Hagel Calls for Sweeping Budget Reforms to Avoid Hollow Force

During a tour of U.S. military bases last week, Defense Secretary Chuck Hagel heard eyewitness accounts of the fiscal fallout from sequestration. Hagel was sympathetic to furloughed workers and veterans who have suffered disruptions in benefits programs.

But he insisted that there is nothing he can do to compel Congress to reverse a $37 billion spending cut that went into effect March 1 and caught the Pentagon unprepared.

Now, another $52 billion cut looms in 2014, and Hagel said the Pentagon should brace for another sequester. This time, however, Hagel wants to protect troop training, equipment and “readiness” programs, even if that means laying off workers and taking other politically unpopular measures.

As a new fiscal year nears, Hagel said the Pentagon is giving up hope that Congress will undo a $52 billion sequester that Congress mandated for each budget year until 2021.

“We can’t lead the Department of Defense based on hope. … We have to prepare our institution for whatever comes ahead,” Hagel said July 22 in a speech at the Veterans of Foreign Wars’ annual convention in Louisville, Ky.

Hagel’s comments echoed thethemes of his April speech at the National Defense University, when he noted the Defense Department could no longer afford to just tweak or chip away at existing programs, but needed to make fundamental budget changes. He also identified troubling spending trends that could hollow out the military in the long run. Spiraling costs to sustain existing bureaucracies and institutions, personnel benefits and over-budget weapons systems eventually crowd out operations and readiness accounts, Hagel warned.

“To avoid a prolonged readiness crisis, and the lasting damage it would inflict on our defense enterprise, I have given clear guidance to the services – that they should not retain more people, equipment, and infrastructure than they can afford to keep trained and ready,” he told the VFW, an organization that represents 22 million U.S. war veterans.

Many veterans groups have resisted suggestions that personnel and benefits accounts should be put on the table with all other spending categories that are being scrutinized. Hagel said the Pentagon has no other choice given the fiscal crunch. “Strengthening readiness will ultimately demand that we address unsustainable growth in personnel costs, which represent half of the department’s budget, and crowds out vital spending on training and modernization,” he said. “If trends continue, we could ultimately be left with a much smaller force that is well-compensated but poorly trained and equipped. That would be unacceptable.”

Opposing every reform or cost-savings measure is “shortsighted and irresponsible, and it does not help our men and women in uniform — especially when these savings can be used to fund readiness and modernization,” he said. “This will require Congress and the Defense Department to work in a partnership” to make politically tough choices, said Hagel.

Four months ago, Hagel launched a “strategic choices and management review” to help prioritize missions and match them against available resources. Hagel hinted that the only way to avoid weakening America’s military is to make sweeping reductions in overhead costs, including payroll and unneeded facilities, all of which Congress has opposed. “Preserving combat power means the department is going to have to deal with deep structural imbalances in our budget — particularly supporting infrastructure that has grown in size and expense.”

Hagel last week directed a 20 percent reduction in the budgets of his office, the Joint Staff and military headquarters. “I expect these cuts to not only save us money, but also to result in organizations that are more effective,” he said. “However, the Defense Department will not be able to meet its budgetary savings requirements just through more efficient operations and headquarters reductions. It will require far more.”

He acknowledged that his proposals face a steep uphill climb on Capitol Hill. “Unfortunately, when compared to other areas in the Defense Department’s budget, military readiness does not have a vocal constituency.”

Topics: Defense Department, DOD Budget, DOD Leadership, Procurement, Acquisition Reform