Three years ago, I advanced the argument in a Foreign Policy article that the defense budget should -- and could, without endangering the republic -- be cut by 10 percent annually for several years before leveling out. As Secretary of Defense Chuck Hagel made clear on July 31, this is now precisely what is happening. Well, not exactly. My preference was, and is, for reductions to be made more selectively than by the meat-axe methods of sequestration. Hagel and his advisors intend to operate more flexibly, too; that is, they want to be allowed to make choices between what they call "capacity" and "capability." This more deliberative approach, Hagel hopes, will govern the roughly $500 billion of across-the-board defense budget cuts that are currently scheduled to unfold over the next 10 years.
By "capacity cuts," the Hagel team -- which conducted a comprehensive internal strategic review this past spring -- means basically numbers. Of troops, tanks, ships, planes, and so on. "Capability cuts" refer to quality-oriented matters, ranging from modernization of weapons, transport, and information systems to expanding capabilities in such key areas as special operations and cyberwar. The underlying sense of the review is that the U.S. military now confronts something of a zero-sum situation: Holding on to capacity means sacrificing capability; emphasizing capability requires loss of capacity. The example that Hagel cited last week entailed having to mothball three aircraft carriers to create budgetary space for further investment in force modernization.
One can easily grasp how these grim calculations work, at least in a rough sense. Keeping current authorized active-duty servicemember levels at a total of about 1.5 million overall means continuing to bear a roughly $250 billion annual personnel cost on the books (around 40 percent of the current defense budget). In the face of looming real spending reductions of $50 billion per year, this inevitably means that something has to give on the systems side of the equation. Conversely, keeping a very expensive procurement program in place -- like the F-35 fighter plane, with production costs of about $400 billion, and even more in operations and maintenance -- imposes pressure to reduce troop levels. This is how the Hagel team has put the matter to the American people -- perhaps in the hope of gaining an exemption that would curtail continuing defense spending cuts.
But the "10 percent solution" should be considered more carefully, each element separately. It is important to weigh capacity, in terms of troop numbers, as a factor in its own right -- not as locked in reverse synchrony with modernization. In fact, reducing active-duty forces is a good idea on its own merits. Why? Because small units have already become greatly empowered by existing smart weapons. Because, in countering insurgencies or terrorist networks, the key is not numbers but knowledge. And because, even in large engagements, nimbler and more networked forces can make mincemeat of big enemy formations. For those who want to fight massive, old-style opponents more traditionally, the cost-saving, hedging strategy is to move heavy units more and more into Reserve and National Guard formations. If they're needed for a reprise of World War II, there will be plenty of warning time to mobilize them.