Defense Officials Anticipate Drop In Military Spending

Michael Mullen testifies in Washington on the Defense Department's fiscal 2011 budget i i

hide captionLast month Chairman of the Joint Chiefs of Staff Michael Mullen testified in Washington on the Defense Department's fiscal 2011 budget. He said recently that debt was one of the biggest threats to the United States.

Pablo Martinez Monsivais/AP
Michael Mullen testifies in Washington on the Defense Department's fiscal 2011 budget

Last month Chairman of the Joint Chiefs of Staff Michael Mullen testified in Washington on the Defense Department's fiscal 2011 budget. He said recently that debt was one of the biggest threats to the United States.

Pablo Martinez Monsivais/AP

American troops are fighting and dying and al Qaeda is still scheming to strike the U.S. homeland, but it turns out both take a backseat to another threat to the country's security.

"I think the biggest threat we have to our national security is our debt," says Adm. Mike Mullen, chairman of the Joint Chiefs of Staff.

Debt undermines the economy and robs resources needed to protect the population. And though defense budgets have grown fat in the last decade, that could now be coming to an end. Mullen and other Pentagon officials are bracing for bad news when Congress returns to Washington.

Does Security Cost Too Much?

During a recent Washington speech, Mullen highlighted one troubling number: Within two years, just the annual interest on the debt will be close to $600 billion.

"And that's, notionally, about the size of the Defense Department budget. It's not sustainable," he said.

But, if overspending now endangers U.S. security, is it in part because the country is spending too much on security? At $700 billion a year, defense is the biggest part of the federal budget. The United States is now spending as much on defense as the rest of the world combined.

If the deficit is to be reduced, the Pentagon is certain to take a hit, and Defense Secretary Robert Gates is warning the department to get ready.

"The secretary is saying we need to deliver the war-fighting capability required within the resources the country can afford to provide, and that's going to require us to change the way we do business here," says Ashton Carter, the Defense Department's undersecretary for acquisitions.

Gates has already killed the F-22 fighter jet program and Carter says the Pentagon is now taking aim at all the programs that each year get more costly.

"That has to stop and be reversed," he says. "And programs that can't be managed to be affordable in the new climate will be eliminated."

'Not That Big A Deal'

Pentagon leaders are now expecting their annual budget to grow by about one percent, after inflation, in the coming years. That's not enough for wartime, they say, so they're looking for places to cut back and free up more money for war-fighting.

It shouldn't be too hard. Defense spending has doubled over the last ten years, and Carter says contractors have grown undisciplined.

"We failed to provide incentives to our managers and industry managers to make them drive down the price that we pay for things, because we had the money to pay the price," he explains. "Now we need to reverse those incentives, we're not going to have that amount of money and we need to replicate in the defense sector the productivity growth that you see everywhere in the commercial economy."

Last week, Carter drove home that message in a meeting with defense industry executives.

Gordon Adams managed the defense account at the Office of Management and Budget under President Clinton. He thinks Secretary Gates and other Pentagon officials underestimate the budget troubles they face and he is not impressed by this new Pentagon productivity push.

"It's being portrayed as this mammoth exercise, with briefings all over town and the industry worried," Adams says. "It's just not that big a deal. It's a very small deal when you're talking about a $700 billion baseline. The real crisis the secretary has is the one that he's not planning for, and that's serious decline in the defense budget."

A Different Era?

Bipartisan commissions are now working up deficit reduction plans, and their recommendations are likely to be tough.

At the same time, public support for funding the wars in Afghanistan and Iraq is waning.

Adams, now at American University, predicts there'll soon be demands not just for a smaller rise in Pentagon spending, but for actual cuts, like the Pentagon has seen before.

"From 1985 and 1998 we went through exactly that: huge attention to deficit reduction over a sustained period of time, right in the middle of which the political support for high levels of defense eroded, because the Cold War ended," he says.

Pentagon leaders insist this era is different. The Obama administration has told them that they should be able to count on modest budget increases in the coming years.

Robert Gates and his team are hoping they don't have to plan for the worst.

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