Analysts: Defense Review Must Acknowledge Fiscal Reality

There is no shred of evidence that Congress will roll back the legislation that requires federal agencies to cut spending by 10 percent across the board. The reductions began in March and could continue until 2021.

The beginning of a decade of plummeting budgets happens to coincide with the congressional deadline for the Pentagon to submit the 2014 quadrennial review of defense strategy, known as the QDR. The report due in February will be the fifth iteration of the QDR since Congress signed it into law in 1997. Past reviews have been generally dismissed as either rubber stamps of the administration’s budgets, or as unrealistic wish lists.

It appears that the 2014 QDR could become another exercise in smoke and mirrors if the Pentagon chooses to write a strategy that ignores the federal budget forecast and its own internal fiscal struggles, analysts said.   

“The building, the White House and Congress continue to act as if the law isn't the reality,” said Clark Murdock, director of the Center for Strategic and International Studies’ defense and national security group.

The Pentagon faces the potential loss of $500 billion in future spending power, but its leaders have yet to articulate how they will reshape the military for a leaner time. This is causing frustration on Capitol Hill and raising questions about the Defense Department’s ability to plan for the future, a panel of CSIS analysts said July 23.

Defense leaders have an opportunity with the 2014 QDR to address the cold, hard facts of the defense downturn. That should include a realistic assessment of what a downsized military will be able to do, Murdock said. The QDR also should tackle the Pentagon’s internal budget trends that threaten to turn the military into a paper tiger, such as rising personnel and infrastructure costs that are crowding out equipment modernization and training programs.

“The gap between our strategy and our resources continues to widen,” Murdock said. “The QDR has to overcome today’s lack of reality.”

The Budget Control Act of 2011 has imposed deep spending cuts, to the tune of $37 billion in 2013 and $52 billion in 2014. To comply with the law in 2014, the president’s request of $525 billion would have to be reduced to $475 billion, not including $83 billion for war-related expenses.

Lawmakers and defense analysts in countless studies over the past two years have urged the Pentagon to “set priorities” in anticipation of reduced spending. Suggested reforms include changes to military compensation and benefits, cutbacks in the civilian workforce and dramatically shrinking the size of military forces, particularly ground troops.

President Obama unveiled in January 2012 a new “defense strategic guidance” to help shape future plans. That guidance, however, did not set spending priorities, and continued the pattern of past QDRs of including a broad range of missions and goals the military should accomplish, regardless of available resources.

“The 2012 defense strategic guidance is a pretty good document,” Murdock said. “But it was supposed to establish priorities.”

CSIS analysts identified 28 “end-states and objectives” in the document, including the one listed in the title, “sustaining global leadership.” Nowhere does it say how much capability is needed to sustain global leadership, said Murdock. “We still haven't learned what it means to act in constrained circumstances.”

The QDR needs to also shed light on the Pentagon’s unsustainable cost trends, said Murdock. “We have to build that in.” Congress has resisted efforts by the Defense Department, for instance, to increase military healthcare premiums for retirees, which would save $2.5 billion in 2018. As health and compensation costs continue to rise uncontrolled, the Pentagon will have to shed military and civilian personnel to stay within the budget caps. “The QDR has to say: This is where our current trend lines take us,” said Murdock. “We have to level set our expectations. People have to have an understanding of what current trends will do to the Defense Department.”

Based on the Pentagon’s track record with past QDRs, the upcoming review is likely to be frustrating and stoke political flames, said Stephanie Sanok Kostro, acting director of homeland security and counterterrorism at CSIS. “Congress is frustrated with the QDR process,” she said. Lawmakers want defense leaders to lay out their assumptions about the future environment and what tools the military will need. Once that is explained, they want to know how much it will cost. “Congress wants to see how the Defense Department defines its missions,” she said. The analysts agreed, however, that the process tends to be disingenuous, as defense hawks in Congress look to the executive branch to provide the ammunition to beat up the administration for weakening the military.

As part of the quadrennial defense review legislation, Congress directed the creation of an independent panel to review the QDR. A 10-member group has been selected, led by former Defense Secretary William Perry and retired Army Gen. John Abizaid. The panel was scheduled to convene Feb. 1, but so far it's kept a low profile, said Sam Brannen, CSIS senior fellow. The panel traditionally has served as a hawkish counterbalance to the QDR by usually recommending a larger force size.

In the current budget crunch, the panel needs to offer productive suggestions rather than unconstrained wish lists, Brannen said. “It might be a good idea to take the budget realities into account,” he said. “I don't think a 500 ship Navy or a million-man Army coming out of the panel will be that helpful.”

He said the panel should take on politically tough issues such as whether the Pentagon needs separate U.S. Northern and Southern four-star commands, or whether it makes sense to have a U.S. Agency for International Development whose functions overlap with the military’s. “A lot of low-hanging fruit and sacred cows need to be taken on,” Brannen said.

The Pentagon has to decide if it wants the QDR to truly further the debate or be a sideshow, said David J. Berteau, director of the CSIS international security program.

Whatever direction the QDR takes, it has to acknowledge the Budget Control Act, he said. “It is hard to see any political scenario, with or without a grand bargain, that doesn’t include at least this big a cut in Defense Department spending over the next decade.” How the reductions are distributed might be subject to negotiation, said Berteau, “but I see no scenario where the Defense Department gets by with a $100 billion cut instead of $500 billion.”

Topics: Defense Department, DOD Budget, DOD Leadership, War Planning