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Hagel Channels Eisenhower

Can the new SecDef actually rein in the military-industrial complex?

It was a New Yorker cartoon, I think, that showed two generals walking in front of the Pentagon, with one saying to the other, "Well, we've run out of money; guess we have to start thinking." Secretary of Defense Chuck Hagel started that thinking process in his speech at National Defense University on Wednesday. He is the first to really do so since we started flooding the Pentagon with money when we invaded Afghanistan and then Iraq.

Oh, the speech is full of some miserable speechwriter progeny. The boilerplate per square minute was almost indigestible: "a principled realism that is true to our values" (a Dagwood sandwich of prose, everything in the strategic fridge layered on top of itself), and "we are a wise, thoughtful, and steady nation, worthy of our power, generous of spirit, and humble in our purpose" (how could we, dare we, be anything else?).

But in and around this mindless rhetoric, Hagel got the problem right: It's about the money. And the money is going south probably for a number of years. Strategy and planning have to follow the money, not the other way around.

He was wrong to say that the Pentagon will be dealing with "significantly less resources than the Department has had in the past," as Mark Thompson pointed out on TIME's Battleland blog. Defense budgets, even down 10 percent over the past two years, are still higher than they have ever been since the end of World War II, in constant dollars.

And instead of drawing the line at the "cuts" Secretary Panetta made (that $487 billion in reductions to projected budget growth over 10 years), Hagel was clear that the Pentagon now needs to plan for further reductions, perhaps as low as the full sequester. (Realistically, I would suggest even lower than that.)

But instead of saying these lower budgets will turn the United States into a second-rate power, or undermine national strategy, or decimate the nation's military capability, his message was clear: It is time to adapt, change, reform, and move on. If the Pentagon wants funding for the point of the spear, he said, it will need to zero in on the real budget issues: military hardware that has cost too much for decades; a system of pay and benefits that has spun out of control; and, especially, a "back office" that is over-stuffed and hasn't faced budgetary discipline in decades.

As the secretary said, everything we buy costs too much, takes too long, and falls short on performance. The Government Accountability Office has reported that recent reforms to the way the Pentagon buys equipment have lowered cost growth in hardware programs. Maybe, maybe not. (A large part of the cost change has come simply because programs have been finished or cancelled.) It is certain that costs will not stay down unless the secretary follows weapons programs closely. Maybe Hagel will; most secretaries do not.

He raised good questions about personnel costs, too, like healthcare fees and pay raises. Like how many civilians and military the department really needs. And how many officers, and what about all those folks who are doing commercial, not military work? If any secretary wants to take this on, he does so gingerly, and at the edges, the way Secretary Gates did, but a full assault is needed to make any real progress.

Above all, Hagel addressed what he once called "bloat" at the Pentagon -- too many headquarters, too big a Joint Staff, a plethora of offices. The back office needs to be the cutting edge of budget discipline; it is too often ignored in debates about whether weapons or uniforms will pay the price.

Like all good speeches, and all puddings, the proof will lie in the eating. So far, the signs aren't good. The terms of reference for the Strategic Choices and Management Review (known as "scammer" in the Pentagon -- an unfortunate acronym) Hagel ordered did not make it clear that program options were needed at much lower budget levels. And the secretary may have made a strategic error in saying that the entire building, including the service chiefs, "are going to come out of this together." The big, hard choices are the ones the chiefs do not like to make: cutting billets, offices, infrastructure. The operating budgets have historically been cut the least in a defense drawdown. They are the pet rocks, the bulwark of service turf. And to cut them down to size, the secretary is going to have to discipline the services, not bear hug them. It will not be easy. He will need to lay down the law and take the money.

In fact, the whole task is going to be unbelievably difficult. Because if Hagel means business, he is taking on the Iron Triangle, all three parts at once. He is going after the services' cherished possessions. He is going after the programs and basing infrastructure Congress loves to protect. And he is telling industry and the communities that house bases and offices that some of them will not survive.

Few secretaries have done this and gotten away with it. Eisenhower, whom Hagel quoted twice, could do it because, well, he had five stars and the highest-ranking officers had only four. Nixon could do it because the war was ending and his defense secretary, Melvin Laird, was one of the best pickpockets the Pentagon has ever seen. And Dick Cheney and Colin Powell could do it because they were Cheney and Powell.

Every drawdown is tough. This one should, in theory, be less tough because the budget is historically high. But the problems are historically tough, too. So we should wait a while, spoon in hand, for the pudding tasting, to see if the rhetoric this week is followed by the discipline it will take to bring the Iron Triangle to heel.

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National Security

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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