Quadrennial Review Skirts Biggest Management Challenge

Issue Brief

Congress has mandated that the defense department must conduct a comprehensive review of military strategy and capabilities at the beginning of each new presidential administration. The latest such “quadrennial defense review” (or QDR) began in April, with plans to complete work in time to shape the 2011 budget. This year’s review is already degenerating into the kind of budget drill that led to criticism of the process in years past. Defense secretary Robert Gates has been in his job for two years, and doesn’t want to spend a lot of time rehashing what he already knows. So he preempted much of the QDR discussion with his program recommendations on April 6, and the only big item that remains to be decided is what force-sizing construct will prevail for the next four years.

To outsiders, this may sound like simple efficiency. If Gates knows what needs to be done, then why not just get on with it? Here’s why: because the process is ignoring the biggest single management challenge that Gates and his successors will face. That problem, bluntly stated, is that the All Volunteer Force is becoming unaffordable. Military personnel costs are out of control, and the Obama Administration is making the problem worse by sticking with Bush Administration plans to increase the size of the ground forces by 92,000 personnel. Consider some trends:

• According to Stephen Daggett of the Congressional Research Service, the annual cost of an average uniform member of the joint force has increased 45% after inflation since 1998, from $55,000 in constant 2009 dollars back then to $80,000 today.
• That number does not include the cost of healthcare for the military and civilian defense workers, which has increased 144% since President Bush took office to over $40 billion per year.
• Despite these extraordinary increases in the cost of personnel, Congress continually legislates new benefits for warfighters and their dependents, including everything from free college tuition to supplemental Medicare payments.

Rapid increases in pay and benefits are already squeezing money for new weapons out of the Pentagon budget, but other consequences are more subtle. For instance, the defense department’s operations and maintenance accounts are increasing about 2.5% annually after inflation in large part because of expenditures related to the cost of personnel. As Daggett points out, most of the costs associated with healthcare for warfighters, retirees and military dependents are subsumed in the operations and maintenance accounts, as are the pay and benefits of civilian employees in the department.

Secretary Gates talks a great deal about the need for a balanced defense posture, but apparently this aspect of balance has eluded him. Not only does the current QDR look unlikely to address the burgeoning cost of military and civilian personnel, but it is grounded in the implausible assumption that defense spending will be stable for the next four years. How likely is that in a government that projects budget deficits above half a trillion dollars every year through 2019, and in which the chief executive is determined to implement the most ambitious domestic agenda since Lyndon Johnson’s Great Society? The answer is that it isn’t likely at all. Which means that regardless of what force-sizing construct the QDR comes up with, it isn’t going to be sustainable, because policymakers refuse to confront the biggest management challenge they face — the rapidly rising cost of all the people hired to defend America.