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Contingency Operations

Are the Pentagon and the GOP finally embracing defense cuts?

Sequestration, complete with furloughs for some civil servants, is on its way. And it is going to set defense planning on a different trajectory. Rather than being a "meat axe" or "Armageddon," sequestration may turn out to be just the kind of wake-up call the Pentagon needed.

The appropriations bills likely to pass this week or next do not change that, though they will prevent a government shut-down. There was some discussion of providing special flexibility for the Defense Department in the appropriations bill so they could manage sequestration more easily. That's not going to happen unless the same flexibility is given to all agencies -- so there will be no relief at the Pentagon from the cuts.

For Congress, however, sequestration may turn out to be like the Base Realignment and Closure (BRAC) process for the entire defense budget. As a series of unavoidable and somewhat arbitrary budget cuts which Congress cannot prevent, sequestration becomes the outside actor members can point to, saying, "It wasn't me; the sequester cut the budget." Just like they could point to a base closure proposal and say, "It wasn't me; the BRAC Commission set up the plan and I had to vote for the whole plan, up or down."

With the sequester, the defense drawdown is underway. And it is possible, just possible, that the new leadership at the Pentagon has begun to smell the coffee. On March 15, Secretary Hagel sent a memo to, well, basically everyone in the Pentagon, announcing that he had asked the deputy secretary and the chairman of the Joint Chiefs to carry out a "Strategic Choices and Management Review" by May 31 in light of "budgetary and strategic uncertainty."

This review is new, and it is going to come before the Pentagon machinery begins to grind away at its fifth Quadrennial Defense Review, the document that is supposed to guide long-term strategy, mission, and force planning. Hagel stepped in front of the QDR train and said, "Not so fast; we gotta take a look at where we are, to know where we can go." So, we get a review before the review.

This first look at the defense past and future could help him set out strategic choices and management challenges as a way to guide the QDR. But it has to be budget constrained, and two things are unclear: First, is the secretary going to put resource limits on an equal footing with strategic choices, as is necessary; second, is he going to make this review a real plan with real guidance for the QDR.

His spokesman, George Little, suggested that the answer to the first question is yes: "The review will define the major decisions that must be made in the decade ahead to preserve and adapt our defense strategy, our force, and our institutions under a range of future budgetary scenarios."  A senior defense official may have undermined that intention, though, by fudging the second issue: "The department hopes never to have to work toward the contingencies this review might identify," the official said. If the budget cuts under sequestration are lifted, "those contingencies are likely to go away."

Deputy Secretary Ash Carter may have pulled the rug from under his own review in Indonesia on March 20, when he said "these arbitrary cuts are temporary, lasting through October of this year. The sequester mechanism is an artificial, self-inflicted, political problem, not a structure problem. The turmoil and gridlock will end, and the U.S. can get back to normal budgeting."

If Carter sticks to this view, the forthcoming Hagel review will be meaningless. While the across-the-board nature of sequestration goes away in October, the sharp reduction in the defense budget baseline for the next nine years is likely to remain. That is not "normal budgeting" by any stretch of imagination; it is a deeper downturn than the Pentagon now plans.

If the QDR is going to be realistic, as opposed to a wish list, the review had better not imagine normal business in the future, but instead be a serious, ground-breaking effort, and not a contingency plan. Sequester or not, the defense budget is declining, and probably at a rate that will strip $500 billion from the baseline then-Secretary Panetta projected last year. Hard choices and serious management will be needed, not hopes and wishes.

This realism has not yet seeped in deeply at the Pentagon. As evidence, the Congressional Budget Office, one of the best sources in town for hard numbers and objective analysis, took a look at the current defense plans and said that the current plans for forces, weapons systems, and defense operations were unaffordable, even without sequestration. Losing another $500 billion in the 10-year plan will only make matters worse, according to the CBO.

Military pay, the CBO analysts said, is going to grow faster than the Pentagon projects, because the politics of pay don't make restraint easy. Healthcare costs will grow because they always do, despite optimistic DOD projections. Military hardware programs will cost significantly more than the DOD projects, because a perpetual and definitive history of underestimating almost all hardware costs tells us so. And the costs of operating the forces (training, exercising, moving around the globe) will be higher than DOD forecasts because that has been true for decades. Put it all together and, using realistic cost estimates, the Pentagon's plans will cost 20 percent more than they are likely to have over the next 10 years.

Secretary Hagel should pay attention here. A realistic review has to use good numbers, or the forces are going to find themselves seriously short-changed.

There are at least three ways of dealing with this funding gap. One of them is to revisit strategy, as Hagel might do in his review and as the QDR should do. There are lots of good ideas about how to do that out there, which I summarized in a column four months ago. The world hasn't changed a lot since November. We still live in a moment of extremely low threat to our national security, a good moment to step back and review strategy.

The second way is the "peanut butter" way. Whatever a strategy review comes up with, spread the costs and benefits over everyone. This way, nobody comes up short. The Army doesn't have to batter its way into a "Pacific Pivot," they can pretend they are part of the strategy in that region and keep their share of the budget. The Navy doesn't get to grow, or buck the budgetary trend, it has to hold its share and live with the strategic consequences. And the Air Force still gets to invest in some technology. That's the "good service partners" way and nobody's ox gets too badly gored, but we don't necessarily end up with the best force for the world we live in.

A third way is to mix a strategy revisit with some tough love for the perpetual drivers of Pentagon budgets: weapons costs, the back office, and pay and benefits. Of course, that's the politically hard way. The Iron Triangle (services, members of Congress, and the defense industry) resist the idea of tough choices on hardware and tough love on costs. The services like to hold on to their infrastructure and find letting go of offices and processes pretty hard, as Secretary Gates found out with his effort to find efficiencies a couple of years ago. And most members of Congress (and a lot of the military) would sooner re-invade Iraq than touch the third rail of pay and benefits.

But it's like bank robber Willie Sutton said: "That's where the money is." And there is growing recognition inside the Beltway that constrained budgets are forcing closer attention to at least two of these.

Don't believe me? Take a look at a paper out this week by conservative defense analyst Mackenzie Eaglen from the American Enterprise Institute. Set aside the politically necessary rhetoric she opens with -- a readiness "crisis," "slashed" programs, and Pentagon budget "cuts." Go to the back of the piece where the facts are. Where she discusses pay growth and pay differentials and higher healthcare contributions by retirees. Or where she recommends another BRAC round because the services have way more infrastructure than they need. Or where she says the back office needs to shrink, which means bringing down the number of both civilian and military personnel to levels below where we were in 2000.

Some of these things are not controversial to conservatives, who generally take a "cut the waste; save the forces and weapons" position. But some of them are, and the "gung ho" advocates of "defending defense" might take offense. The proposals suggest two things that are truly important. First, the number of people outside the Pentagon who think long-term planning for a drawdown is necessary is growing and spreading across the political spectrum. And second, there may just be a constituency out there in the "aware public" for some realism in the Pentagon. Some support for the kind of tough love Hagel needs to bring to the services and the bureaucracy.

That -- and some serious, budget-constrained options inside the Hagel planning process -- could get us started on the drawdown management the Pentagon badly needs.

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National Security

Military Review

How Chuck Hagel can show the generals who's boss.

The time for a strategic rethink at the Defense Department has arrived. It is signaled by the third straight year of declining defense budgets and the reality that the sequester will bring the defense budget down even more -- and more quickly than forecast.

Not surprisingly, these budget realities are stirring up the same sentiments that we encountered at the end of the Cold War. The defense community is beginning to search for ways to prevent what Colin Powell and Les Aspin called a "freefall" in the early Clinton years, when they were chairman of the Joint Chiefs and the secretary of defense, respectively. "Stability" is the defense community's new goal, and a more intense strategy review than the one Leon Panetta oversaw is what will get them there.

Last November, I flagged five think tank reports that rethink fundamental U.S. strategy to frame options for the forces and their budget. With Secretary Hagel's arrival and the beginning of the Quadrennial Defense Review, it's time to put that approach into practice.

The latest signal that we need to rethink America's defense missions comes from five former deputy secretaries of defense: John Deutch, John Hamre, John White, Rudy de Leon, and William Lynn. They sent Secretary Hagel a letter on March 5, urging him to take a page from the Aspin era and carry out a separate "Bottom Up Review," or BUR, of our defense posture. Their intentions are good, but adding another review to Hagel's agenda would seriously compound his difficulties in getting control over the Defense Department -- and it wouldn't necessarily focus attention on the areas that most need it.

Strategy and force posture are driven by shrinking resources. As strategist Bernard Brodie once put it: "strategy wears a dollar sign." The deputies urge the secretary to take a new look at the threats we face and specify the forces we need, the tempo at which they should operate, the level of readiness they should have, and the training equipment they need. But they put "the resources needed for the posture" at the end of their list of priorities, instead of at the beginning where it belongs in the current budget atmosphere. They are still locked into the blue sky world of defense planning -- we decide strategy first, then we worry about the money.

To be fair, they ask that the review present the secretary with a "range of postures" at different levels of cost and capability, which is something the Quadrennial Defense Review has never done. They point out that savings will take time, that the hard choices need to be made early, that terrorism and cyber should be priorities, and that the rising costs of pay and benefits are a growing problem for Pentagon planning. Perhaps most importantly, their proposed review incorporates a key principle: "More cannot be done with less."

That is a crucial observation, and it flies in the face of the endless, mindless chatter from many officials that the Pentagon will now have to do "more with less." Nobody is asking DOD to do more! As Iraq is forgotten (though see the excellent report from the Special Inspector General for Iraq Reconstruction on the many negative lessons learned from our invasion and occupation) and we leave Afghanistan, the fact is that we are asking the military to do "less with less."

But there are serious problems with the planning process they propose.

I was around for the BUR; I remember it well, as an OMB participant in the process. Secretary Aspin brought to the Pentagon a pre-formed idea about U.S. force posture, based on years of thinking and testimony before his House Armed Services Committee, and informed by the "base force" concept Chairman Powell had already begun. The goal was to shrink the force, but guided by a set of strategy considerations.

The process of downsizing the force was already well underway when he took office. Secretary Cheney and Powell had already drawn down roughly 500,000 people from the Cold War force. In his first few months, Aspin was confronted with budget realities: The planning process for the first Clinton budget had lowered the resources he thought he might have. So the BUR was immediately "resource constrained," and the force had to come down even further.

The BUR was a new process; Pentagon planning processes before then had always been ad hoc and informal, at best. There was no QDR around to compete with it, or run parallel to it. In fact, the BUR could be seen as the "parent" of the QDR, which first took place under Secretary Bill Cohen in 1997.

Now the Pentagon is in a different place, and it has a different institutional problem. The QDR is a statutory requirement and has, as the deputies rightly point out, been "captured," as many Pentagon processes are, by the services. This makes the process a forum for advancing service goals, but not a process which the secretary can use to set overarching priorities for the Department. But it is and should be the secretary's tool. Unfortunately, instead of stiffening the secretary's spine so he can recapture his planning process, the deputies' proposal of reinstituting the BUR would either leave the QDR churning away in parallel under the old rules or abolish it altogether (the deputies leave this entirely vague).

The real problem for Chuck Hagel is that over the past 12 years, the military services have captured much more than the QDR inside the Pentagon. In an era of runaway resources, they had no incentive to rethink strategy or make hard choices; they just spread out to do everything, as the last two QDRs have done.

When the time came to make hard choices -- the last two years -- the services have railed against the necessity, still arguing for everything, trying to plug the leaky fiscal dike with their fingers. And in the most recent round of the sequester battle, the White House made the tactical decision to step aside and let the services become the poster child for the entire budget war, further encouraging them to wander outside the box of proper civilian control.

One of Secretary Hagel's most important challenges, then, is to reassert civilian control in the Pentagon. The services are magnificent, in many ways, but they have not been disciplined for more than a decade -- disciplined about what really matters: planning sensibly to spend the resources the Pentagon will have to perform the military's missions.

The best managed drawdown, for that is what Hagel will oversee, depends on his gaining control over the existing machinery, not inventing new machinery to run parallel or instead of what exists. Instead of abandoning the QDR, he should be encouraged to embrace it, make the QDR a resource-driven exercise, and run it from his office using his staff.

Above all, he should ensure that it is focused on doing what the deputies recommend: producing options for strategy, mission, force structure, readiness, and equipment. And these need to be real options, such as the proposal made last week by former Navy CNO Adm. Gary Roughead that would dramatically shrink the ground forces and enhance the role of the Navy. That's an option, and it breaks a lot of china in the Pentagon. It should be on the table, and the services are unlikely to put it there.

And there are a few budgetary and management options the former deputies left out. In addition to this strategic rethink, and reducing/changing the personnel mix, the next QDR should tackle the two other big sources of Pentagon fiscal indiscipline: the back office (the administrative overhead which employs more than a third of the active-duty force), and the out-of-control acquisition system (which leads to endless cost growth for military equipment, delays in production, and diminished capabilities from those promised).

These two major problems seriously compromise the secretary's effort to keep the point of the spear sharp, because they devour the shrinking resource pie. And they pass unmentioned by the former deputies.

Shrinking resources and sequester are, like the Chinese symbol, both a crisis and an opportunity. The arrival of a new secretary and the start of the next QDR strategic review are the place to start.

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