In a recent speech at the Eisenhower Library in Kansas, US Secretary of Defence Robert Gates stated that “Given America’s difficult economic circumstances and parlous fiscal condition, military spending on things large and small can and should expect closer, harsher scrutiny.” Secretary Gates is right to point to the dangers of America’s soaring budget deficits, but his implication that the US defence budget contributes significantly to the problem is incorrect. The measures that he and the Administration propose are the same ones that have already been tried, and failed, in Britain. The British example shows the danger facing the US forces.
Placing US defence spending in context
Today, including the cost of the wars in Iraq and Afghanistan, the US is spending 4.9 per cent of its gross domestic product (GDP) on defence. That is less than the post-1945 average of 5.3 per cent and about as much as the US spent in 1978 and 1979 under President Jimmy Carter. Defence now consumes 15.7 percent of the federal budget, while in 1978 it consumed 22.7 per cent. The Administration plans to reduce defence spending to 3.4 per cent of GDP and 14.6 per cent of the budget by 2015, with further reductions to come.
The President’s 2011 budget, according to the Congressional Budget Office, projects a deficit of $1.3 trillion, almost twice as much as the total defence bill of $740 billion. Commentators who argue that either the core defence budget or the cost of current operations created the burgeoning US deficit show a willful disregard of history and reality. Defence spending is not squeezing the budget: As Secretary Gates’s remarks show, defence is being squeezed for the sake of the rest of the budget.
The Administration’s dangerous proposals
The Administration proposes a $90 billion cut in core defence spending in 2012, followed by modest increases. This approach is politically convenient, because it will allow the Administration to claim credit for several annual increases in defence spending, but it still amounts to an overall reduction.
The Administration assumes that current operations will end after 2011: this is unrealistic. The Administration argues that in this new era of counterinsurgency warfare, expensive Cold War weapons are unnecessary: This ignores post-Cold War experience, which - with the exception of nuclear weapons - has seen the use of all of America’s Cold War systems. And it argues that the need for, and the potential savings from, procurement reform is demonstrated by the expense of these weapons: This ignores the fact that procurement has declined as a share of overall US defence spending.
The end result of the Administration’s proposals is that already strained modernisation budgets will be forced to absorb even more reductions, as well as the cost increases that come with inflation and the military entitlement system, leaving the US facing a substantial procurement bill and unable to meet all of its commitments.
Lesson of the British example
Every proposal the Administration is currently advancing has an exact parallel in Britain. This is not a coincidence. In part, this parallel exists because the US now has an Administration that, like the one elected in Britain in 1997, is eager to increase social spending and to cut defence. Similar aims lead to the same quest for arguments to justify policies that were chosen before the arguments were devised.
But the parallel also exists because the US and Britain are borrowing arguments from each other. British defence planners explicitly acknowledge that their current proposals were inspired by Secretary Gates (PDF 5.23MB). It is therefore reasonable to look to the British example to judge the merits of the Administration’s plans.
The British experience in the realm of defence since 1997 has been little short of disastrous. After it was elected, the Blair government embarked on a major defence review, which it released in 1998. The review was based on the premise that procurement reforms would achieve substantial efficiencies, which in turn would allow the rest of the defence budget to be cut without harm to Britain’s capabilities and responsibilities. The result was that defence spending in Britain declined as a share of GDP from 1996 through 2004, even as Britain fought wars in Sierra Leone, Kosovo, Afghanistan, and Iraq.
The experience of these wars did not persuade the government that its policy was fundamentally misconceived; instead, it continued to emphasise efficiencies and to dribble out increases to fight the public relations fire of the day. It never treated defence as a serious issue requiring sustained, careful investment at a level that would not damage the nation’s economy, but also at one sufficient to sustain and train the forces of today while procuring for the force of tomorrow.
The results of this experiment did not justify the government’s policy. It turned out that it was extremely difficult to secure efficiencies in defence procurement, so while the cuts in defence spending were real, they were not compensated for by efficiency gains. Instead, the cuts forced delays in programs, increasing their overall cost while simultaneously piling up a procurement gap as the military of today consumed the funds that should have built the military of tomorrow.
As a result, by October 2009, the Ministry of Defence estimated its total procurement shortfall through 2038-39 at between £35 billion and £100 billion. This did not stop the government from taking credit for increasing defence spending after 2004, even though these increases did not close the growing gap between planned and required spending.