Despite Defense Budget Increase, Modernization Still Short-Changed

By Lawrence F. Skibbie

My comments this month are precipitated by President Clinton's $110 billion proposed increase for the Defense Department during Fiscal Years 2000-06.

If approved by Congress, this funding boost would represent the first long-term sustained increase in defense spending in more than a decade. Further, the administration says that the additional funding will help the Pentagon achieve its procurement spending goal of $60 billion per year by Fiscal Year 2001.

Currently, procurement is running at about $45 billion per year. The chairman of the Joint Chiefs of Staff, Gen. Henry Shelton said "First, this budget will fully fund our critical readiness requirements" and "second, it will enable us to achieve the procurement goals spelled out in the Quadrennial Defense Review."

But, before we get carried away with optimism about the prospect of more dollars for force modernization, we should take a closer look. First, the audit trail:

The Joint Chiefs originally sought a $148 billion increase over the Fiscal Years 2000-06 period. Then the chiefs and the secretary of defense negotiated this level to $112 billion and Office of Management and Budget and the White House agreed to $110 billion.

For Fiscal Year 2000, the Defense Department would receive $12 billion of this increase-$2 billion for Bosnia, $2.5 billion for military pay raises and improved retirement benefits, and $7.5 billion for a variety of other needs such as reliability upgrades to aging equipment, spare parts, as well as modernization programs.

So the Pentagon ended up with 74 percent of the original Joint Chiefs' target and, considering the volatility of budget drills, that's probably not so bad.

The bottom line is that we should also look at were the money comes from, because there's more than meets the eye. First, 68 percent of the increase is for the latter three years of the six-year period. Thus, only 32 percent or $40 billion of the increase will apply to the serious near-term readiness problems facing our forces today.

Perhaps more importantly, 60 percent of the $110 billion proposed increase-or $66 billion-is to be generated from within the current defense budget projections. These funds would stem from internal savings resulting from expected fuel price decreases, projected lower inflation, and other efficiencies such as acquisition reform (Haven't we spent that savings several times before?).

In the end, the much heralded $12 billion increase for the budget year 2000 only includes $4 billion that will be added to the defense top line.

The fact that much of the increase is forecast to be generated from within the current budget is a direct consequence of the budget rules change in Fiscal Year 2000, which removed the so-called firewalls for defense and domestic activities. This means that one spending cap covers both activities and the arrangement results in a so-called zero sum game-if defense is increased, domestic programs must be reduced.

It is doubtful that defense can be a winner for very long under this scenario because the American public generally is not ready to support increases in defense spending at the expense of domestic priorities. Many of these citizens who do not support higher military budgets take the competence of our forces for granted. It's worth noting that anyone under the age of 40 probably does not remember Vietnam.

Further, in an era when fewer and fewer policy makers have ever served in the military, and when the political process is less attuned to matters of national security, we probably should heave a sigh of relief that any increase at all has been granted.

Meanwhile, at NDIA our goal now is to focus on the top priority item of the association's Top 10 Policy Issues for 1999-to support increased defense modernization budgets. Escalating from the current $45 billion annual procurement level to the $60 billion target will take more than the $40 billion increase requested for the first three years-especially if we are to sustain the pay raises and other necessary quality-of-life improvements.

As the President said in his January 2 radio address, "when we give our service men and women a mission, there is a principal we must keep in mind: We should never ask them to do what they are not equipped to do, and we should always equip them to do what we ask. The more we ask, the greater our responsibility to give our troops the support and training and equipment they need."

We can only hope that the President and the Congress act on these good words.

Topics: Budget

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