Tough choices confront defense budget cutters

After a decade of unprecedented growth, efforts to cut waste in the defense budget are coming from every corner -- from the high levels of the Pentagon to fiscal conservatives and liberals alike on Capitol Hill.

The proposals on the table vary, as do the appetites for making actual reductions to the size of the Pentagon's budget.

But the discussion inside the Beltway has shifted within the past year from shielding the military's accounts from the type of fiscal belt-tightening that is now a reality for most other federal agencies to making the Pentagon an active participant in cost-cutting exercises.

For its part, the Pentagon recently announced a five-year effort to find more than $100 billion in savings within the Defense Department's budget and reinvest that money into higher-priority force structure and modernization accounts.

Two-thirds of the savings are expected to come from unnecessary overhead costs, which make up roughly 40 percent of the Pentagon's budget.

The rest will come from cuts to weapons systems and other investment accounts that the military deems it no longer needs -- a painful prospect for the armed services and lawmakers on Capitol Hill, who are reluctant to cut programs they've championed for years.

The cost-cutting effort is designed to make the Pentagon able to live within a base budget that is expected to have only 1 percent real growth annually -- a relatively modest raise for a department whose base budget has nearly doubled in size since 2001.

At the same time, House Armed Services Committee Chairman Rep. Ike Skelton, D-Mo., has announced that his panel will launch a review to find cost savings, presumably starting with the fscal 2012 budget.

"It's not just a matter of dollars; it's how you spend them," Skelton said recently. "You spend [it] all on bows and arrows in a bigger budget, you don't have much."

Some budget hawks argue that the Pentagon is not going far enough and should actually reduce the size of its accounts -- not continue to grow its overall budget each year.

House Financial Services Committee Chairman Barney Frank, D-Mass., who was joined by Reps. Ron Paul, R-Texas, and Walter Jones, R-N.C., has released a study that proposes defense cuts that total nearly $1 trillion over the next 10 years. And Sen. Tom Coburn, R-Okla., has proposed freezing the size of the defense budget until the Pentagon can produce an audit of its accounts.

"Change is in the wind," said Winslow Wheeler, a former Senate budget analyst now at the Center for Defense Information. "[Defense Secretary Robert] Gates and people like Skelton are fighting a rearguard action where they're trying to express the view where we know the party's over but we sure would like to keep the spending at its ultra high level like it's at now."

But even Wheeler -- who says Gates is "missing the boat" and does not grasp the sense of urgency in the need to cut the size of the defense budget -- credits the Defense secretary with taking a stab at reform.

"I like Gates - I just wish he'd do more of what he's doing," Wheeler said.

Others, however, see Gates' five-year plan as a significant challenge, one that could prompt a cultural change within a Pentagon that has grown accustomed to spending freely.

Jacques Gansler, the Pentagon's acquisition chief during the Clinton administration, said Gates is "calling attention to the fact" that the Pentagon needs to worry about affordability, change the way it does business, and do more with less money.

Meanwhile, David Berteau, a senior advisor at the Center for Strategic and International Studies, said it would be impossible to cut tens of billions of dollars from overhead in the defense budget without making significant changes.

"There's a popular view that there's so much fluff or waste or mismanagement that there's billions and billions of dollars to be picked up," Berteau said. "The reality is, to get that kind of savings, you actually have to stop doing something. You actually have to find actions you have to stop spending time on."

Finding the level of savings that Gates wants from the Pentagon's budget is "harder than it looks," Berteau said.

But when it comes to ensuring that defense bears some of the burden of federal deficit reduction, $100 billion over the next five years would hardly make a dent. The deficit for this fiscal year will top $1 trillion, and is expected to grow exponentially over the next decade because of a sharp rise in entitlement costs.

The defense budget, which accounts for more than half of all federal discretionary spending, must play a role if the government has any hope at reining in the burgeoning deficit, said Gordon Adams, OMB's former associate director of national security programs during the Clinton administration.

"A double tsunami is about to hit defense," said Adams, now a professor at American University.

The first wave is a growing appetite for deficit reduction and spending control. The second wave, Adams said, is an anticipated reduction in troops deployed to Iraq and Afghanistan, making it both easier and more politically feasible to cut the defense budget.

With tens of thousands of troops still deployed in both countries, most lawmakers -- particularly key members of the Armed Services committees from both parties -- would not tolerate cuts to the defense budget. In fact, many Republicans complain that the Obama administration isn't spending enough to acquire fighter aircraft and ships.

But a peacetime environment would pave the way for significant defense cuts, as it has after most major military operations.

Gates' $100 billion cost-saving plan does not qualify for a "serious rethink" of the Pentagon budget, Adams said. Berteau, meanwhile, likened it to a "test program" in deficit reduction efforts.

But Adams predicts that external pressures from the White House, as well as a growing deficit-reduction pressures from Blue Dogs and fiscally conservative Republicans, will lead the charge in cutting the Pentagon's top line.

"The train is leaving the station but it isn't at full speed," Adams said. "I predict we are a year or two short of it really gathering momentum."