Have You Heard the One About the Pentagon's Budget?

They're all fat jokes. And that needs to change.

There's a joke about lawyers (one of many) that goes, "What do you call 10,000 lawyers chained together at the bottom of the sea?" The answer, for those who think we have too many lawyers (well over 1.2 million, according to the American Bar Association), is "a good start." Well, what do you call a 20 percent cut in the staffs of the Office of the Secretary of Defense and the Joint Chiefs of Staff (closer to 9,000 people in a DOD military and civil service workforce of 2.2 million)? A symbolic start, at best.

The headquarters staff cuts, announced by Secretary Hagel last week are, of course, welcome, even though they will apparently take place over a five-year period, much of it after Secretary Hagel is gone. But they do not begin to address the problem of the Pentagon's "back office," the most serious managerial challenge the secretary faces.

And it is a big back office, indeed, ranging from 1.1 to 2 million people, depending on who you count. If you count the 800,000 civil servants working for DOD and add the 340,000 active-duty uniformed personnel who are performing civilian or commercial functions (according to the Defense Business Board) you get to the lowest estimate. If you add those 800,000 civil servants to the separately-counted 560,000 active-duty military personnel the DBB says "never deploy," you get 1.36 million. And if you add to either total the 700,000 "ghost" civil servants -- contractor personnel who work side-by-side with the civil servants doing government jobs (as estimated by Pentagon Comptroller Robert Hale) -- you get to at least 1.8 million, and maybe 2.2 million who are contractors, civil servants, or uniformed military who are not at the point of the spear.

That's one heck of a back office. The DBB estimates, without contradiction, that 42 percent of the defense budget is spent on overhead. Some overhead is clearly needed for every enterprise, including the military. But 42 percent? No private sector business, non-profit, or public charity would survive for long with an overhead rate even 20 percentage points lower than that.

It seems to be the problem nobody wants to tackle. In the average defense drawdown (and that is where we are heading), we cut dollars invested for hardware purchases and we cut forces more deeply than we cut the budgets that support the back office. Take a look at this graphic measuring what we did in the drawdown of the 1990s, for an illustration; the pattern is the same for post-Korea and post-Vietnam.

The back office is Hagel's biggest and most difficult challenge. Getting $100 billion in "efficiencies" was the toughest challenge Bob Gates faced as secretary (and it is not clear he got that much -- there are no reports telling us he did). But if Hagel cannot develop a detailed, long-range plan for cutting the back office, here's what could happen, even without a sequester: Investment dollars shrink even further while the costs of the hardware continue to grow, pay and benefits continue to rise because cutting even the rate of growth is political suicide, and the size of the force, according to the Center for Strategic and International Studies could shrink as much as 455,000 troops from where it is today.

So it is time to get beyond symbolism. And, with the possibility of sequestration looming again next year, it is time for the secretary to plan for the long, Battan-like death march it will take, struggling through service and congressional resistance, to shrink the back office. It will not be easy.

One could describe DOD as a "Department of Government" (as a friend at the State Department once did to me) -- reproducing virtually every function the government does in large and small ways: personnel management, financial systems, health care insurance and delivery, education systems, counseling, recreation facilities. Over the past decade or so, the costs of providing these services has basically doubled per active-duty troop.

And while the civil service has grown more than the active-duty military over the past decade, the core problem is not in the headquarters staff -- it is in the 70 percent of DOD overhead that is in the military services, according to the DBB.

Too many defense spokespersons want to avoid this problem. The secretary told Senators Carl Levin and James Inhofe on July 11 that sequester-level cuts to Operations and Management (O&M) next year (even with flexibility to move the cuts around) would cripple readiness. And, indeed, the Pentagon response to the sequester cuts this year, which largely hit O&M, was to make visible, dramatic, but, in the end, hardly crippling cuts to training, flying, sailing, and equipment maintenance. (Congress approved a reprogramming that already reversed these cuts for the Air Force.)

The politics of readiness are a form of resistance. There is no doubt that the O&M budget funds training, flying, sailing, and equipment maintenance. But, as the Congressional Budget Office (CBO) has said for 20 years, using virtually the same language every time, DOD cannot tell you what the link is between O&M spending and any specific measure of the readiness of military units. The CBO thinks that more than half of O&M spending is going for things other than readiness, like recruiting, administration, base operations, financial and personnel management, virtually all of the salaries paid to the civil servants, and the contracts for all those "ghost workers" from the private sector.

If the secretary and the services want to protect the point of the spear (combat forces) and make sure it is nice and sharp (investment), they are going to have to tackle overhead, for real. And the back office scrub needs to be something a lot more serious than the usual budget drill. You know, tell the services they will have however-many billions of dollars less for the back office; now, go find the savings. That's a recipe for "hollowness," as the services use funding reductions to justify getting the money back. And it means more than an "efficiencies" drill, driven by a savings target, especially when you don't ever measure whether the "savings" were really obtained.

It means doing better than just "guessing" how many contractors are sitting at Pentagon desks and really counting them. And then deciding whether they are needed and those jobs really need to be done.

It means going with a scrub brush through all those civilian and commercial functions active-duty forces are performing, and making the same kind of decision about whether the military should be doing it, whether a civilian could do it more cheaply, and whether it needs to be done at all.

And it means doing the same with the civil service. The secretary would like to avoid furloughs next year, as he said to Levin and Inhofe. Then he warned that would mean the dreaded Reductions in Force (RIFs). This was meant as a political warning, but, in fact, reductions in the civil service would be part of a sensible approach to personnel management in a drawdown.

After all, the civil service at DOD shrank 50 percent after the Second World War, 24 percent after the Korean War, 28 percent after the Vietnam War, and 37 percent after the end of the Cold War. A low-end reduction of 25 percent would shrink the Pentagon's civil service to 600,000, only 50,000 smaller than what it fell to in the 1990s.

It means the secretary needs to steel himself against the "readiness = Operations and Maintenance budgets" mentality. The process he uses needs to sort out these two things and hold the services' feet to the fire on what funding actually contributes to measurable "readiness."

And it means the scrub has to include not only the people in back office functions, but the back offices themselves. Which command flags can go, which offices are performing duplicative functions, which ones no longer have a mission?

These inventories and the evaluation process need to be done from the secretary's office, with the participation of a dedicated team of experienced military, civilian, and private sector personnel who know and understand the DOD and its business. Reform and consolidation will not happen if the services are asked to do it to themselves.

The process should start now, for three reasons:

First, sequestration is likely to hit defense again in five months and a plan would put the secretary ahead of the curve. He could argue the cuts make sense and get away from the blackmail of readiness impacts.

Second, even without the sequester, he will need a plan to be sure he and his successors have the right resources for the point of the spear.

And, third, the politics of the back office are as difficult as the politics of pay and benefits, base closings, and hardware "kills." The secretary is going to have to start to build a track record with the services (which like the back office to grow) and Congress (which likes the back office when it is near home). He will need to overcome political resistance by convincing them that if they are serious about maintaining a reliable, agile, trained, and ready point of the spear, only serious savings in the back office will make that possible.

Alex Wong/Getty Images

National Security

Taxed Americana

Why the United States needs to get out of the 'indispensable nation' business.

Senator McCain is pushing Gen. Dempsey to get the United States into the fight in Syria. NSA chief Keith Alexander announces the creation of 40 new cyberwarrior teams, 13 of which are dedicated to the development of offensive cyberweapons. The urge to advance America's national security agenda around the globe, using the military instrument, continues unabated despite a defense drawdown, the potential for the defense budget to drop another $52 billion below what the administration asked for next year, and Secretary Hagel's warnings that the going is going to get tougher.

It makes me wonder if it is not time to rethink our assumptions in a fundamental way. In the 1990s, when I worked in the White House doing defense and foreign policy budgets, the Clinton staff regularly asked with wonder, "Why do we spend so much on the military?" Pretty senior people, not just the young whippersnappers like George Stephanopoulos or Rahm Emmanuel.

After a while I got to expect the question, so I would routinely carry with me a set of briefing graphics that described the U.S. defense posture and its budget. The graphics told a story about what the U.S. military did and where they did it. They weren't about waste or out of control "back office" administrative costs, or runaway pricing of weapons programs. Those all contribute to the size of the budget.

But at the heart, I would explain, we had and have a huge military establishment because, at the very core of our foreign and national security policy, we assume that the U.S. military, the United States as a whole, is responsible for everything and the military needs to be everywhere.

When I walked people through the briefing, I would point out that the American soldier, sailor, and pilot is everywhere. The U.S. military was then (and continues to be today) the only one in the world with a truly global presence. No other country has global military communications, global logistics, global intelligence operations, global basing, global transportation. No other military can deploy forces anywhere in the world, by sea or by air, fly in any airspace (in principle), sail to any part of the world. No other military even tried -- not then, not today.

It's not just about the costs of overseas basing; it's about having the personnel, equipment, and capability to do that anywhere in the world. To put a fine point on it, we have, for decades, asserted and executed the role of global system integrator. And our defense budget is expensive, fundamentally, because the military is the primary instrument for ensuring we can play that role.

This assumption is as common to our discourse as the water we drink and the air we breathe. It is hardly questioned. Just listen to the politicians' speeches and the policymakers' declarations. If there is a failing state in Syria, we must start planning to use the military to deal with it. If there is a tsunami in the Indian Ocean, the U.S. military is needed to provide assistance. If there is a bad guy oppressing his people, we need to step in with swift regime-change justice. If there are untreated illnesses on the Latin American coast, the American military has to sail a hospital ship in to comfort them. If there is an Islamic extremist surge in Mali, the U.S. military has to engage at least to the extent of supplying intelligence, transportation, and fuel, and then bulk up training programs for African militaries, along with our own military presence on that continent.

The assumption is very broad; it affects much of American statecraft and foreign policy. The success of our diplomacy and the global trading system depend on our global military presence. Our global diplomacy will fail, some argue, if the United States does not have a global military to back it up. The U.S. military is the bedrock "guarantor" of security in every region. Terrorist organizations can only be confronted by the United States, primarily through military operations.

The global "commons" depends on the U.S. military to ensure that the seas are safe, the airspace is used peacefully, outer space is not militarized (though we send much of our military communications through space-based assets). And, increasingly, the global cybercommons, it is argued, is a responsibility of U.S. Cyber Command, the leader of which is currently dual-hatted with the job of leading the National Security Agency, responsible for all that global listening and data gathering we are hearing about.

This huge capability, operating on a global basis, is rarely questioned. When it is, or when a major combat deployment on land ends, as I pointed out last week, the military "shrinks" a bit to some more normal state (especially the ground forces), awaiting some new assignment of responsibility for an event or challenge somewhere around the globe. Meanwhile, we pursue "stealth globalism," forces and intelligence operatives who work more in the dark -- as they did in the 1950s, the 1980s, and today.

All kinds of signals are now appearing that this global role is unsustainable, even counterproductive, and out of touch with the dramatic changes taking place in the world. Yet we push on, as if the assumption is still tenable.

The explosions in the Middle East reflect historical realities which we did not create and which we cannot control, yet political leaders like Sen. McCain still bluster that we can and ought to use our military to do so. And yet our very global presence seems to exacerbate the problem; the Arab Center for Research and Policy Studies in Doha found, in a June opinion survey of 14 countries, that the United States and Israel were considered "the largest threats to Arab national security."

The finding is consistent with the conclusion drawn by CIA counterterrorism operative Michael Scheuer 10 years ago in his book Imperial Hubris, that what sustained support for al Qaeda in the region was not anti-American values or cultural reaction, but resistance to America's presence and policy in the region.

The rise of China, which the military's "Asian Pivot" is designed to contain or resist, is not something we caused. But it is inevitable, and the expansion of the U.S. military presence in the region is a double-edged sword. It may appear to reassure some of China's neighbors; it may also exacerbate precisely the military confrontation it is intended to prevent. But it is clearly built on the global assumption: Regional powers cannot resolve contentious security issues, so we must be there with a major military presence.

For decades the security assumption in Europe was that the American military presence ensured not only the deterrence of the Soviet Union, but also provided the sinews that bound the security of the European countries together. Yet, for the past 20, nay, even for the past 50 years, the United States has pushed the Europeans to bulk up their militaries; they have not only failed to do so, but their military budgets have plummeted as the Europeans make their own choices about their security interests, impervious to U.S. global demands.

And today, having learned that the global intelligence apparatus of the United States was not only gathering military and security secrets, but tapping into such un-terrorist locations as the offices of the European Union, the Europeans are asking themselves what is the cost to their security of such deep intrusion by the big brother across the Atlantic.

And despite the rhetoric about the global commons, today ships sail without naval protection (don't talk to me about pirates -- a nit on the seas compared to the global naval traffic). Aircraft fly under rules negotiated by diplomats and technical experts; they are not accompanied, each, by an American fighter jet. Aside from military communications, space is full of commercial enterprise, guaranteed by commercial rules and international agreements. And I have just noted the down-side of making the NSA responsible for policing cyberspace.

I despair, I confess, of any expectation that the Washington assumption will be reexamined. But it is worth raising the flag, because persisting in the illusion that we should, and can, be the indispensible nation, the guarantor of the system, the protector of the commons, is unsustainable, counterproductive, and even dangerous.

In a world where virtually no problem can be solved without the cooperation of all, especially inevitably rising powers like Turkey, South Africa, Brazil, India, Iran, China, and even Russia, the assumption that we have the answers and are the indispensible manager is just plain wrong; it passed its sell-by date a long time ago.

And being wrong, it can be counterproductive. We walk in with the answer, send the forces to execute the answer, and discover that we are not as beloved as we think we are.

And not being beloved, we become the force to resist, which frustrates the very purpose we set out to accomplish.

Plus, today, the entire global mission is unaffordable. No amount of increase in defense spending is going to reverse the trends I have identified. As defense resources decline, and they will decline with our fiscal and economic troubles and the end of the misadventures in Iraq and Afghanistan, we will still have the world's only global military. But it is going to have to be matched with our non-military, civilian wits, because using the military tool is not buying us the security we once thought it did.

It is time to rethink the assumptions, because the price of not doing so is too high; its ineffectiveness too obvious, and the blowback too threatening to our long-term security.