Carl Conetta, Project on Defense Alternatives
THE BOTTOM LINE: The DoD budget goals in the CFRR plan for 2012-2015 are good goals, provided that they represent a hard and fast cap on defense. The plan gives no guarantees for the period after 2015, however. Another concern: the pathways to DoD savings outlined in the report are not entirely convincing. There is too much "efficiency magic." Conclusion: Clarify, ensure, and embrace the caps on defense for 2012-2015 -- while pointing out that there are various, alternative ways of implementing them.
Yesterday the chairmen of the Commission on Fiscal Responsibility and Reform (CFRR) released their draft proposal. It seeks to trim the base defense budget by about $100 b. in 2015 – a cut of approximately 15%. All told, it may seek $250 b. in defense cuts for 2012-2015. For this period it seems to apply a cap directly on defense spending. After 2015, the direct cap may come off, allowing for transfers between defense and non-defense spending. During the period 2016-2020, discretionary spending as a whole is allowed to rise at the rate of inflation.
How good is the Commission’s draft proposal? A lot depends on what the DoD budget caps are for 2012-2015. If they are hard, fast, and calculated on the 2010 base DoD budget, then the goals are "quite positive top line goals for those years."
Cumulative top line savings for 2012-2015 might be 75% as large as those proposed by the Sustainable Defense Task Force. In order to really tell, more details are required. The period after 2015 is a complete toss up, however, because the defense/non-defense firewall comes down. The Commission Draft says: let the new Congress negotiate the firewall for the period after 2015.
CFRR Draft versus SDTF Report
As for the specific program of cuts: it differs significantly from the SDTF plan in several consequential ways. What differences?
The CFRR defense savings plan for 2010 can be divided into four general categories:
1. Prospective efficiency savings = 44%
2. Pay & benefits cuts = 20.5%
3. Overseas deployment savings = 8.5%
4. Modernization savings = 27%
See details below. By contrast the SDTF plan resolves into:
1. Prospective efficiency savings = 11.7%
2. Pay & benefits cuts = 12%
3. Modernization, force structure, and deployment savings = 76.3%
Thus, the CFRR plan is heavy on pay, benefits, and efficiency savings. The SDTF plan is heavy on modernization and force structure savings.
The CFRR plan gives the impression of the US military being able to retain much more of its current forces, strategy, and posture while nonetheless realizing a high level of savings. That’s a nice trick if one can manage it. This is accomplished by invoking a huge, but largely unspecified advance in efficiency. By contrast, the SDTF plan pivots on saying that real reductions require structure cuts that in turn imply a significant rethink of our strategy and posture.
Put simply: SDTF says that "if you want to save money, you've got to slim down and do less."
Solid versus Soft
Another way to assess the two plans is in terms of "solid" versus "soft" proposals. A truly "solid" proposal would point to specific line items to cut and would allow a clear appreciation of what is being sacrificed in terms of capabilities. A very "soft" proposal, by contrast, would simply direct DoD to "find a way to spend less" in some area. The success of soft proposals depends heavily on Congress and the administration standing fast against agency complaints that "it just can’t be done." Soft proposals are easier to rebuff as "unrealistic" and easier to fudge.
By my assessment, the CFRR plan comprises 50% soft and 50% solid proposals in dollar terms. Especially soft is its reliance on $28 billion from Gates’ initiatives, which reflects too much wishful thinking. Gates’ initiatives are in fair measure "promises, promises."
By contrast, the SDTF plan is about 85% solid and 15% soft savings proposals.
Some good perspective on "solid" vs "soft" proposals comes from the 1990s. The decade experienced a major push to adapt the size of US forces to post-Cold war realities. Force and modernization cuts related to that goal saved ~$800 billion. The 1990s also saw a big push to streamline and improve efficiency. Cumulative savings from this were certainly less than ~$30 billion. A special case was the BRAC military base reduction process, which will eventually save more – but BRAC was a streamlining process that was quite "solid" insofar as it targeted hard assets.
UPSHOT: The DoD budget goals in the CFRR plan for 2012-2015 are good goals, provided that they represent a hard and fast cap on defense. The plan gives no guarantees for the period after 2015. Another concern: the pathways to DoD savings outlined in the report are not convincing. There is too much "efficiency magic."
Conclusion: Clarify, ensure, and embrace the proposed caps on defense for 2012-2015 -- while pointing out that there are various, alternative ways of implementing them.
Breakdown of Commission plan for 2015:
1. Finding new efficiencies (44%)
Gates Initiatives
– Apply overhead savings Gates has promised to deficit reduction = 28 b. (v. soft)
Workforce size and composition
– Double Secretary Gates' cuts to defense contracting = 5.4 b. (soft)
– Replace mil pers performing commercial activities with civilians = 5.4 b. (soft)
Support activities
– Reduce spending on base support = 2 b. (soft)
– Reduce spending on facilities maintenance 1.4 b. (soft)
– Consolidate the Department of Defense's retail activities = 0.8 b. (semi-solid)
– Integrate children of military personnel into local schools in US = 1.1 b. (semi-solid)
2. Cut pay and benefits (20.5%)
– Freeze federal civilian compensation at DoD for 3 years = 5.3 b. (solid)
– Freeze noncombat military pay at 2011 levels for 3 years = 9.2 b. (solid)
– Modernize Tricare, Defense health = 6 b. (solid)
3. Reduce Modernization Plans (27%)
– Reduce procurement by 15 percent = 20 b. (solid)
– Reduce spending on RDTE by 10 percent = 7 b. (semi-solid)
4. Force structure, force size, and deployments (8.5%)
– Reduce overseas bases by one-third = 8.5 b. (solid)