Defense Spending After 2015: It's Anyone's Guess

The powers-that-be must soon make a decision on how to cut military spending before sequestration returns in 2016.

If this sounds like déjà vu all over again, it’s because it is, said Rep. Adam Smith, the top Democrat on the House Armed Services Committee. “We face seven more years of sequestration and there is no clear picture of how that's going to be handled,” Smith told reporters Feb. 6 at a breakfast meeting in Washington.

Congress, against all odds, last month passed a two-year budget resolution that set defense spending for 2015 at approximately $498 billion, or  $9 billion above the spending limit mandated by the 2011 Budget Control Act. By 2016, under the BCA, the Pentagon’s inflation-adjusted funding would fall to about what it received in 2007 and remain essentially flat through fiscal year 2021.

To stay within the lower spending caps, analysts said, the Defense Department will have to make draconian cuts to the size of military forces, close bases, reform military compensations and take other politically unpopular steps. The BCA reductions would require that the military slash spending by about $500 billion through 2021.

Lawmakers, however, are in no mood to deliver “strategic” proposals to reshape U.S. armed forces so they can reduce spending without hollowing out the military, Smith said.

“It was hard enough to get the two-year deal,” he said. The same questions about long-term budget decisions that were being asked in 2011 during the buildup to the BCA will be asked again in 2015, he said.

The Obama administration so far has refused to submit budgets that comply with the budget caps that are set by law. Congress has aggravated the situation by rejecting almost every Pentagon cost-saving recommendation, such as increasing Tricare fees for retirees, taking aging ships and aircraft out of service and closing excess military bases.

“It's not good,” Smith lamented. Decisions about force size, military compensation, benefits, and major weapon systems have to be made now in order to yield savings before sequester hits the Pentagon again, he added. The defense establishment, though, appears to be still in denial, hoping for another miracle deal, Smith said. “We have seven years of sequestration. What are we going to do about that? Is it going to happen, or are we going to delay it?”

There is no “strategic plan” for building a force that conforms to reduced budgets and also meets national security needs. “Everyone is still at the mindset we were three years ago … but we are in a different world. We are not going to have as much money,” Smith said. “It's frustrating that we are still not accepting the reality of where we're at.”

With mid-term elections just months away, there is no appetite for tough choices, and parochial interests will drive spending decisions in defense and elsewhere in the federal budget, Smith said. “We have consensus that we need to reduce the deficit but nobody wants to cut anything or raise any taxes,” he said. “Voters have rewarded that strategy.”
With regard to defense spending, the stalemate will not end as long as interest groups and Congress keep “trying to protect everything,” said Smith. “We need a strategic response from Congress other than, ‘No, don't cut that.’”

The hysteria over the federal budget deficit that led to the passage of the Budget Control Act appears to have receded but appearances can be deceiving, Smith said. “The Tea Party's defining issue is spending less. They're not going to shrink away from that,” he said. “The influence of the conservative wing of the Republican Party isn't going away. … There will be continued pressure on federal spending for a while. I don't see that letting up.”

While there is considerable anxiety at the Pentagon about future defense spending, budget analysts have noted that the downturn that began in 2010 is relatively mild compared to past post-war slumps. Measured in current dollars, the low points for defense spending reached $373 billion in the 1950s, $384 billion in the 1970s, and $391 billion in the 1990s, according to Russell Rumbaugh, senior associate at the Stimson Center. An often forgotten piece of today’s military budget is the additional war funding that this year reached about $85 billion, and is not restricted under the BCA like the regular budget. “The current defense budget is healthy, in the sense that it keeps the military ready," said Rumbaugh. "There's no doubt forces will get smaller, but they are “shaping up to be healthy small.”

Topics: Defense Department, DOD Budget, Procurement