrennial Defense Review, as well as the immediate exigencies of the war on terrorism.

For those who doubt the need for added defense spending, it is true that a military of a given size costs more to maintain each year. Whether it is the price of weaponry, the burden of providing military health care to active-duty troops and their families as well as retirees, or the price of paying good people enough to keep them, most defense costs rise faster than inflation.

In addition, the U.S. military took a “procurement holiday” of sorts during the 1990s, because money was tight and it had so much modern weaponry already on hand after the Reagan buildup. That holiday must now end as systems age and require refurbishing or replacing.

The military services are not so irresponsible as to request money for weapons that are truly pointless. But given the ample money now being offered them, they are failing to prioritize.

Rather than buy large numbers of new weapons typically costing twice as much as their predecessors?the F-22 and the Joint Strike Fighter, the Crusader artillery system, a new Virginia-class submarine, the V-22 Osprey?the military services should adopt a “silver bullet” approach to modernization.

They should buy modest numbers of the most sophisticated and most expensive equipment to ensure U.S. technological dominance even against the likes of China. But they should purchase less-expensive weaponry for the rest of the force.

For example, rather than buying nearly 3,000 Joint Strike Fighters, the military services could buy a smaller number?about 1,000?and purchase modern, improved versions of existing fighters like F-16s. Carrying improved sensors, communications systems and munitions, those F-16s will be formidable weapons?and cost a third less than the alternative.

In addition, the lessons of the war in Afghanistan need to be recognized and built upon. That conflict has demonstrated, more than any other before, the importance of pilotless aerial vehicles, real-time battlefield information networks, certain kinds of precision munitions such as the so-called JDAM with its global-positioning guidance system, and, of course, special-operations forces. These and most other “transformation technologies” are generally worthy of the support the Bush administration is requesting.

Because of these various factors, real defense spending should indeed continue to increase, as it has been doing since 1999. But the increases need to be only about half as large.

Bush and Rumsfeld propose large increases in virtually every part of the defense budget. In almost all areas, their proposed increases are excessively generous.

Take pay, for example. After Congress’ and the Clinton administration’s largess of the past few years, military pay has never been higher in inflation-adjusted dollars, and recruitment and retention of military personnel have improved as a result. Most additional increases should be targeted at those few specialties where the Pentagon still has trouble attracting and keeping people, rather than the entire force.

As for military readiness training, spare-parts availability and other contributors to combat preparedness, funding is already the highest ever on a per capita basis. (That is true even after accounting for the costs of excessive bases, overseas contingency operations, health care costs, environmental-cleanup costs and aging weaponry.)

After the increases of recent times, further additions for training requirements should not exceed $3 billion or so.

Demands are somewhat greater in the realm of military health care, because Congress passed a bill late in the Clinton era mandating free lifetime care for retirees who had been promised it earlier. But if billions of dollars are to be added to the military health care system, it is time to demand reform of a behemoth that ignores free-market principles and allows each service far too much of its own institutional infrastructure.

By doing so, the administration should be able to keep the added health bill to around $7 billion in annual terms instead of the $10 billion Bush is asking. It’s still a huge amount, but, alas, a necessary one.

Bush has rightly emphasized defense research and development ever since he began running for president, but the 2002 budget already added large sums to this area. No more than another $1 billion for the kinds of systems we have seen star in the Afghanistan war is needed now.

All the above costs total $15 billion or so on an annual basis, compared with the $48 billion Bush wants.

Then, there is the elephant in the room: defense procurement. The Clinton administration spent about $50 billion a year buying equipment; the figure is now about $60 billion. According to the Congressional Budget Office, however, the expensive modernization plans of the military services might imply an annual funding requirement of $90 billion or more. Accordingly, the Bush-Rumsfeld budget envisions procurement funding of $99 billion in 2007.

But the war in Afghanistan has underscored the potential of relatively low-cost systems. We have seen the effectiveness of strap-on GPS guidance kits added to “dumb” bombs carried by B-52 bombers, pilotless aerial vehicles costing a fraction of piloted fighters and special-operations personnel equipped with advanced sensors but riding on horseback.

To be sure, expensive weapons such as aircraft carriers have been used as well, and not every future foe will be as militarily unsophisticated as the Taliban and Al-Qaida. But the services need to prioritize. They should recognize, as former Vice Chairman of the Joint Chiefs of Staff Bill Owens argued, that the electronics and computer revolutions often promise major advances in military capability without inordinate expenditures.

More broadly, Bush, Vice President Cheney and Rumsfeld, all of whom have considerable experience in the private sector, seem to be ignoring an important principle of corporate management: Institutions need incentives to become more efficient. Give an organization all it wants and it will fail to prioritize; impose some financial discipline and it will innovate and reform.

These Bush officials need to reread their own speeches of a year ago, when they said they would skip a generation of weaponry and improve the military on only $5 billion additional spending per year. They seem to have forgotten that they came into office wanting to reform the Pentagon rather than feed its insatiable appetites.