The Right Way to Cut Defense

It would be a colossal mistake to cut our overall level of defense spending. However, there are reforms which could streamline the budget and protect our military.

As they say in Congress, I’d like to revise and extend my remarks about the Bowles-Simpson deficit reduction plan.

I’m struck by the positive reaction with which the plan has been met by many on the Right -- including, for instance, FrumForum contributor Eli Lehrer and defense hawk extraordinaire Jennifer Rubin. This suggests to me the very real possibility that conservative policymakers and Republican officeholders are prepared to gut the defense budget.

Which is why I think it’s important that pro-defense conservatives such as myself begin identifying how, exactly, we would reform and even cut the defense budget. And, with that in mind, Bowles-Simpson, I must admit, offers some very helpful ideas.

Now, don’t get me wrong. I think it would be a colossal and historic mistake to cut the overall level of defense spending. It also would be a mistake to cut Army and Marine Corps force structure, or boots on the ground. Ditto weapon systems and modernization.

For starters, as I have observed here at FrumForum, cutting the defense budget won’t help much with deficit and debt reduction. Entitlements -- Social Security, Medicare, Medicaid, and now “Comprehensive National Health Insurance” -- are the real culprits behind our massive sea of red ink.

But more importantly, America and the world require a bigger and more robust defense budget to ensure a more assertive U.S. military posture abroad -- and conservatives who discount this requirement do so at their peril.

Why, one need only look at nuclear-armed North Korea to see where American ground troops might next be deployed, and in massive numbers. The truth is that the demand for American leadership and an assertive U.S. military posture abroad are not about to abate anytime soon.

However, as a practical political matter, conservative policymakers and Republican officeholders feel compelled to show that “everything is on the table” and that “there are no sacred cows.”

That’s the rationale, after all, behind a letter put forth last week by Grover Norquist and other conservative leaders to “consider defense spending cuts.”

“Ignoring the burden military spending places on the taxpayers promotes the same reckless spending ethos that led to failed ‘stimulus policies, government bailouts and a prolonged economic recession,” these conservatives write.

Their suggestion that defense spending be cut by 20% is incredibly stupid and dangerous. Still, one can certainly appreciate the political calculus that is driving their proposal.

For these reasons, as I say, it behooves pro-defense hawks like myself to begin identifying how, exactly, we might streamline the defense budget. This to satisfy a political imperative that I fear may soon become inexorable and irresistible.

But before doing that, context is required:

(1)  Defense Secretary Robert Gates has cut already an estimated $330 billion in weapon systems programs.

True, these are estimated savings effected over a 10- to 30-year period; and at least some of this money has been reallocated to new and different weapon systems. Nonetheless, the Gates-Obama defense cuts have been rather dramatic -- especially when compared to the rest of the federal budget, which has been on autopilot.

(2)  By Gates’ direction, the Pentagon is now cutting, over a five-year period, an estimated $100 billion in “administrative overhead.”

(3)  Any savings and efficiencies identified in the defense budget must be plowed back into the defense budget. We simply cannot afford to cut the overall level of defense spending -- which, as a percentage of the Gross Domestic Product (GDP) is roughly a half to a third what President Eisenhower (a Republican) and President Kennedy (a Democrat) spent on defense.

Reforming the defense budget will not be easy. It will require, in fact, genuinely “hard choices” that policymakers don’t like. And that is because, contra the politicians, the biggest cost drivers in the defense budget aren’t weapon systems, but rather personnel and benefits -- and especially healthcare and retiree benefits.

Indeed, according to the American Enterprise Institute’s Thomas Donnelly:

At the end of the Cold War — when the force was much larger — healthcare accounted for about four percent of defense spending. During the Bush years, that doubled and current trends would take it to 12% by 2015.

Most of this increase is due to a single benefit, ‘TRICARE for Life,’ enacted in 2001. This extended the benefits of the military health insurance program to members, their families and survivors of their lifetimes. (Formerly, they [beneficiaries] were transferred to Medicare coverage upon reaching age sixty-five.)

Thus, the GAO [Government Accountability Office] has found that TRICARE costs have been growing at an annual rate of 16%, doubling the cost to the defense budget from $17.4 billion in FY2000 to $35.4 billion in FY2005.

“Benefits consume an increasing slice of the Pentagon’s baseline budget,” Donnelly told Congress last year.

In 1985, for instance, the Pentagon spent $1.42 in weapons procurement for every dollar it spent on personnel; but by 1998, that figure had been reversed: “For every procurement dollar, the Pentagon spent $1.55 on personnel,” Donnelly said.

Clearly, if policymakers are serious about reforming the defense budget, then they’re gonna have to reform the military healthcare system, while tackling retiree benefits. This, however, is something that Republicans officeholders insist they won’t do.

Consider, for instance, Rep. Joe Wilson (R-South Carolina), a member of the Tea Party and the incoming chairman of the House Armed Services Subcommittee on Military Personnel. According to military reporter Tom Philpott, Wilson

told me he is committed to protecting TRICARE [healthcare] beneficiaries from fee increases. In fact, his priorities as panel chairman included expanding entitlements: ending a Survivor Benefit Plan offset for widows, lowering the age-60 start of reserve retirement, and providing some military retired pay atop disability compensation for members forced to retire before reaching 20 years due to disability or injury.

Now, some of these proposals may have merit; but the fact is that the military retirement pay and benefits are extraordinarily generous and must be addressed -- or they will soon consume the defense budget. Who else in America, after all, can retire at the age of 37, after just 20 years of service, and receive for life free healthcare and a pension worth 50 percent of his working income?

Bowles-Simpson, to its credit, tries to address this problem. For example, it would delay retirement pay until age 60, while reducing the vesting period from 20 years to 10 years. TRICARE fees would rise modestly.

Yet, whenever the Department of Defense deigns to reform and rein in its personnel and benefit costs, the politicians and the veterans lobbies cry foul. And so, DoD does a hasty retreat.

That won’t do. The defense budget isn’t supposed to be a liberal welfare state for soldiers, sailors, airmen and Marines. It’s supposed to equip our warriors to fight and win our nation’s wars. Yet to prove their pro-defense bona fides, liberal members of Congress typically champion more goodies for the troops; and conservatives go along.

I understand the political difficulty posed by this issue. But we’re not talking, necessarily, about significant cuts to military benefits. We’re really talking about replacing a state-run benefit delivery system with a market-oriented benefit delivery system.

A voucher-based system geared toward private-sector medicine and health savings accounts, for instance, would save the government money and effect better healthcare for our troops. However, enactment of this reform would require intellectual legwork by conservative policy analysts and political leadership by the Republican Party, both of which have been lacking, sad to say.

Moreover, to the extent that benefit cuts are required, policymakers should be candid and forthright with the troops, both active duty and retired.

Our servicemen and women, after all, are adults; and they should be treated as such. They didn’t sign up for military service to become wards of the state. They signed up to fight and to serve. They can handle straight talk about the defense budget. They deserve that. And so do we.

John Guardiano blogs at strong>www.ResoluteCon.Com<, and you can follow him on Twitter: strong>@JohnRGuardiano<.