Gates’ Defense Cuts Are “Chump Change,” But This Is A Good Thing

Secretary of Defense Robert Gates announced his long-awaited defense budgets yesterday. Despite the efforts of the media to turn his decisions into a major news story there was not much noteworthy in his announcement. The actual reductions in defense spending were $78 billion over five years or around 2 percent of the expected total defense budget for this period of some $3.75 trillion. Even these cuts are not real but based on the last year’s projections by the Pentagon of future defense budgets. The Secretary pointed out that defense spending will actually increase slightly in real terms the next three years before going flat for the final two. In terms of programmatic changes, the announcement can only be described as much ado about nothing. The three program cancellations announced, the Marine Corps’ Expeditionary Fighting Vehicle and the Army’s Surface-Launched Advanced Medium-Range Air-to-Air Missile and Non-Line-Of Sight Missile, were dead a long time ago, regardless of their merits.

Of slightly greater news value was the $154 billion in alleged internal efficiency savings, $100 billion from the armed services and $50 billion from DoD offices and agencies. One quarter of the savings by the services will go to cover increased expenses and the remainder will be used to plus up or start major programs including upgrades to Abrams tanks, Bradley and Stryker armored vehicles, a new strategic bomber, more UAVs and reconnaissance aircraft, F-15 radars, additional F/A-18s, a next generation electronic jammer and more Navy ships. Both the Air Force and Navy variants of the F-35 Joint Strike Fighter were given a vote of confidence by the Secretary and the VTOL version got a two year reprieve.

The Secretary also announced specific cuts that made good on his August proposal to find $100 billion in savings by reducing DoD overhead costs. This involves a combination of reducing personnel, consolidating functions, eliminating duplicative operations, a pay freeze and a modest increase in co-pays for military health care. What is amazing about these reductions is how much credit the Pentagon wants for doing such a modest job of reducing overhead. These are the kind of reductions that the private sector would do at the drop of a hat if they anticipated a decline in revenues. In fact, this is just what the private sector has done over the past two years in response to the recession while the size of the federal government and its costs increased. Whether it is better supply chain management or savings from improvements to its IT systems, the Pentagon would do well to reverse its recent emphasis on insourcing work and rely more heavily on the private sector to perform such functions.

Overall, in his formal announcement and the subsequent press conference Secretary Gates made a spirited and thoughtful defense of what must be characterized as continuing high levels of defense spending. Gates best line during yesterday’s press conference was when he reminded the audience that the defense of the Republic is an unambiguous responsibility of the federal government. Secretary Gates rejects the notion that the United States can withdraw from the world or even cut back on its capabilities to perform the major missions of regional security, deterrence of nuclear and conventional conflicts and defeating the global terrorist threat. Deep defense cuts would be, in his opinion, “risky at best and potentially calamitous.” So it is a good thing that his proposals for cutting the defense budget amount to “chump change.”