In Budgets as in War, Hope Is Not a Strategy

Wishful thinking has been taken to new heights in this year’s Pentagon budget. The most sanguine of the assumptions in the funding proposal is that Congress will somehow make peace after years of partisan trench warfare and approve $74 billion in additional discretionary spending to be divided equally between defense and nondefense.

Less obvious but just as unrealistic are many of the “savings” that the Defense Department built into its budget. These amount to tens of billions of dollars that the Pentagon would save from initiatives like closing bases, retiring the Air Force A-10 fleet, reforming military compensation and reorganizing the Army’s helicopter fleet. Everyone knows none of these initiatives has a snowball’s chance of being approved by Congress, but the Pentagon baked them into the budget anyway.

Pie-in-the-sky savings estimates are a time-honored budget tactic. Without them, the military would have to cut additional spending at a time when it feels it has cut enough.

Pentagon Comptroller Mike McCord dismissed criticism of the budget as being more aspirational than grounded in political reality. “I would take issue with that,” he said during a news conference. “Every year that we’ve had a budget since the Budget Control Act was signed, we have asked for something higher than sequester, and every year we have gotten something higher than sequester.” Although the Pentagon has not received 100 percent of what it’s asked for, “We believe that stating what we think we need has been useful and productive.”

McCord defended the plan. He said the savings proposals are consistent with what the administration has pushed for years as a way to cut cost and free up money to pay for pressing needs like military training and equipment.

McCord’s argument aside, there is a larger question about the administration’s use of the budget as a political tool. It is something every president does, although the 2016 budget pushes the boundaries, said former Pentagon Comptroller Dov Zakheim, who served during the George W. Bush administration.

“How likely is Congress to agree on taxes or domestic spending?” he asked. “There’s an unbelievably excessive degree of optimism in the president’s 2016 budget. They’re wearing rose-colored glasses.”

The savings that are factored into the Pentagon’s budget are just as unrealistic, Zakheim said in an interview. The habit of counting the chickens before they are hatched only adds to the Pentagon’s mounting budget pressures. “I wouldn’t call this budget trickery, I would call it excessive optimism,” Zakheim said. “You can always hope.”

Comptrollers have been guilty of building defense budgets on overly optimistic assumptions, said Zakheim. Some are perennial favorites like the repeal of wage requirements set in the Davis-Bacon Act. “I used it, every comptroller uses it, but we know the odds are stacked against us.”

The savings the Pentagon included in the 2016 are not insignificant. Although McCord did not provide a specific estimate, they likely range from $40 billion to $50 billion over the next five years. The 2016 budget alone includes $78 billion in savings that former Defense Secretary Robert Gates directed in 2012 as part of a broad “efficiency” effort. Some of that, for instance, is a 20 percent mandated cut in “headquarters” staff and contractor support. According to the Government Accountability Office, the Defense Department cannot even agree on a standard definition of what is a headquarters job.

“Efficiencies is a word that sometimes gets used a little loosely,” said McCord.

What makes this year’s efficiency drills more questionable is that they follow on the heels of similar proposals that were soundly rejected only a few months ago when Congress passed the 2015 budget. “The only difference is that there are more Republicans now,” Zakheim said. “What are the chances that people are now going to vote for something they just voted against? This is not ancient history, where Congress 15 years ago voted against something and now they’re trying to get them to change their minds.”

The battle over government spending will be reaching a fever pitch just as new Pentagon chief Ashton Carter prepares to defend the 2016 proposal. Remarks during his confirmation hearing suggest Carter believes there is much bloat to be eliminated in the Pentagon, and observers wonder how far he will go. His deputy Robert Work already has announced plans to engage with the Defense Business Board to attack overhead costs and other areas ripe for savings. Again, how much of this will translate into real money is a big unknown. The DBB in a January report said the Pentagon is sitting on a fiscal ticking time bomb because of its rising “back office” costs. “We are spending a lot more money than we thought,” the panel said. It proposes a path to saving up to $125 billion over five years mostly from early retirement of civilian workers and reductions in contractors.

“These recommendations could be extremely helpful if you can get them implemented,” said Zakheim, who was one of the founding fathers of the DBB during the Donald Rumsfeld era.

“This is serious money,” he said. Several right-leaning think tanks have proposed cuts to the civilian workforce, but their advice tends to be discredited as partisan. The DBB, a panel of private sector executives has a history of controversial proposals that have met fierce resistance from within the Defense Department and unions. “Nothing new about that,” said Zakheim. “But there should be a debate about how to best manage the taxpayer money.”

Former Undersecretary of Defense Michèle Flournoy has called on Carter to take this on. “The next secretary of defense must address unnecessary overhead in the Pentagon, defense agencies and headquarters staffs,” she said. “Congress gave these authorities to the last secretary of defense who had to manage a major drawdown, William Perry, and it should provide these tools to Carter as well.”

Topics: Defense Department, DOD Budget