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DoD Dodges Budget Bullet

The Pentagon has "dodged the bullet" in the fiscal 2011 budget but will almost certainly face demands for cuts next year.

That was the fundamental assessment of strategy and budget experts at the respected Center for Strategy and Budgetary Assessments, a thinktank and consulting shop on which senior military leaders often rely.

"I can tell you there is no way the defense budget will be immune to budget reduction efforts," Stan Collender, one of Washington's most respected budget wallahs, said at CSBA's annual budget briefing.

But the following fundamental facts stand in the way of any budget cuts for the time being. "No one is talking about reducing the size of the force," said Todd Harrison. In his prepared remarks, Harrison noted that "over 60 percent of the base defense budget is used for operations and support (O&S) activities, such as recruiting and training for the active duty military, guard, and reserve, supporting the DoD civilian workforce, and funding the peacetime operations and maintenance of equipment." Combine those with health care costs and a benefits package that has done nothing but grow for the last decade and there is little room to slash spending without weakening the strategic reach of the United States.

Given that, the most likely size of the defense budget "will be somewhere in between zero real growth and the 2 percent the Defense Department has requested," Harrison told reporters Tuesday morning.

Top of the list of programs to watch in the budget, due for a Monday release, is the Joint Strike Fighter program. With the death last year of the F-22, nothing else in the defense budget comes close to JSF's size. It comprises a significant portion of the research and development budget, Harrison noted, at a time when the military's R and D funding has been on the decline. And that portion is likely to grow --not decline as was planned for 2011 -- as a result of the slow rate of testing and high-tech problems that have afflicted the plane this year.

Another key program to watch for budget tendencies is JTRS, the software-programmable radio system the Pentagon has been working on for a decade. The department requested $900 million in the 2010 budget. And on paper, the services plan to buy 194,000 radios for $23 billion over the next decade. With understatement only a defense budget analysts could muster, Harrison said, "that's a lot of money.... It remains to be seen whether the services are going to fund this or not."

The Navy is likely to shift its funding to smaller and cheaper ships, such as the Littoral Combat Ship, if it really is serious about building a 300-ship Navy, Harrison said.

Missile defense is unlikely to see much new money, although there is one program to watch. "The newly announced European missile defense system, which would use sea-based missiles initially, could cost as much as $19 billion if new ships are procured for this mission or as little as $300 million if existing ships are converted," Harrison said.

As the Defense Department comes under closer scrutiny next year as a possible source of savings, there is one group of accounts -- the "compensation package we give to our troops" -- that could be mined, Harrison offered. They receive 52 percent of their pay in deferred benefits. Those benefits, Harrison said, "only accrue to those who stay the full 20 years...a small percentage of the military." For comparison, people in the private sector get about 29 percent of their pay in non-cash and deferred benefits. "That is something DoD has got to look at, and something Congress has to look at," he said.

Of course, no one in Congress has yet shown any willingness to curtail troops' benefits. Who on Capitol Hill might be the first to stand and deliver such savings in time of war, we wonder.

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