You think the Pentagon would learn. But, no, there may even be a payoff in being ill-behaved on your spending: when you get into deep trouble you made for yourself, you just take yourself hostage and threaten to pull the trigger.
Two years ago, then-Chairman of the Joint Chiefs Adm. Mike Mullen warned that "the budget has basically doubled in the last decade. And my own experience here is that in doubling, we've lost our ability to prioritize, to make hard decisions, to do tough analysis, to make trades."
Seems like the Pentagon didn't get the memo and has been overspending its allowance. According to a Politico piece today from David Rogers, one of the best budget writers in town, DOD decided last September it would just keep spending on operations at the rate they had asked for in the FY 2013 budget request they sent to Congress a year ago.
Some kind of denial must have set in. The continuing resolution funded DOD through March 27 of this year at the FY 2012 rate, which means the 9 percent growth in operations spending the Pentagon wanted was not on the table, not yet.
Apparently, the Pentagon "bet on the come," assuming sequestration would not happen, and has merrily been funding operations (training, exercising, equipment maintenance, fuel purchases, services contracts, and, yes, operations in Afghanistan) as if the FY 2013 budget request were real.
Haven't they been watching? Even if we don't have a sequester, every analyst in town and on Wall Street has been saying the FY 2013 request is the best the Pentagon will do, and cuts are extremely likely, as part of a budget settlement.
Seems a bit irresponsible to spend when you know the money will not be there. Or is this a bizarre form of hostage-taking: if you don't do what I want, I will shoot myself...
Now, of course, we are being treated to round two of the "shoot myself" scenario, with dire, and highly vocal threats that we are headed for a readiness crisis of grand proportions. Readiness, which can be a refuge of scoundrels (especially when they don't define it), is funded largely in those same operations accounts. (See Panetta and Dempsey on the Sunday talk shows.) As I have already noted, this supposed crisis is way overstated, even though managing sequester levels of funding is a challenge.
Overspending your allowance is one way to get there, though. And the continuing resolution set a pretty clear level for the allowance. Overspend, and you run out of money earlier. And have to pull the trigger, especially if you are trying to prevent losing more money through a sequester.
Too cynical? Adm. Mullen was pretty realistic about the Pentagon's management problem. Either they did not hear him, or just willfully decided to ignore him and scream for help when they got into trouble.
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Putative secretary of defense Chuck Hagel had his baptism-by-fire yesterday at the Senate Armed Services Committee. It was all theater. One of its most striking features was the absence of almost any serious attention to the challenge he will actually face if he is confirmed: the management of a defense drawdown.
No senator focused on the Pentagon's long-term budget and management challenges. Not one. While a few asked about the looming sequester, the answers were anodyne. Only Sen. McCaskill asked about whether the department needed to have an auditable financial statement by 2017.
There was no discussion of the challenge of getting the costs of weapons procurement under control. Instead, senators from Connecticut, Colorado, Maine, New Hampshire, and Virginia all wanted to be reassured that the defense programs in their states were key to our national security, the top priority of the Pentagon, and protected from budget reductions.
There was no discussion of how to restrain compensation and benefits costs at the Pentagon. There was precious little interest in the programs that deal with the transition of veterans and returning soldiers. Aside from (rightly) honoring Hagel for his service in Vietnam, the people in the military were not a central focus.
And there was virtually no attention at all paid to the critical, long-term management challenge posed by the explosive growth of the Pentagon's "back office." The administrative part of the military bureaucracy has roughly doubled in cost per troop over the past 15 years.
When it came to sequester, the focus was on keeping it from happening, because of the pain it would allegedly cause. The senators have clearly been listening to the campaign being conducted by the service chiefs over the past two weeks, a campaign saying that sequester will cause U.S. military readiness to fall to security-threatening low levels. And, of course, Senator Hagel simply adopted the Panetta rhetoric that sequester would be a "disaster."
But we need to be cautious about this campaign. The service chiefs have been announcing specific, horrific things would happen as a result of a sequester -- docked ships, lowered brigade readiness rates, an end to equipment maintenance. Maybe. But maybe not. The chiefs are suggesting these consequences before they have actually submitted plans for the sequester to the deputy secretary of defense.
Those plans are due today, Feb. 1, but they have no official standing at all. Seems to me the deputy might have something to say about these steps, before the consequences can be announced.
So maybe, even here, we are watching political theater. And the service chiefs are running this show during a transition, while one secretary leaves and another is not yet confirmed. Convenient timing to shape the debate before Hagel arrives? I would be shocked -- shocked! -- to learn there is politics going on in this joint.
It is a pity that the Senate Armed Services Committee decided to avoid the long-term drawdown and the management challenges it actually poses. These are the problems Hagel will really face when he gets to the five-sided building: managing a drawdown safely and intelligently. These are the questions that should have been front and center, instead of the show we saw.
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There is a flurry in the dovecote today about the decline in the GDP registered in the fourth quarter last year. Is defense spending decline the culprit, we are asked? Indeed defense consumption spending (buying things, not paying people) declined 22 percent in the fourth quarter of the year, the largest single element in an overall decline in federal consumption spending. And doesn't that say we shouldn't let sequester happen or, above all, cut the defense budget?
Not so fast. There may be less here than meets the eye. After all, there is an historical pattern here. Every third quarter of the calendar year (which is the last quarter of the federal fiscal year) defense consumption goes up. Obligating and spending resources at the end of a fiscal year is a way of ensuring the services can get them spent and that they can justify the next year's budget to Congress: we really needed that money; don't take it back or cut us next year.
Then, in the first quarter of the next fiscal year (which is the fourth quarter of the calendar year) defense spending slides from the leap upward in the previous quarter. Time to catch the Pentagon's breath, reset spending, and start again.
There is nothing new to this pattern. The Commerce Department data make it clear that this happens during the last two quarters of every fiscal year.
But this year it was a higher jump at the end of FY 2012 and a deeper slide at the start of FY 2013 than in previous years. Why? I believe the answer is partly that the Pentagon is anticipating a decline in resources (and so husbanding money) and partly that the defense draw-down has actually begun.
The concern about the budget this year is only partly about sequester, which everyone seems to think is going to happen March 1. The real focus now is on funding levels for FY 2013, which are currently set at FY 2012 levels in the Continuing Resolution. The military services are worried that this may end up being the budget level for the rest of the year, which is below their budget request. Congress has begun to mark up appropriations bills for defense that are actually $11 billion higher than the cap set in the 2011 Budget Control Act, but a negotiation is likely to bring that level down. It could be that DOD is slowing the spending train to protect resources that will be needed deeper into the year.
The defense draw-down may be playing a role, too. For the past three years the Overseas Contingency Operations account has been falling. It funded a lot of services contractors that provided everything from guards to maintenance to food in Iraq and Afghanistan. Those contractors are already noticing a decline in business, which is accelerating with the move out of Afghanistan.
And one of the foci of the "efficiencies" Secretary Gates pushed a couple of years ago was to deeply cut services contracting in general at the Pentagon. There have already been reductions in the rate at which the Pentagon hires people to sit at desks as if they were government employees, when they are actually employed by private contractors.
We have been seeing a draw-down at DOD for three budgets, now, and are down 10 percent in constant dollars below the FY 2010 peak. So it would not surprise me to see those cuts start to show up in the Commerce Department's data.
The argument about the GDP decline is a bigger one, with lots of explanations and answers. Clearly DOD spending plays a role in the economy, though it has been shrinking over the years. The ups and downs of the data will continue, as the draw down moves ahead. The worst answer, however, would be to spend unnecessarily on defense as a form of stimulus.
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The Pentagon does it best. They are "best practice" in federal agency planning and budgeting. And they are world class in public relations. We are getting a bit of both these days. And it is striking that by-and-large, while the planning continues, as it should, the cries of pain are not getting much traction.
Planning first. I have said before that it is high time the Pentagon began to roll out its formidable capacity to plan and get down to work, not only about sequester, but about the underlying reality that we are in a defense draw-down. The five-sided building needs to forget the rhetoric about the Panetta plan and the $487 billion "already cut" (which was not a real cut, just a flattening of the budget so it is projected to grow with inflation), and start taking a good look at the options and choices we face over the next decade when the budget will actually be cut. I expect the budget to go somewhere between $500 billion and $1 trillion below the currently projected aggregate over the next decade; this would be consistent with prior draw-downs.
The Pentagon is not quite on board with this, in planning terms, but it is getting close. The new Quadrennial Defense Review is just starting to gear up. Incoming Secretary Hagel would do well to put a strategic red team together to draw up both budget options and an outline of questions for strategy, forces, procurement, and operations, for each of those budgetary options. Will he? That remains to be seen, because the services are too good at gaming such a set of options by putting the highest priorities on the table to be cut, which stops options in their tracks.
Meanwhile, the planners are stepping out on the near-term agenda. Every service chief has submitted a memo, following Deputy Secretary Ash Carter's memo of early January, as part of the effort to put together a plan, by the end of this week, about how they would manage if a sequester happens and/or if the budget this year stays at FY 2012 levels.
They are going to need those plans, even if there is no sequester, because the plans focus on the key part of the defense budget. Operations are the problem; they have always been a significant management problem for DOD. Nobody seems to be able to figure out exactly how the money is spent on operations and what we get for it.
So that's the right target. And the categories the chiefs worry about are the right ones in a draw-down. How fast do we repair equipment in military depots? What is the pace of travel and orders for the small stuff -- from pencils to computers? What is the intensity of the training cycle, now that the wars are ended/ending? How much priority should we put on support to the field? How many temporary contractor employees to we have, do we need, do we want? How many civil servants? How many bureaucrats in uniform running the back office?
Now, of course, the chiefs cannot resist what must seem to be an opportunity in this management dilemma -- an opportunity to stop sequester, spare defense, and reverse the tide. So the sensible planning is accompanied by painful cries. Rhetoric about a readiness crisis, being on the brink of hollowness, breaking the force, endangering our national security.
They don't need that; they don't need it because is it not true. We have never spent so much on defense. Our military readiness is at heights unreached at the start of any previous draw-down, in the active force and the reserves. Our operations budgets are unprecedentedly high, both in constant dollars and per soldier. The troops have never been as well trained, exercised, and experienced. U.S. global capabilities far surpass any other country.
Yes, there are many management issues at DOD; there are in every government agency. There are problems with the high costs for programs that were promised for less; problems with pay and benefits nobody can touch; health care costs that grow for defense as they do everywhere else, and problems holding down the growth of the Pentagon's large back office. And, yes, sequester is an ugly way to approach a budgetary draw-down, though DOD is better protected than most.
The challenge today is not to "save the defense budget." It is to "manage a draw down." On Thursday the Senate Armed Services Committee will grill the putative next secretary. The focus of that questioning should be less on such irrelevant issues as Israel, Iran, and gays. It should be on how Sen. Hagel intends to manage the department's adjustment to post-war budgetary realities and how he will focus the chiefs on the job they can and should do, without the rhetoric.
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I have been saying for some time that we are in a defense drawdown. It has already begun. Including war costs, overall DOD budgets are down more than 10 percent in constant dollars from the FY 2010 peak.
While some will immediately say that is because we left Iraq and drew down in Afghanistan (which is true), the so-called "base defense budget," which is largely interchangeable with the war budget, has also come down. It was flat in FY 2011 (no gains for inflation), down about 1 percent in FY 2012, and seems very likely to go down even further this year, with negotiations over sequester between now and March 1 likely to arrive at an agreement that includes more defense reductions.
A drawdown is realistic. What is unrealistic is the Pentagon's current expectation and planning projection that defense budgets will keep up with inflation over the next ten years. While Secretary Panetta likes to claim (he did so just last week in Europe) that he has cut $487 billion from future defense budgets, he fails to say that these "cuts" actually brought projected budgets down to where DOD would still keep up with inflation, or, in other words, continue to grow in current dollars.
We will go deeper. We have always gone deeper after a war. And the defense community in Washington, D.C. is substantially more realistic than the Pentagon leadership in projecting deeper cuts. The latest sign comes from the National Journal, which polled its large and highly diverse group of "national security insiders" last week, asking them how deep they thought the defense budget could go over the next decade.
Eighty percent of this group, which ranges from left to right, thought the budget would go down at least another $100 billion over the next decade. Thirty-five percent expected cuts of $100-300 billion; 21 percent thought they would range from $300-500 billion, while 24 percent (including yours truly) thought they would be at least $500 billion.
Those would be real cuts, below inflation. And a surprisingly large unanimity of view exists that such cuts are inevitable. Moreover, they would not be "doomsday." A $500 billion reduction in currently projected defense budgets would be one of the most shallow drawdowns in our military history, below those after Korea, Vietnam, and the end of the Cold War. It would leave the Pentagon with $5.3 trillion in discretionary funding over the next decade (excluding any residual funding for overseas contingency operations, which could be as much as another $500 billion).
If sequester hits, these cuts will start right away. Even without sequester, such cuts are realistic and a form of budgetary discipline DOD has not had for more than a decade. It would be good for the Pentagon and likely Secretary of Defense Hagel to focus on this number as the budget negotiations move forward and as planning for the next Quadrennial Defense Review get under way.
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The Joint Chiefs have spoken, and have told the Congress that "we are on the brink of creating a hollow force." Them's fightin' words. The mantra of "hollow force" goes back 40 years to the "bad old days" of the 1970s, when we transitioned from a conscript to a professional military. Turbulence there was, in those days. But the allegation, shall I say, rings "hollow" today. It smacks more of budget politics than truth.
It seems to be part of an orchestrated campaign, following the January 1 agreement, to stop sequester or at least draw a line in the sand for a Congress which seems increasingly benign about the consequences of the across-the-board cuts that might happen March 1, if there is no spending agreement.
But it is not truth. We are nowhere near a "hollow force" today. Au contraire, after more than 10 years of war, we have just about the most ready, sharpest point of the military spear we have seen since the military went professional in the 1970s. Returning forces will tell you; they are not tired, wrung out, depleted. They are ready, well-tuned, and probably better prepared for the conditions of the new warfare of this century than ever before.
And they are numerous, too. We've been out of Iraq for a year now and Afghanistan is coming down fast, even faster than expected. We increased the ground force by about 100,000 to deal with rotation in those countries; we are coming back down from that rotational buildup, but will retain sizable forces.
So the chiefs have offered absolutely no evidence that a readiness crisis is at hand, because it is not at hand. What they are really saying is "don't cut, please don't cut our budget." Budgetary politics as normal.
And there is a kind of budgetary sleight of hand going on here. They were careful in their letter to say that there might be a cut of more than 20 percent in operating budgets as a result of a sequester and extending the current continuing resolution through the whole year. But check the elusive, always important issue of the baseline from which they are measuring: that 20 percent is from the operating budget request the president sent up last February for this fiscal year.
But the president's budget requests sought an increase of nearly 10 percent over the previous year's funding level. So part of that 20 percent, nearly half, is just not getting what you asked for, but dealing with level funding. The services don't like that; no wonder they protest.
Methinks they doth protest too much. Add to that legerdemain the reality that we are about to reduce forces in Afghanistan at an accelerated pace. Overseas Contingency Operations, which funds Afghanistan, is two-thirds operating funds. And these funds are entirely fungible with the rest of the services' operating funds. In the last couple of years, Congress has found billions of unspent Afghan operations dollars to use for other purposes, due to underspending there. I have no doubt they will find the same this year. This will provide more flexibility for the operations cuts the chiefs are screaming about.
This is a management problem, not a readiness crisis. The last decade has given us the most over-ready military we have ever had. What the services are actually doing -- what Deputy Secretary Carter asked for last week -- is nothing more than due diligence and the first step toward sensible planning for a drawdown. This is hyperbole and budget politics, but it is not reality.
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It appears there are second acts, or is it a third? Jim Rutenberg in the New York Times on Sunday described the "dramatic return to the public stage" of the neocons, who hope to finish off Chuck Hagel's nomination with theatrically embellished claims about his stances on Iran and Israel.
There would be no such drama and no return to the stage but for the eagerness of media editors to stimulate the appearance of a conflict. These folks -- the William Kristols and Elliott Abramses of the policy right -- should be condemned to the dustbin of history for their fatally mistaken fantasies that left a deep, lasting, and negative legacy for U.S. security interests and goals around the world. Kristol is certainly no "mainstream internationalist," as he tries to repaint himself in the Times story; he is a policy extremist, one among many who caused this damage over the past decade.
They fantasized hegemony -- that the 21st century would be an "American century," with U.S. military power ensuring dominance, stability, and the ability to shape events around the globe. But the 21st century, as a recent National Intelligence Council report makes clear, is a global century, with changing coalitions and rising powers, not ours to dominate.
They hoped that sending American men and women in uniform into Iraq in sheer ignorance of the political and cultural conditions on the ground would instantly install democracy (it didn't), eliminate a sponsor of terror (it was not), and end a threatening program of weapons of mass destruction (there weren't any).
That a surge left in place a shaky and hardly democratic regime and a country in shreds is no victory; it is escaping a bad situation without tar and feathering on the way out. They screamed that we should have left troops there to prevent disintegration, ignoring the reality that the presence of U.S. troops could only delay a resolution of Iraq's historic and internal cultural conflicts, at the cost of a continuing loss of American life.
They hoped to eliminate the Taliban as a host to al Qaeda by invading Afghanistan. They accomplished about a third of that task (throwing out the Taliban, but not eliminating it) and then completely dropped the ball in their eagerness to take on Saddam Hussein.
The Taliban returned, the new government sank into the cesspool of corruption too common in that country, and the Obama administration is now coming to terms with the reality that more American soldiers cannot reshape Afghanistan (any more than the Russians or the British could), and it is time to come home.
And it took a focused, disciplined effort on the part of a non-neocon administration to find and eliminate Osama bin Laden, a mission at which the neocons had failed miserably.
Now the chickenhawks are gearing up to send U.S. soldiers into the field again, this time into Iran. For them there will be no staying the hand of an Israeli government determined to go to war; America's fighters must pay the price. They worry that Chuck Hagel might not share this new fantasy.
Have they no shame? Clearly not. Not a lick of embarrassment crosses their faces. It is as if the past does not exist; it's as if they could airbrush the last ten years off the map of history and the nation would forget. Sadly, too many members of Congress are prepared to bluster with them.
I have been clear that I would like some very tough budgetary and managerial questions to be put to the nominee for secretary of defense. Even if he is not deeply steeped in the internal workings of DOD, and he is not, it will be critical for him to focus on managing a defense drawdown in a responsible and balanced way, and not to become a pure mouthpiece for "more" or "holding the line." For a drawdown is surely underway.
But Hagel is vastly more qualified than some to be secretary and certainly more focused on the world as it is, not as the neocons fantasize it to be. Their fantasies have damaged America's reputation, its ability to lead, its national security interests, and left too many soldiers and their families dead or damaged beyond repair.
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Presidents choose cabinet members for a lot of reasons: friendship, substantive expertise, political rewards, payback. This president has decided he wants Chuck Hagel at Defense. There's a lot of hype about why: they see the world the same way; they served on the Foreign Relations Committee together; he needs a Republican for cover.
In political Washington, critics of the nominees go after them for an equally wide variety of reasons. Lobbyists and spokespersons who purport to represent the security needs or interests of Israel have been teeing off on Hagel for weeks now. And it is not quite clear why Elliott Abrams went so far as to accuse him of being an anti-semite: "I don't understand really how you can reach any other conclusion, that he seems to have some kind of problem with Jews." Really!
Time to back off on this rhetoric. He is nominated to be secretary of defense, not prime minister of Israel, and the Defense Department doesn't put Israeli policy at the center of its mission or capabilities.
For me, the questions for Hagel don't have to do with his policy views on Israel, Iran, or, for that matter, gays. They have to do with the things he would really be responsible for: the management of a defense drawdown in a way that keeps the U.S. military sharp, strengthens the point of the spear for what it should be doing, and constrains the overuse of the military for missions that are not their core competence.
Not everyone is going to agree on what these things mean, and smart minds will disagree. But there is no way of getting around the reality that we are in a drawdown and it will require sound management decisions, strong leadership, an ability to both work with and talk back to the services, and a willingness to make choices that DOD has been able to avoid for the last ten years.
The looming sequester battle will lead Secretary Hagel to this set of issues. In my view, the result of the tax deal is that defense budgets are even more on the table than they were last year, and they should be.
Any deal will have to work both sides of spending; Republicans know it, Democrats know it. And Hagel's first challenge will be dealing with that negotiation. Leon Panetta is probably glad he could well be out of town before the fan gets hit. In those talks, the FY 2013 budget level for defense will decline from the current continuing resolution. Is Hagel ready for this? The learning curve on choice-making is steep and the pace is rapid.
Second challenge: There is no DOD (nor any other) budget for next year, and it looks like the budget request will be delayed. The level is likely to be below what the president's budget forecast last year. What are the choices to be made? Is he ready for them?
Third challenge: The Pentagon is starting its Quadrennial Defense Review, due to be carried out this year. Hundreds of choices to be made and options to be defined. And this year, more than any year, that strategy review will be heavily impacted by resource constraints. Hagel is going to see a ton of PowerPoint over the next six months; better fasten his seat belt.
These challenges are also opportunities to reshape the military, constrain the runaway "back office" at DOD, hold contractors to realistic pricing on hardware programs, and make the tough decisions about compensation and benefits that need to happen.
If Hagel is a good defense manager, he will have to make progress on these things. They are the reason we spend too much on defense, not the external challenges America faces, not even the Iranian nuclear program.
So it is time to cut the irrelevant chatter and ask the nominee the really tough questions. How will he manage the real challenges at DOD?
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Gordon Adams tracks the budget and the national security establishment for FP.