In a notable essay in Foreign Affairs, Secretary of Defense Robert Gates has directly challenged his strategists and the military chiefs, declaring that the defining principle of the new National Defense Strategy is “balance” and announcing that throwing money at the Department of Defense’s problems was no longer acceptable.[1]

Secretary Gates’ insistence that the DoD return to the basics of strategic planning rather than using nearly limitless resources is heartening. Too often in Washington, the meaning of strategy is lost. We have apparently forgotten how to “choose realistic goals or craft strategies likely to achieve our objectives at affordable costs in the face of various constraints.”[2]

The greatest imbalance in our national security framework is the distinct lack of relationship between the Pentagon’s coffers and the resources that the nation is willing to apply in a sustainable way. Walter Lippmann once declared that “foreign policy consists in bringing into balance, with a comfortable surplus of power in reserve, the nation’s commitments and the nation’s power.”[3] This is known as the famous Lippmann Solvency Test. By that standard, U.S. foreign policy and military posture is close to bankruptcy. Our fiscal commitments and our economic base are in shambles, and we have expended our military to the point where it is certainly strained. We have no “comfortable surplus of power in reserve,” and the prospects for rebuilding the military are at risk. Whatever grand strategy the Obama administration seeks to craft, its principal task is to get us out of the red–strategically, militarily, and fiscally.

How Much Is Enough?

Gauging America’s defense needs has never been easy. The proverbial “how much is enough?” question has never been answered with any scientific prediction. The current security environment comprises emerging powers, Islamic fundamentalism, rogue nations with hopes of becoming nuclear states, and transnational terrorists adept at attacking the sinews of modern societies. Our national security strategy and our military forces must prepare for this broadening set of missions.

The most common measure of defense spending compares a country’s budgetary resources against those of other countries. The United States nearly outspends the rest of the world combined. According to the International Institute of Strategic Studies, U.S. military spending exceeded that of the next 24 countries in the world in 2006.[4] Very few of these countries represent potential adversaries. Even combining Russian and Chinese defense budgets, we outspend them by a factor of three.

Another common measure of defense spending is to assess how much of the nation’s gross domestic product (GDP) is being extracted for defense. A number of defense analysts have been calling for a defined level of investment–a floor of 4 percent of GDP–for defense spending.[5] This is far lower than during earlier eras, where 8 to 12 percent of our total economic output was applied to defense. Admiral Michael Mullen, the Chairman of the JCS, has supported this proposal.

For reference, excluding direct war-related supplemental funding, today’s Pentagon absorbs nearly 3.7 percent out of a $14+ trillion economy. Adding the funding provided via supplemental funding brings today’s level up to 4.2 percent.[6] So, the proposal to lock in a “four percent for freedom” would lock in the Bush administration’s defense mobilization and also add the current war’s supplemental funding into the Pentagon’s baseline budget. This would be roughly $600 billion a year and would add at least $200 billion a year to the budget deficit.

Greater Discipline

There are a number of arguments raised against this specific level of spending:

Astrategic. If there is one lesson from the ongoing Long War, it is that there is more to national security than armed might and traditional warfighting capabilities. Our diplomatic and development tools are anemic, and homeland security is thin. Accordingly, it is incumbent upon our nation’s leaders to understand and act upon this lesson wisely. It is astrategic to simply assign a flat percentage to the armed services in the face of these competing demands.

Simply stated, the nation’s GDP is a measure of our capacity to invest; it does not reflect what the requirements are, or what the nation’s overall strategy should be. It’s a crude measure of what we can afford to pay as a nation. What we paid in the past for defense is relevant, as long as we understand the context today. We spend far more today for energy, health care, and social entitlements, and thus we are no longer able to make simplistic comparisons.

Inaccuracy: Relative vs. Absolute Spending. The impression has been created that the nation is not spending enough on defense. Some want the American taxpayer to believe that the military has been badly shortchanged for years.

It is not accurate to say that defense spending has declined. We are spending less in relative percentage terms of the total resources the country has than in the past. It is true that we spend relatively less of our total national economy and a smaller percentage of our federal budget for military purposes (dropping from 40 to 20 percent since Vietnam). Thus, we are spending less relatively than we could, but this does not equate to spending less. It means that we can afford to spend more, not that we are spending less in absolute terms.

When one examines the defense budget in constant dollars (adjusted for inflation) in these same time periods, one sees a different story. Defense spending in real and absolute terms has grown. In fact, the last administration made a concerted effort to build up the armed forces, and the FY2009 baseline budget for DoD represented a 44 percent increase in real or inflation-adjusted resources. The fact of the matter is that defense spending, in real terms (inflation-adjusted dollars), has increased over time. While the Pentagon’s share of the federal budget has declined, its real or absolute resources have increased. The total top line for DoD has increased from $452 billion to $589 billion in constant budget dollars. So the declining defense argument needs a bit of clarification. In real terms, we spend more today, over 40 percent more.[7]

Rewarding Mismanagement. A widely cited study by the Government Accountability Office shows that many of the Pentagon’s major hardware programs turned out to be far more expensive than initially projected and late in delivery. The average cost escalation in research and development rose 40 percent over the last eight-year period, and total acquisition costs rose 26 percent. The total acquisition costs of the military major programs grew by nearly $300 billion over its initial estimates since 2000. The Pentagon’s processes for estimating costs and overseeing weapons systems has been described as ‘”fragmented and broken.”[8]

Examples abound. The Marine’s Expeditionary Fighting Vehicle has experienced 168-percent cost growth during its lengthy development. The Air Force F-22 program, expected to produce 341 fighters at a cost of $180 million back in 2000, ended up producing 184 airframes at an increased unit cost of $350 million each. The end result of these cost overruns is a serious strategic challenge for DoD. The cost overruns have robbed our troops of nearly three years worth of recapitalization funding. In view of this record, giving the Pentagon extra money does not force its program acquisition experts to fundamentally change the way Pentagon plans and buys.

Towards Solvency

Gaining an appreciation of where we stand is an important first step. Our national debt has grown nearly 80 percent over the last eight years, rising from $5.7 trillion to $10.6 trillion. This now represents about 80 percent of GDP, and it is projected to grow to 120 percent of GDP over the next five years, back at the level we were after World War II. This large debt has been accrued by living beyond our means as individuals and collectively as a nation.

The situation is getting worse. On top of growing government spending for benefits, we have borrowed a trillion dollars to prosecute the GWOT, and another half trillion dollars to build up the military since 9/11. Additionally, we are borrowing another trillion to prop up our financial institutions and planning to borrow another $0.8 trillion to shock our economy out of an incipient recession. This will substantially increase our annual deficit, which reached a new high last year at $458 billion, and which will now be closer to a $1.2 trillion for the next two years. This undercuts our ability to invest in economic and military security.

We need either to significantly increase taxes to pay for our security, or to downsize our strategy and investment levels to a more sustainable level. Given our insolvent base, a lower defense budget–closer to 3 percent of GDP or roughly $460 billion–offers a more sustainable basis for America’s security. Continued government spending cannot continue at these levels indefinitely without undercutting the economic security of future generations.

Reprogramming for a Sustainable Strategy

Achieving a balanced and sustainable posture will require hard calls. We cannot borrow our way out of the problem. Proposed shifts in posture and investment include:

A less assertive and less unilateralist approach to foreign policy and security challenges. Such a strategy must realize that “No matter how powerful the United States is, it cannot effectively address these challenges alone.”[9] This is not a “strategy of restraint” or neo-isolationism, as some propose.[10] Instead, we should pursue a more discriminate and disciplined grand strategy. We need a more realistic approach to promoting democracy and freedom, one that relies more on example and less on force of arms.

Reduced military forward presence, especially in Europe and Korea where we have obtained strategic success. Fixed forward bases should be reduced to a minimum. Our approach to presence should be minimal footprint and maximum freedom of action by flexible and maneuverable forms of presence.

Reduced strategic force structure levels. This would include substantially reduced nuclear force levels, although more reliable warheads are viable. Cuts to national missile defense are also recommended, to emphasize research and testing rather than premature deployment.

Reductions in planned acquisition levels for the Joint Strike Fighter, which presently stand at some 2,400 airframes at a cost in excess of $250 billion. Reducing the programmed acquisition objective to closer to 1,600 aircraft and investing in unmanned penetrators appears a better long-term investment.

Reshaping the Army’s Future Combat System to emphasize ground maneuver, force protection, and ISR integration. This program has many components and appears to be well designed for a broader operational spectrum. However, at a price tag approaching $200 billion, its ambitions outstrip any reasonable projection for available funding. Cuts to this program should be made in aviation aspects and focus resources on ground force protection.

Reframe the Navy’s Shipbuilding Priorities. The Navy’s long range 30-year ship construction plan is wildly ambitious, requiring nearly $10 billion a year more than is projected for naval acquisition. The Congressional Budget Office estimates that executing the Navy plan will cost $25 billion a year, far more than is projected by the Office of the Secretary of Defense and Congressional budgeteers.[11] The Navy’s programmed carrier fleet should be reduced from 11 to 9 carriers. The CVN 21 Ford-class carrier, a 100,000+ ton nuclear-powered aircraft carrier designed to replace the Nimitz-class series, is estimated at $11.2 billion each. At this cost, we are putting too many eggs into one basket.

Resizing and Reshaping the Ground Force, once current operations wind down. Both the Army and Marines are growing in size to address the strain of two simultaneous, manpower-intensive operations. Scaling our ground forces based on the Afghanistan and Iraq models is not consistent with a longer-range strategy that must address a range of threats. The force should be carefully shaped to emphasize prevention, and innovative organizational models should be explored.[12] A force estimated at 515,000 for the Army and 185,000 for the Marine Corps is sustainable and required, if properly shaped for tomorrow’s threats and not yesterday’s.

Conclusion

Secretary Gates recognizes that we cannot eliminate all national security risks by simply approving higher and higher defense budgets. The Defense Department must set priorities, hedge and manage risks, and consider inescapable tradeoffs. It must discipline itself and extract better value out of its procurement practices instead of routinely relying upon the taxpayer’s purse for a bailout. It must strike a balance for a sustainable defense.

Achieving a balanced and sustainable security posture will prove to be this administration’s gravest challenge.

Notes

1. Robert M. Gates, “A Balanced Strategy,” Foreign Affairs, Jan./Feb. 2009, p. 28.

2. Andrew Krepinevich and Barry Watts, “Lost at the NSC,” The National Interest, Jan./Feb. 2009, p. 63.

3. Walter Lippmann, U.S. Foreign Policy: Shield of the Republic, Boston: Little, Brown, 1943, pp. 34-36.
4. International Institute for Strategic Studies, Military Balance 2008, London: IISS, 2008, p. 433-38.
5. The leading proponents of this view include James Jay Carafano, Baker Spring, and Mackenzie Eaglen, “Four Percent for Freedom: Maintaining Robust National Security Spending,” Washington, DC: Heritage Foundation, No. 1023, April 10, 2007. See also MacKenzie Eaglen, Balancing Strategy and Budgets,” Armed Forces Journal, Oct. 2008.
6. This is according to a historical update produced by the independent Center for Strategic and Budgetary Assessments. See Steven M. Kosiak, “Historical and Projected Funding for Defense: Presentation of FY 2008 Request,” Washington, DC: Center for Strategic and Budgetary Assessment, Backgrounder, June 7, 2007.
7.  Steven M. Kosiak, Analysis of Proposals to Allocate Four Percent of GDP to Defense,” Washington, DC: Center for Strategic and Budgetary Assessment, Backgrounder, Sept. 9, 2008.
8.  Michael J. Sullivan, Defense Acquisitions: Fundamental Changes Are Needed to Improve Weapon Program Outcomes, Testimony, Washington, DC: GAO, Sept. 25, 2008.
9. Shawn Brimley, Michelle Flournoy and Vikram Singh, Making America Grand Again, Washington DC: Center for a New American Security, 2008, p. 27.
10. Barry Posen, “Stability and Change in U.S. Grand Strategy,” Orbis, Fall 2007.
11. Eric J. Labs, Congressional testimony, “Current and Projected Navy Shipbuilding Programs,” before the Seapower and Expeditionary Forces subcommittee, House Armed Services Committee, Mar. 14, 2008.
12. Michelle Flournoy and Tammy Schultz, Shaping U.S. Ground Forces For the Future: Getting Expansion Right, Washington, DC: Center for a New American Security, June 2007.

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