Shots Fired

The battles over a drawdown at the Pentagon may have begun, but senior leadership is still prioritizing politics over hard budget realities.

We are almost through the first year of the sequester, and the impact at the Department of Defense (DOD) has been less serious than advertised. The aircraft carrier Truman sailed to the Gulf; civilian furloughs were predicted to be 22 days, but instead were cut to six; and forces were clearly ready to fire on Syria if the president had asked. Was the sequester a mirage for the Pentagon? No, but the capacity of the DOD to manage the situation has actually been pretty impressive.

As I have said before, the tools DOD has to manage sequestration cuts are significantly more flexible than those of other departments: Military personnel are exempted from the sequester, and existing hardware contracts are also not affected by it; reprogramming authorities are large and flexible; war funding is fungible with non-war operating funds; funding for operations, training, and administration is also extremely fungible and doesn't require asking Congress's permission to move money around; and Congress gave DOD an actual appropriation this year, which was not the fate of most other federal departments. (This increased DOD's operations funding.)

Let me be clear: The sequester is not a walk in the park. The Pentagon would rather have even more flexibility -- who wouldn't? But in reality, the sequester only accelerates a process that has been underway since fiscal year (FY) 2011: We are in a defense drawdown, and that is what the DOD needs to be planning for.

The political process in a drawdown typically erupts into two kinds of battles: the one between the Pentagon and Congress ("if you cut us, do we not bleed badly?") and the one among the services ("the military must absorb cuts, but take them from the other guy"). We are heading into a budget war that will involve both of these battles -- a war that, as long-time Pentagon observer George Wilson once said, "really matters."

As an example of an early shot in the first type of battle, acting Air Force Secretary Eric Fanning said that his service could probably protect future budgets for its new fighter (the F-35) and its new tanker (the KC-46), but that it might have to get rid of its close air support aircraft (the A-10) and its more modern tanker (the KC-10). The Air Force has wanted to put the A-10 over the side for years, but the KC-10? That sounds like more of a Washington Monument cut -- you know, "If you slash the budget of the National Park Service, we will have to close the monument."

Meanwhile, the harbinger of the second battle came from former Chief of Naval Operations Gary Roughhead when he argued that ground forces (the Army and Marines) could take deeper cuts than currently projected, while the Navy budget should stay large. He may be strategically correct (I am inclined to agree with him), but his suggestion was not well received everywhere in the Army. My conversations suggest this particular battle is just now getting underway as the services prepare to respond to the request for sequester-level budget choices.

So it appears that the Pentagon is beginning to wake up and smell the coffee -- that is, to acknowledge that the drawdown is happening. Nonetheless, there is still a tendency at the DOD to make things look worse than they are, or to shape the budget realities to suit budget politics. For example, the Pentagon is still talking about the dangers of a $52-billion cut in FY 2014 if a sequester happens again. But another way of looking at things is that the sequester this year already took away more than $30 billion, setting a new baseline for the FY 2014 defense budget. The DOD comptroller, the redoubtable Bob Hale, keeps emphasizing this view: "If they've cut $30 billion, you'd probably better execute at that and maybe even be a little risk averse and go below that."

Given that FY 2013's sequester-level funding is now the new normal for defense, last spring's "wish list" for the DOD is now just that -- a wish. It can no longer be used for measuring cuts. Although it makes better politics for the Pentagon to compare a possible FY 2014 sequester to the old number, rather than the new one, it has to start admitting that, over the next two to three years, the defense budget is going to settle somewhere around $450 billion (in this year's dollars). This would make this drawdown similar to the ones we have gone through in the past.

Some see a budget agreement with Congress as a way out of this reality. Don't count on it -- Congress has never seemed further away from an agreement. House Republicans can't even agree on a continuing resolution to tide the government over to December.

The Pentagon's leadership needs to emphasize reality over politics and continue pushing the services to accept and plan for the drawdown. It will be a manageable change, especially if the leadership keeps up a drumbeat about shrinking the Pentagon's overhead. Christine Fox, former head of the Pentagon's Office of Cost Assessment and Program Evaluation and the leader of DOD's most recent strategy and management review, argued in a recent Defense News editorial that the "back office" could not be cut deeply or quickly because the people there are doing things that need to be done, including logistical support and equipment repairs. She left out some key data, however. Like the fact that the Congressional Budget Office notes 60 percent of the overhead is in infrastructure, unrelated to readiness. Or that there are, as Hale estimates, 700,000 contractor personnel (not the military, not civil servants) that are doing back-office work. Or that even a substantial number of folks in uniform are performing civilian or contractor functions, according to the Defense Business Board.

Shrinking the Pentagon will not solve all problems. But senior leadership can tackle the issue more aggressively than it has thus far and create lasting savings. If Pentagon leaders -- both military and civilian -- take this challenge on fully and honestly, they will be creating budgetary space for the forces and technology that are most important for the military's future.

Staff Sgt. Eric Harris/DVIDS

National Security

Get Real

The House proposal to keep defense spending down is a big deal -- and a reality check for the Pentagon.

Earlier this week, the House Appropriations Committee introduced a continuing resolution to prevent a government shutdown, which assumes there will be no final agreement on a budget or on appropriations bills before the end of the fiscal year on Sept. 30. The House bill provides discretionary government funding through Dec. 15, or the first two-and-a-half months of FY 2014. The committee decided that, rather than give either the president or Rep. Paul Ryan what he asked for, it would get real: fund defense and the rest of the government at roughly the same level for the next three months as they have been funded for the past year. In other words, fund them at the post-sequestration level. My colleague Russell Rumbaugh calls this "a huge deal."  

The resolution -- which is now being contested within the Republican majority in the House -- has yet to be voted on. But it confirms an ongoing message: Defense budgets are going down, sequester or no sequester. If the Pentagon cannot count on more money from the Republican House than it got after the sequester this year, there is no "get well" point in the visible future. Trust me, the "defending defense" crowd isn't going to be any happier when the Senate takes its stand on a continuing resolution. It is time for the Pentagon to think about how to manage with funds that are no more than what the Budget Control Act projected over the next 10 years.

If sequester kicks in again in January because there is no budget deal (a distinct possibility, given the absence of any progress in talks on the overall budget this summer), the level of funding provided by the House Appropriations Committee bill will fall another $20 billion. The Department of Defense managed to survive, quite handily, the $37 billion it lost through sequestration in FY 2013. Given the flexibility the Pentagon has to manage sequester -- for example, a flexible operations and maintenance account, large internal reprogramming authority, and fungibility between the base budget for operations and the "war" budget -- it can handle another $20 billion in FY 2014, probably without more furloughs and, frankly, without severe damage to military readiness.

But it will take work and more advance planning than the Pentagon has engaged in so far. There are lots of places to get this planning going. The budget request for FY 2015, now in its final stages, is one place to accommodate realities in the future. The Quadrennial Defense Review (QDR) now underway, with a report due in February, is also a good place to acknowledge what the great strategic thinker, Bernard Brodie, said way back in 1959: "Strategy wears a dollar sign." If the QDR does not take place in a context that is fully informed by budget constraints, it will be a failure and irrelevant to the choices that need to be made as the budget declines. The independent panel that was appointed to review the QDR from the outside (co-chaired by former Secretary of Defense Bill Perry and retired General John Abizaid) had better be a resource-aware enterprise, too.

There are two other commissions that are increasingly relevant to where the Pentagon should be going spending-wise. One is the panel on headquarters reductions that Secretary of Defense Chuck Hagel appointed last month, chaired by former Air Force Secretary Michael Donley. It is supposed to look at how the DOD will implement a 20-percent reduction in headquarters staff that the secretary announced in July. (Over five years -- to which I say: Let's move faster.) That's a good start, but the panel's mission is too narrow. It should be digging into the entire DOD "back office," the 42 percent of the defense budget that is overhead, 70 percent of which is in the services -- not just into the secretary's office, military commands, or headquarters.

The other panel is the one looking at military pay and retirement, chaired by Al Maldon, Jr., who is a former DOD official and a founding partner of the Washington Nationals. The panel needs to hit one out of the park when it reports on Nov. 1; pay and benefits, including health care, have doubled per active-duty troop over the past decade. This is a touchy issue in the defense world, full of political landmines. But it needs to be addressed. (The Center for Strategic and International Studies group working on trade-offs in future defense planning has been saying this for a couple of years.)

If the Pentagon does not do long-term planning that tackles the "back office" and the pay and benefit issues, the budgetary drawdown over the next decade will not end well, in terms of meeting the nation's needs. Secretary Hagel and Deputy Secretary Ashton Carter need to step in aggressively to ensure future planning is not just business as usual -- that is, spreading the cuts in a "chunky peanut butter" way that keeps the services and the politicians happy but does not actually close the gap between plans and resources. Their leadership and legacy are at stake here, and they need to intervene in a way that may not always make the services happy, but that promises to protect what the services are here to do: provide the agile and capable force the nation can call upon to support its statecraft.

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