As the U.S. economy struggles to recover from the Great Recession, most American families have had to make tough decisions about their current needs and future spending.
Similarly, one year ago, Congress passed the Budget Control Act (BCA), which put caps on future government budgets. As a result most federal agencies, including the Department of Defense, will be required to roll back their spending plans. Furthermore, unless Congress can find a way to save $1.2 trillion over the next nine years, an additional $110 billion in “sequestration” cuts will hit federal agencies, including the defense department, on January 2nd.
The prospect of this so-called sequestration, which would reduce defense spending by 10% from current levels, has inspired panic within the defense establishment and industry. Some defense and congressional leaders have called the prospect “draconian,” “devastating,” and even “catastrophic.” These public fulminations have helped shaped a growing consensus in Washington that the Budget Control Act must be amended or suspended to prevent sequestration.
Indeed, a more reasonable approach to achieving savings is needed. But the type of hyperbole issuing from the defense establishment and defense leaders in Congress does us no good. It impedes clear thinking about the options before us.
With the wars in Afghanistan and Iraq drawing to a close, it is sensible to expect what new fiscal constraints require: some significant reduction in defense spending from current levels. We need to ask: how can America’s defense posture and budget change to address security concerns in a more cost-effective and sustainable manner?
The first step is to put the prospective savings in context.
Unlike most American’s household accounts, the Pentagon’s “base budget” (which excludes the costs of the Iraq and Afghanistan wars) has grown by 40% over the past decade, in inflation-adjusted dollars. It is reasonable to expect some room for significant savings.
What would sequestration do to the Pentagon’s base budget? Essentially, it would roll it back to a level equivalent to the budget in 2007 – a year the Pentagon survived without catastrophe, or anything resembling it. Savings of this magnitude should be possible. The real question is, How? And the real issue is, How fast?
There are numerous ways to save defense dollars that avoid both institutional disruption and most of the economic pain associated with deep cuts to government spending. An illustrative option is the “Reasonable Defense” plan, which will soon be released in its entirety by the Project on Defense Alternatives.
The Reasonable Defense plan would reset and reshape America’s defense posture in response to new strategic challenges and circumstances. Based on a more realistic and cost-effective defense strategy, the new posture would enable a sustainable balance between military power and other elements of national strength.
It would allow the United States to reduce the base budget to the same amount as was provided in 2006 (corrected for inflation), but do so gradually in stages that the Pentagon and armed services can readily accommodate.
The table and chart that follow illustrate the first five years of the Reasonable Defense plan, comparing it with the Budget Control Act “sequestration” budget, the Administration’s FY2013 plan, and the actual 2012 spending level carried forward with increases for inflation.
The first three years of Reasonable Defense savings would be considerably smaller than what the BCA sequester entails. Then, in 2017, when the post-recession economic recovery should be complete, the savings would exceed those dictated by the BCA. They eventually plateau at a level about equal to the 2006 budget, which is somewhat lower than the sequestration level.
What does this proposed level of funding mean?
The Reasonable Defense budget over 10 years would cost $560 billion less than the 2013 plan submitted by the Pentagon, which envisioned spending $5.76 trillion over the same period. Instead, the Reasonable Defense budget would provide the Pentagon with $5.20 trillion. In comparison, the Budget Control Act would cap defense spending at about $5.18 trillion.
Once the drawdown to a Reasonable Defense level is complete, the annual Defense Department base budget would stabilize at approximately $455 billion (2012 dollars), which is 14% below the Fiscal Year 2012 budget. This is quite a modest reduction compared to the 35% cut that followed the end of the Cold War. And, because the reduction would occur gradually over four years, the annual steps down would be comparable to those successfully absorbed by the Defense Department during previous periods of adjustment.
Americans understand how difficult it is to make tough decisions about where to spend money and how to save. They send their elected officials to Washington to make the same difficult choices.
As many families around the country tighten their belts and learn to live with smaller household budgets, they expect the Pentagon to do the same. The Reasonable Defense plan demonstrates how carefully conceived changes to the Pentagon budget can be consistent with economic recovery and also provide ample military capacity to protect America and our core commitments abroad.
Charles Knight is the co-director of the Project on Defense Alternatives, a think tank which promotes consideration of a broad range of defense options and advocates resetting America’s defense posture along more sustainable, cost-effective lines. He can be contacted at firstname.lastname@example.org.