Providing Adequate Funding for Defense

The stakes in the “long war” against the forces of Islamic fascism are high — nothing less than the survival of the free world. Congress and the President must ensure that our military receives the resources it needs to prevail. There’s simply no greater challenge.  

Unfortunately, the recent trend with respect to our military budget suggests that we are dangerously close to revisiting the dark days of the 1990s, when we allowed our armed forces to “hollow out” and render us vulnerable to attack.  

First, let’s briefly review what happened when the Cold War ended.

After the fall of communism, Congress and the Clinton Administration determined that we could scale back military spending and still protect America’s vital security interests. This gave rise to the so-called “peace dividend,” the flood of money saved by slashing the defense budget.

During the decade between 1990 and 1999, defense spending decreased in real terms each year.  However, history had not (as Defense Secretary Robert Gates said even at the time) ended with the fall of the Soviet Union. It had just been frozen by the Cold War. In the ’90s it began, he noted, “thawing out with a vengeance.”
Regional conflicts erupted across the globe, prompting Clinton to send U.S. forces to hot spots more frequently than his predecessors — to the former Yugoslavia, Somalia, Haiti, and elsewhere.

Not surprisingly, all of these military deployments and “peacekeeping” operations increased spending on operations and maintenance — even as lawmakers craving that “peace dividend” shrank the overall defense budget.  Something had to give. In the words of former Sen. Jim Talent (R.-Mo.), the preferred solution was “a decade-long procurement holiday.”

Talent offered a vivid depiction of how the hollow military took form in a Senate floor speech:

  • Scout and attack helicopters: between 1975 and 1990 we purchased an average of 78 per year; from 1991 through the year 2000, we purchased only seven;
  • Battleforce ships: between 1975 through 1990, we purchased 19 each year; during the 1990s, annual purchases fell to seven;
  • Navy fighter aircraft: an average of 111 were purchased annually between 1975 and 1990; only 42 were purchased annually during the 1990s;
  • Tankers: annual purchases almost disappeared entirely, falling from five per year between 1975 and 1990 to only one per year during the 1990s;
  • Army tanks, artillery, and other armored vehicles: annual purchases of these basic fighting platforms collapsed as well, from an average of 2,083 annually to a mere 145.

The hollowing-out process led to a smaller Navy and Air Force. At 283 ships, our current naval strength falls considerably short of the Pentagon’s desired 375-ship fleet. And since we’re only adding 5.6 new ships per year while retiring older vessels, the fleet will eventually bottom out at 170 ships.

Lawmakers faced with the difficult choice of whether to spend precious defense dollars on weapons or personnel costs often choose the latter. In 1985, there was rough parity between what the Pentagon calls the “operation and support” portion of the budget (military personnel costs plus operations and maintenance) and spending on “modernization” (research and development plus the procurement of new weapons).

Over the last two decades, however, that parity has disappeared. We now spend more than twice the amount on operation and support (health care, subsidized food and housing, child care for dependents, and education benefits for GIs) as we do on modernization.

Talent sums up the Pentagon’s budgetary conundrum as follows:

“Most of the [Pentagon’s] budget is basically committed. You cannot short operations and maintenance…[or]… readiness. You must pay your people. You must provide the benefits you have committed to provide.  That means any budget cuts must come almost entirely out of exactly the platforms, the ships and planes, and tanks and vehicles…that our men and women need to… defend us.”

Indeed, our European allies have traveled even further along this road. Last year, the 24 member states of the European Defense Agency reported spending an average of only 1.8% of their GDPs on defense, less than half of what we spend. And they devoted much less (only 18% of their defense budgets) to modernization. Instead they spent more on generous benefit packages for their servicemen and women. Little wonder that a spokesman for the Belgium defense ministry acknowledged shortly before the 2003 liberation of Iraq that: “I’m not sure that the mission of the Belgium military is to fight.”

As bleak as the picture may look today, the coming fiscal crunch brought on by the retirements of 78 million Baby Boomers promises to make the situation much worse. (For a more in-depth discussion of the challenges posed by the looming Boomer retirements, see the companion piece, “Recasting Entitlements and Healthcare Market.”)

My colleague Baker Spring points out that since 1970 the historical ratio between spending on defense and on Medicare, Medicaid and Social Security has flipped. In 1970, military spending as a percentage of GDP consumed more than twice the proportion of GDP consumed by the Big Three entitlements (8.1% compared to 3.9%). Today, defense spending has fallen to 3.9% of GDP while entitlement spending has more than doubled, consuming 8.3% of GDP. By 2030, these major entitlements will absorb roughly 85% of all federal revenues.

The Boomer retirements will place enormous pressure on national security spending, as lawmakers face the political Hobson’s choice of funding popular welfare-style giveaways or the military.  Choosing butter over guns, Spring warns us, could “jeopardize our nation’s ability to wage war over the long term. Entitlement reform,” he concludes, “is a national security issue.”

To prevent the return to a “hollow military,” there are several steps Congress should take, including:

Commit to spend at least 4% of GDP on our national security. By any historical standard, this is a modest level. Yet it’s sufficient to provide an adequate military and not unduly burden the economy. Throughout the decades-long Cold War, for example, defense budgets averaged almost 7.5% of GDP.

Congress should fund war-fighting costs related to the operations in Iraq and Afghanistan through supplemental appropriations. Core service functions, including crucial research and development, weapons procurement and manpower costs, should be funded through the regular budget.

Make national security spending more efficient. In particular, Congress should end the practice of earmarking Defense Department appropriations. Almost 40% of research and development dollars, for example, are earmarked to be spent in the districts and states of particular congressional members.

Congress should allocate a greater proportion of the defense budget to modernization, especially procurement. With China poised to become a heavily-armed hegemonic power in the Pacific and rogue states like North Korea and Iran prone to destabilizing and possibly destructive behavior, this is no time to allow our naval and airborne capabilities to decline.

Provide adequate funding for missile defense. A fairly modest investment would allow us to accelerate testing and improve the operational capability of our current ground-based missile defenses. Lawmakers should also insist that the military work to develop space-based platforms.


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