MARY LOUISE KELLY, host:
The U.S. defense budget has soared over the last decade as the country has waged two long-running wars and addressed other security threats. But the days of ever-expanding budgets could now be coming to an end, and at the Pentagon, officials are bracing for bad news. NPR's Tom Gjelten reports.
TOM GJELTEN: American troops are fighting and dying, and al-Qaida is still scheming to strike the U.S. homeland. But the chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, doesn't see either of those concerns as the number one worry.
Admiral MIKE MULLEN (Chairman, Joint Chiefs of Staff): I think the biggest threat we have to our national security is our debt.
GJELTEN: The debt: the biggest threat to the country's security. It undermines the economy and robs resources needed to protect the population.
Admiral Mullen, in a recent Washington speech, highlighted one troubling number: Within two years, just the annual interest on the debt will be close to $600 billion.
Adm. MULLEN: And that's, notionally, about the size of the Defense Department budget. It's not sustainable.
GJELTEN: But here's what's interesting: 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. Ashton Carter is the undersecretary for acquisitions.
Mr. ASHTON CARTER (Undersecretary for Acquisitions): 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.
GJELTEN: Secretary Gates has already killed the F-22 fighter jet program, and Ashton Carter says the Pentagon is now taking aim at all the programs that, each year, get more costly.
Mr. CARTER: That has to stop and be reversed. And programs that can't be managed to be affordable in the new climate will be eliminated.
GJELTEN: Pentagon leaders now expect 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 are 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 10 years, and Ashton Carter says contractors have grown undisciplined.
Mr. CARTER: 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. 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.
GJELTEN: Last week, Carter drove home that message in a meeting with defense industry executives. Will it be enough? 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's not impressed by this new Pentagon productivity push.
Mr. GORDON ADAMS (Former Manager, Defense Account, Office of Management and Budget): It's being portrayed as this mammoth exercise, with briefings all over town and the industry worried. And 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.
GJELTEN: Why would there be declines in the Pentagon budget? 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.
Mr. ADAMS: From 1985 to 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.
GJELTEN: Pentagon leaders insist this era is different. The White House has told them they should be able to count on modest budget increases in the coming years, and Robert Gates and his team are hoping they don't have to plan for worse.
Tom Gjelten, NPR News, Washington.