Colleagues:
Two articles today on Secretary Bob Gates’ announcements on the 5-year defense budget plan. The Secretary characterizes his budget as imposing severe cuts, but in reality those are only reductions in the previously planned rate of growth. The Secretary is still asking for 3% annual increases in the Pentagon’s budget–roughly equivalent to anticipated inflation.
Several weapons systems are being eliminated from the acquisition programs, with the Army being hit hard–mainly due to alleged severe mismanagement of its programs.
One observer noted on another loop: ” Why are we referring to SECDEF’s announcements as “cuts” – they are not – they are reductions in the pace of growth.
No reassessment of force structure, operations, commitments.
Also, raising it rhetorically, but I noted in his interview on PBS that SECDEF said we had to be concerned about Russian and Chinese force modernizations? Really, sure they are modernizing, but I could help but wonder what they say about us and our military power. Frankly, I think China is free-riding on us, taking advantage of us policing and spending our selves into economic ruination – while they finance it. Its the biggest threat to our relative power in the world, and yet we seem collectively (as a nation) unable to even conceptualize it.”
Another area not addressed that will be of major concern for the next SecDef is military retirement and health care, where costs are soaring.
The defense budget, previously regarded as sacrosanct and off the table for Republicans, seems to be very much in play, particularly by tea partiers and deficit hawks.
Two articles by Shanker and Drew on the Secretary’s presentation follow. Also note that Gates will be heading for Beijing for important security related talks prior to President Hu’s state visit later this month.
— Ty
January 7, 2011Struggle Forecast for Pentagon and Deficit Hawks
By CHRISTOPHER DREW and THOM SHANKER
Now that the Obama administration has forced the Pentagon to gradually freeze its budget in response to economic pressures, the question in Washington is: How long will the deal hold up?
In announcing plans to cut $78 billion in spending over five years, phasing out any growth above inflation, the defense secretary, Robert M. Gates, made it clear on Thursday that he hoped to keep the military budget from shrinking.
Many analysts said he did an artful job in picking areas to trim, but they doubted that the Pentagon would be able to prevent the budget from actually dropping in two or three years, particularly if deficit-reduction efforts gathered steam.
Political and military analysts said even some of the new Republicans in the House might find it difficult to trim government expenditures without including the Pentagon’s base budget, which the White House would like to increase to $550 billion in fiscal 2012.
The new House Republican leaders — who have said that military spending should not be off limits — and newcomers backed by the Tea Party could join with Democrats who have long bridled at the surge in military spending since the Sept. 11 attacks. And with troops coming home from Iraq, legislators could win support for more cuts from a public weary after a decade of war, even as the fighting continues in Afghanistan.
Mr. Gates acknowledged the new political reality, saying tough choices were “more important than ever at a time of extreme fiscal duress, when budget pressures and scrutiny fall on all areas of government, including defense.”
But even as Mr. Gates drew a new line in the sand on “the minimum level of defense spending that is necessary,” the latest reductions seemed to fuel the sense that the military budget was now in play.
Just last fall, Mr. Gates had seemed confident that he could ease such pressures by shifting money inside the Pentagon. He had pushed the armed services and the bureaucracy for $150 billion in savings over five years that could be used for military priorities. He announced many of those changes, including facility consolidations and a reduction in contractors, on Thursday.
But in agreeing with the White House decision to reduce the Pentagon’s budget request for 2012 to $553 billion, excluding the costs of the wars, from the $566 billion that he thought he had been promised, Mr. Gates took “a sort of one-step-back concession to reality,” said Gordon Adams, a former Clinton administration official who served on Mr. Obama’s transition team.
“The finger in the dike didn’t work,” Mr. Adams said, referring to Mr. Gates’s efforts. “And now he is acknowledging that pressure from outside is impinging on defense.”
Mr. Adams and other analysts said that stopping the budget’s growth could lead to substantial cuts in spending and in the size of the military’s forces.
“If you think about the defense budget as having a wide turning radius like an aircraft carrier, it is just about 20 percent into a turn that could take years to finish,” said Loren B. Thompson, a consultant to military contractors. “But at least Gates is now acknowledging that the turn is coming.”
Mr. Gates said the $78 billion in reductions from previous budget proposals would enable Pentagon spending to keep growing slightly faster than inflation through fiscal 2014 and at a rate equal to inflation in the two years after that.
He said some of the savings would be achieved by cutting 47,000 Army troops and Marines in those last two years. But just staying ahead or even with inflation would produce nominal increases that could seem eye-popping to lawmakers worried about the nation’s debt.
Excluding war costs, the administration’s new budget proposal for the Pentagon would total $2.9 trillion over five years. The annual totals would rise to $571 billion in fiscal 2013, $586 billion in 2014, $598 billion in 2015 and $611 billion in 2016.
And Mr. Gates, who is widely respected by members of both parties, has said he is likely to retire this year, a move that would leave the Pentagon without its most forceful advocate.
The defense secretary said that even as the growth slows, the United States military would be far more powerful than any other, especially as other nations cut back more severely. But he also cautioned that further reductions would amount to “math, not strategy.”
Other Pentagon officials wondered what could be cut while 100,000 American troops are in Afghanistan, the United States faces crises with North Korea and Iran, and China and Russia are beefing up their forces.
But the new House speaker, John A. Boehner, and majority leader, Eric Cantor, have said that trims in military spending were a possibility. Other Republicans would prefer to limit budget cuts to domestic programs.
Representative Howard P. McKeon of California, the new chairman of the House Armed Services Committee, said he would resist military spending cuts.
Congress also could reject Mr. Gates’s plan to increase health insurance fees for retired veterans. Representative Norm Dicks, Democrat of Washington, said the health care changes would be “very sensitive in my district.”
Ohio and Michigan lawmakers also have begun to rally support for the Marines’ Expeditionary Fighting Vehicle, a $14.4 billion program that Mr. Gates would like to kill. It could provide thousands of jobs in those states.
Military contractors’ stocks gained Friday, with investors relieved the cuts were not deeper. But as past downturns have unfolded, it has often proved easier to reduce weapons systems than personnel and benefits.///
New York Times
January 7, 2011
Pentagon Seeks Biggest Military Cuts Since Before 9/11
By Thom Shanker and Christopher Drew
WASHINGTON — Defense Secretary Robert M. Gates said Thursday that the nation’s “extreme fiscal duress” now required him to call for cuts in the size of the Army and Marine Corps, reversing the significant growth in military spending that followed the terrorist attacks of Sept. 11, 2001.
The White House has told the Pentagon to squeeze that growth over the next five years, Mr. Gates said, reducing by $78 billion the amount available for the Pentagon, not counting the costs of its combat operations.
The decision to go after the Pentagon budget, even while troops remain locked in combat overseas, is the clearest indication yet that President Obama will be cutting spending broadly across the government as he seeks to reduce the deficit — and stave off attacks from Republicans in Congress who want to shrink the government even more.
Republicans have for the most part resisted including military spending as they search for quick reductions in federal spending.
To make ends meet, Mr. Gates also announced that he would seek to recoup billions of dollars by increasing fees paid by retired veterans under 65 for Defense Department health insurance, even though Congress has rejected such proposals in the past. And he outlined extensive cuts in new weapons.Cutting up to 47,000 troops from the Army and Marine Corps forces — roughly 6 percent — would be made easier by the withdrawal under way from Iraq, and the reductions would not begin until 2015, just as Afghan forces are to take over the security mission there. But Mr. Gates said the cuts in Pentagon spending were hardly a peace dividend, and were forced by a global economic recession and domestic pressures to find ways to throttle back federal spending.
“This department simply cannot risk continuing down the same path where our investment priorities, bureaucratic habits and lax attitudes toward costs are increasingly divorced from the real threats of today, the growing perils of tomorrow and the nation’s grim financial outlook,” Mr. Gates said at an afternoon news conference.
The president’s budget for the 2012 fiscal year, which is due by mid-February, would freeze discretionary spending, but that would not apply to military, veterans and Homeland Security programs. Last fall, a majority of the members of Mr. Obama’s bipartisan National Commission on Fiscal Responsibility and Reform, including three Republican senators, said military spending also should be reduced as part of a long-term debt-reduction plan.
The Pentagon’s proposed operating budget for 2012 is expected to be about $553 billion, which would still reflect real growth, even though it is $13 billion less than expected. The Pentagon budget will then begin a decline in its rate of growth for two years, and stay flat — growing only to match inflation — for the 2015 and 2016 fiscal years. (The Pentagon operating budget is separate from a fund that finances the Afghanistan and Iraq wars.)
“This plan represents, in my view, the minimum level of defense spending that is necessary, given the complex and unpredictable array of security challenges the United States faces around the globe: global terrorist networks, rising military powers, nuclear-armed rogue states and much, much more,” Mr. Gates said.
To be sure, the actual size and shape of future military budgets will continue to be reset by annual spending proposals from the president, and those in turn will be based on shifting economic factors — decline or growth — and threats around the world, as well as by Congressional action.
But for now, the Army is expected in 2015 to begin cutting its active-duty troop levels by 27,000, and the Marine Corps by up to 20,000. Together, those force reductions would save $6 billion in 2015 and 2016.Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, said that all four service chiefs supported the proposals, and that the military would still be able to manage global risks.
“We can’t hold ourselves exempt from the belt-tightening,” he said. “Neither can we allow ourselves to contribute to the very debt that puts our long-term security at risk.”
The Army’s ranks number 569,600, and the Marine Corps has just over 202,000 members; both would remain larger than when Mr. Gates became defense secretary four years ago.
Mr. Gates already had instructed the armed services and the Pentagon bureaucracy to find ways to operate more efficiently, with the savings plowed back into the budget to make up for anticipated shortfalls; otherwise the cuts in troops and weapons would have been even steeper.
The armed services have identified about $100 billion in savings over five years.Separately, the Defense Department bureaucracy had identified about $54 billion more, from things like reducing contractor hiring, freezing personnel rolls, reducing the number of generals and admirals and closing or consolidating headquarters.
Many of those changes can be carried out unilaterally by the Pentagon or the armed services.
But some — especially increases in fees for the military’s health-care system, called Tricare — require Congressional approval, and have been rejected before.
Proposals to increase Tricare fees will pit Mr. Gates against those in Congress — and veterans’ groups — who say retired military personnel already have paid up front with service in uniform. Ten years ago, health care cost the Pentagon $19 billion; today, it tops $50 billion; five years from now it is projected to cost $65 billion.
But Tricare fees have not increased since 1995.
Mr. Gates was expected to press for increasing the cost of health insurance premiums and spot fees only for working-age retirees and their families, not for those on active duty or those 65 and older, to save $7 billion over five years.
Mr. Gates also announced cuts in several weapons systems, led by the cancellation of the Marines’ $14.4 billion Expeditionary Fighting Vehicle, a combined landing craft and tank for amphibious assaults.
Mr. Gates said the Pentagon would add $4.6 billion to the cost of developing the F-35 Joint Strike Fighter, made by Lockheed Martin, and would cover much of that expense by delaying purchases of 124 of the planes.
He said that one of the three versions of the aircraft might need to be redesigned, and that he was placing that model, made for the Marines, “on the equivalent of a two-year probation.”
Federal officials said Mr. Gates had been seeking to increase the basic Pentagon budget, excluding war costs, to $566 billion for the 2012 fiscal year, but had to push the White House to approve $553 billion.
Gordon Adams, a Clinton administration budget official who served on Mr. Obama’s transition team, said he understood that White House budget officials initially wanted to shave the Pentagon’s original, larger request by at least $20 billion for 2012.
Mr. Adams said Mr. Gates met with Mr. Obama three times before Christmas to get at least $7 billion restored. Mr. Gates was also able to persuade the White House to reduce its demands for cuts over the next five years to $78 billion from $150 billion. Even so, Mr. Adams said, “I think the floor under defense spending has now gone soft.”