Can't Touch This?: The Pentagon's Budget Fortress

Nearly six years after the fall of the Berlin Wall, all talk of a peace
dividend
has evaporated. The very phrase seems quaint, an echo from another era. Whole
domestic agencies, meanwhile, are targeted for extinction. Welfare and every
other form of safety net--home heating subsidies, housing and homeless
programs, food and nutrition programs--are under the budget knife. Medicare,
long considered too politically risky to cut, has lost its immunity. Only the
military budget remains secure from cuts, not only off the table, but slated
for increases by both the Clinton administration and congressional
Republicans.

Yet credible defense analysts across a wide ideological spectrum, including
former Department of Defense officials, congressional budget analysts, think
tank scholars, and at least one former head of the Central Intelligence Agency,
say the Pentagon could be further cut, saving as much as $200 billion over the
next five years. Why the immunity?

Two propositions are working in tandem to maintain the Pentagon's protected
status, one erroneous, the other problematic. The first is the belief that,
since the end of the Cold War, defense decreases have cut the military "to the
bone"--to its very marrow. The second is a vague but widespread belief that,
while the Cold War may be over, the world is still a dangerous place. Both
propositions, critics say, combine fact, mythology, ideology, and theology and
need to be thoroughly reexamined. Analysts of diverse political stripes argue
that the military has not been cut to the bone, that it has the fittest,
best-trained force ever, and that the global dangers faced by the United States
have been exaggerated.

America's behavior in a wide variety of international hot spots, from Bosnia to
Somalia to Chechnya, suggests an era with few strategic threats to the U.S., in
which both the administration and Congress are reluctant to intervene in
foreign conflicts, no matter what the Pentagon budget. The most hawkish figures
in both parties tend to be the most isolationist. An expanded military could
find itself all dressed up with no place to go.


THE MARROW ARGUMENT

Has the military budget been cut since the end of the Cold War? Yes,
definitely. How much has it been cut? Estimates vary from 15 percent to 40
percent, depending on what years are compared and whether inflation is taken
into account.

Secretary of Defense William Perry says the military budget has been cut by 40
percent, a figure widely cited by politicians who support current levels of
spending or who are trying to save their states' military bases or defense
contracts. California Senator Dianne Feinstein used the 40 percent figure in
arguing against the recommended closure of McClelland Air Force Base. Defense
hawks in the House and Senate use it routinely.

This percentage sounds dramatic until its basis is understood. Laurence Korb, a
former assistant secretary of defense, now affiliated with the Brookings
Institution, says the 40 percent figure is technically correct only if you use
the Reagan 1985 budget year as a base. Between 1980 and 1985, Reagan increased
defense spending slightly over 50 percent. Korb offers a different comparison:
"Let's take the military budget and put it in today's dollars. The Clinton plan
is higher than it was in 1972."

In adjusted dollars, the U.S. is spending more on defense today than it did in
1955, or 1975, or most years of the Cold War with the exception of the Vietnam
and Reagan peaks. The 1996 budget will be approximately $267 billion, or 85
percent of average Cold War budgets.

These comparisons, of course, leave out the defining event, the end of the Cold
War, and the many geopolitical changes that have accompanied its ending.
Together, the United States and its allies account for between 70 and 80
percent of the world's military spending. Although estimates vary considerably,
most experts say that the next highest spending countries-France, Japan, and
Russia-each spend somewhere between $30 and $50 billion annually.

Numbers like these lead such politically different figures as Bob Borosage,
director of the Campaign for New Priorities and a former Jesse Jackson advisor,
and William Colby, former CIA director under Nixon, to argue that we have a
desperate need for new thinking. Colby breaks down previous military
expenditures to demonstrate that the lion's share of annual trillion-dollar
expenditures was due to the conflict with the Soviets: "About $300 billion of
it was our defense budget, about $300 billion was our guess about what the
Russians, the Soviets, were spending, and about $200 billion was what NATO and
Warsaw Pact allies were spending. So, of the trillion, $800 billion was mostly,
not exclusively, devoted to the Cold War. And it's over."



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On the libertarian right, the Cato Institute questions the need for today's
spending levels. In a July 1995 report, the institute urged military spending
be immediately reduced to $205 billion, with a goal of reaching $140 billion
(in today's dollars) by the turn of the century. In releasing the report, its
authors note: "One of the most tenacious myths, especially among conservatives,
is that there has been a dangerously excessive reduction in U.S. military
spending since the late 1980s. By almost any measurement, that is not the
case."

The end of the Cold War has been sharply felt by individuals and
communities
whose livelihoods for decades have been shaped by defense jobs. The absence of
more robust national investment or conversion policies that could cushion the
effects on local economies has silenced traditional advocates for limiting
military spending. Unions, such as the United Auto Workers or International
Association of Machinists, whose leaders for years tried to trim defense
spending, are overwhelmed by layoffs and meager assistance programs and no
longer able to carry on that fight. Many liberal and moderate politicians, who
in the past have challenged military spending and might be expected to
articulate some post-Cold War new thinking, have been silenced by the need for
local jobs. Some have become advocates of a strong defense, as they try to save
bases and vote for bombers and submarines that even the military says are
superfluous.

Senator Feinstein stunned critics of the B-2 bomber when she led the fight to
continue its production. The B-2 is a bomber designed specifically to penetrate
Soviet defense; since the Soviets no longer have anything we need to penetrate,
the logic for continued production of B-2s has disappeared. The cost per bomber
is estimated to be between $1 billion and $1.5 billion. Brookings's Korb minces
no words: "We had killed the B-2 if she hadn't gotten involved. There was a
handshake agreement-everybody had signed up on it-the Air Force, [Senator]
Nunn-no more than 20. Even the Air Force was behaving itself. Then, she gets up
and opens up the damn thing, and all bets are off." He adds, "And, you haven't
heard Clinton get up and say we don't need B-2s."

Leading the fight against the B-2 was deficit hawk Republican John Kasich,
chair of the House Budget Committee, and traditional dove, Congressman Ronald
Dellums, ranking member of the National Security Committee, formerly the House
Armed Services Committee. The vote for producing more bombers was close, 213 to
203, with 70 Democrats joining Republicans. Several weeks after this fight, the
New York Times headlined a General Accounting Office (GAO) draft report
that found after 14 years, the B-2 has not passed most of its basic tests, and
cannot distinguish rain from other obstacles.

Many liberal politicians have long supported defense cuts, except in their
backyards. Feinstein's more liberal predecessor, Alan Cranston, perennially
supported production of the B-1 bomber. In recent years, base closures and
downsizing have coincided with substantial job losses in non-defense areas,
making the political choices more excruciating.

Many politicians say privately that they feel helpless and often unable to save
private-sector jobs. At least defense jobs, as public-sector jobs, are
something they have a shot at influencing. Connecticut politicians freely
acknowledge that support for the Seawolf, a submarine specifically designed to
fight the Soviets, is a sine qua non for re-election.

In the recent round of base closures, one expected to hear the following
rhetoric from Republican Governor Pete Wilson: "We are cutting into the muscle,
we are cutting into the ability of the American military to be able to project
force in a firm and convincing fashion that has special significance here in
the Pacific region, which is particularly volatile." One was surprised to hear
both Senators Feinstein and Barbara Boxer using strong defense arguments.
Closing McClelland Air Force Base, they argued, poses "risks to national
security." Even an angry President Clinton, in his speech publicly accepting
the base-closing commission's recommendations, stuck to economic factors to
explain his anger.


THE CLINTON FACTOR

During the early primaries of the 1992 election candidate Clinton
advocated substantial cuts in the military budget, continuing but accelerating
Bush's downward trend. Clinton promised $100 billion worth of cuts over five
years, $50 billion more than President Bush. President Clinton, however, after
an inaugural budget that continued the Bush trajectory, has gradually been
restoring previous decreases. He had restored $36 billion prior to his proposed
1996 increases. In this year's budget resolution fight, Clinton proposed
increases of $70 billion over the next six years. Some House Republicans wanted
to raise military spending by as much as $150 billion during the same period.

What accounts for the shift in Clinton's stance? In his first year, the
president was roundly criticized by the defense establishment for plucking a
defense figure from a hat rather than using one backed by a cogent set of
strategic objectives. President Clinton directed Secretary of Defense Les Aspin
to conduct a strategic planning process and a thorough review of defense
strategy, force structure, modernization, infrastructure, and foundations.

The Pentagon's effort resulted in the "Bottom Up Review" (BUR), released in
September 1993. It has been characterized by former intelligence chief William
Colby as bureaucratically self-interested, by a Cato Institute publication as
"fraudulent," and by Aspin intimates as an exemplar of strategic clarity,
explicitly linking global security objectives with budget estimates. The BUR's
assumptions about the world's dangers now drive the Pentagon's request levels,
their definitions of military readiness, and the claim that the current budget
is underfunded.


DANGER INTO DOLLARS

As any household planner knows, budget needs vary greatly with how the future
is viewed. Should you plan for a relatively crisis-free year? For an unexpected
fire? For a fire and a flood? For one fire, one flood, and an earthquake?
Clearly, you are going to need larger sums of money in the latter cases.
Critics say the Pentagon constructed a vision of geopolitical dangers based on
worst-case assessment of potential threats. These include not only wars, but
also the potential economic collapse of Russia and China. Those two nations may
well face economic calamities in the coming years, but it's not at all clear
how the U.S. would intervene militarily.

The report says the Pentagon used models, war games, military analyses, and
discussions with political leaders to convert strategy into force requirements.
The key force requirement premise, and the central budget driver, is that the
United States must be ready to fight, simultaneously, two regional wars, in
geographically distinct areas. This is known in Pentagonese as the MRC, for
Multiple Regional Contingencies. Most scenarios involve one war in the Gulf and
one with North Korea. The MRC price tag has been estimated to be as high as $90
billion per year per war. Skeptics in and out of Congress maintain that the
military has essentially substituted rogues for Soviets. One budget analyst
calls it overly ambitious, a case of the Pentagon having pushed the goalposts
back, trying to get a level of security we never had during the Cold War.

Former intelligence chief William Colby, who thinks the military budget can
easily be reduced 50 percent from Cold War levels without endangering national
security, works his way down a list of threats, often accepting the Pentagon's
worst fears, but not their approach or their budget figures. Colby agrees that
the Gulf is our most pressing strategic problem. "I think with these rogues,
there's no use debating whether they could get a weapon or whether they have a
weapon. Assume they have, now what do we do?" He believes diplomacy, mediation,
and arms control are more likely to forestall danger, and that we're doing
exactly the right thing with Iraq, Iran, and North Korea.

Another major danger, cited in the "Bottom Up Review" and frequently expressed
in congressional debates, is that the Russian experiment will fail and, once
again, the United States will be threatened. Colby, along with others, accepts
the possibility of future danger but argues that the financial costs are too
high to treat it as a near-term threat: "Russia could turn to a new fascism if
we are so dumb as to not support them adequately, and a new aggressiveness
toward their neighbors could build up again to a cold war. It would take them
years-ten years, perhaps. Meanwhile, their allies are our allies."

Implicit in such critiques is the importance of nonmilitary resources, foreign
aid, cooperative economic ventures, and multilateral lending. Yet, while
increasing defense, Republicans have been trying to gut most nonmilitary forms
of foreign assistance.


A HOLLOW ARMY?

The relationship between danger and budgetary requirements is a direct one: the
greater the assessed danger, the larger the budgetary needs. Congress rarely
debates the merits of any of the contingency scenarios. Most of the debate
centers around whether U.S. troops are adequately prepared for the
contingencies. Unfortunately, most discussions of readiness get quickly
reduced, bumper-sticker fashion, to the hot-button issue of a hollow army, a
political code word among defense hawks meaning American troops ill prepared to
fight.

The phrase "hollow army" dates back to the 1970s and refers to problems
associated with the change from conscription to a volunteer army. Troops were
hard to recruit in the post-Vietnam period, their quality was low, pay was
inadequate, and training was poor. Democrats, especially President Jimmy
Carter, were blamed for these conditions. The phrase has been kept around,
Willy Horton style, and is a charge that makes Democrats skittish, particularly
the Clinton administration. Korb, who was Reagan's readiness czar during his
first term, says: "You've got a lot of the same people in the Pentagon who were
there under Carter, and they are not going to let themselves fall into that
trap again. So, the military says we're hollow, we've got a problem and they
give 'em the money." Korb says today's military is high on quality: Nearly 100
percent of the recruits are high school graduates-the law requires only 65
percent-and the training budgets per capita are higher than they have ever
been.

Readiness is hard to measure. The key variables of personnel, equipment and
supplies on hand, equipment readiness, and training are translated into
performance measures, such as hours of flying time and tank driving time, and
are numerically scored. Readiness standards were heightened during the Reagan
buildup, and they are used today to boost Pentagon claims of a funding gap.
Richard Kogan, formerly a House budget analyst, now at the Center for Budget
and Policy Priorities, argues that a good analogy to the gap can be found in
modern medicine: "Technology has surpassed our ability to pay for what
technology can provide. We simply can't afford as a society to buy all the
things that would improve either our defense or our health. . . . It could
consume the entire gross national product."

This thirst for reducing risk through technology found its ultimate expression
in Reagan's Strategic Defense Initiative (SDI), better known as Star Wars.
Scientific ridicule of this plan, which would build a kind of shield over the
U.S. to protect us from Soviet missiles, along with the end of the Cold War,
sank SDI for a time. Now, remarkably, SDI has been renamed the Ballistic
Missile Defense Organization (BMDO) by the late Les Aspin, and Republicans and
Democrats have both proposed money for a renewed effort. The Clinton
administration put money in for theater defense-the ability to defend ships and
troops stationed close to dangerous areas where their vulnerability to missile
attacks are increased. The Republicans added money for a national ballistic
missile system defense, a version of Reagan's shield. (For reasons that are not
entirely clear, Star Wars is a theological issue to many Republicans, who
regard support as a litmus test of party loyalty, as potent an issue as
abortion rights are for Democrats.)

Proponents argue that a national shield is now more likely to work than it was
during the Soviet era, because the defense is against, say, three or four
missiles launched by rogues rather than against several thousand Soviet
missiles. Critics say such a defense is still a pipe dream and unlikely to
provide the promised security. In the meantime, BMDO has qualified as another
national security need and added billions to the military budget.


PROSPECTS FOR CHANGE

During his first term, President Clinton has been constrained from further cuts
by a variety of factors, some of which are unlikely to change during a second
term. First, Clinton starts from a position of weakness, not only lacking the
credibility of military service, but having avoided the draft and opposed the
war in Vietnam. Second, his position was further weakened, some say fatally,
after he took on the issue of gays in the military. Said one former Pentagon
official, "Once they rolled him on the gay issue, the battle was really over."

A third factor is more ideological: Bill Clinton shares the conviction, along
with other founding members of the Democratic Leadership Council (DLC), that
Democrats have lost previous national elections (McGovern, Mondale, Dukakis)
because they were seen as soft on defense. He is determined never to be
vulnerable to these charges. In Elizabeth Drew's book on President Clinton's
first year, On the Edge, Clinton worries how his defense budget figure
will be perceived politically, knowing it will peg him as either a centrist or
a liberal. In later budget cycles, according to one White House insider, the
Pentagon got an increase strictly because Clinton was worried about how the
military might perceive him. At the same time, there is no evidence that
Clinton is uncomfortable with the current budget figures, or that if he were
somehow freer, he would slash them.

Some of Clinton's harsher critics believe the administration has squandered a
critical opportunity to define post-Cold War priorities. But most congressional
Democrats, however critical they may be of spending levels, have muted their
criticism in favor of supporting the president. The Black Caucus budget, which
called for lower levels of defense spending, garnered only 56 votes this year.
Congressman Dellums, as the ranking minority party member on the National
Security Committee, sent his own letter to Budget Chair Kasich. The letter,
temperate in tone, recommends $82.5 billion worth of reductions to the Clinton
plan over the next five years. (Activists outside Congress say Dellums
unfortunately did not mobilize support for his position either in or outside
Congress.) Senator Tom Harkin tried to amend the military budget in the Senate,
and found similarly that he he had few allies. The amendment failed 28 to 71.
These congressional failures are also indicative of the lack of public clamor
to cut the military budget.

The only serious fights in Congress to cut defense spending have been led by
Republicans over specific weapons: House Budget Chair John Kasich fought
against the B-2 bomber, and Senator John McCain of Arizona fought against the
production of a third Seawolf submarine. Like the B-2 stealth bomber, the
Seawolf was specifically designed to counter the Soviet fleet. Now, there are
no enemy fleets to counter. Both fights were lost. McCain, it should be noted,
simultaneously advocated a $120 billion increase in defense spending generally.
In the House, Kasich also voted initially against the new Star Wars. His
position got him in trouble with the Speaker and contradicted the Contract with
America, however, and he soon shifted his position, further dampening any
thoughts of a bipartisan coalition between Republicans concerned about the
deficit and Democrats concerned about the military budget.

This spring, while both parties were rewarding the Pentagon with increases, the
General Accounting Office issued a report on the Pentagon's ability to keep
track of its spending. Not only was there a $28.8 billion gap in past
expenditures that no one could account for, but the Pentagon currently can't
find vouchers for approximately $1 billion of monthly expenditures. These
findings went largely unnoticed in the media, but they outraged Republican
Senator Charles Grassley of Iowa. The Pentagon's sacred cow, he said, had
become a fatted cow. Threatening to deny further budget increases, Grassley
asked: "Why is it that members on my side of the aisle send their management
principles on vacation whenever the defense budget is mentioned?"


AFTER 1996

One factor that could force a reappraisal is the long-term politics of budget
balancing. Greg Bischak, executive director of the National Commission for
Economic Conversion and Disarmament, sees three budget bombs: the Pentagon's
own ambitious and underfunded plans; the "back-loaded" path to a balanced
budget requiring far more stringent program cuts after 1996; and the Pentagon's
chronic cost overruns. The GAO and the Congressional Budget Office (CBO) both
predict a procurement bulge by the year 2000, based on historical rates of cost
overruns. The GAO estimated the costs could run as high as $60 billion.

Robert Greenstein, director of the Center for Budget and Policy Priorities, who
is deeply involved in defending low-income programs from budget cutters, agrees
that any future defense cuts are likely to be budget driven. "As these
[domestic] cuts go deeper and deeper, and yet we're still a long ways from
balancing [the budget] . . . at that point you could start building concern and
pressure for going deeper into defense and not so much into domestic."

Yet, should such public sentiment develop, Congress has devised a technical
barrier, known as a budget wall, to prevent savings from the defense budget
from being used for domestic programs. During the Bush administration, these
walls were created by statute, and thus had the force of law. Greenstein says
virtually no one has noticed that the Senate resolution reinstates a budget
wall. The resolution requires a supermajority of 60 votes to move money from
defense to domestic in any one of the next three years.

What is surprisingly absent is any public outcry. While budget bombs
may help drive a reassessment of spending priorities, public engagement in the debate is
crucial to any substantial shift, and that will not come without effort.

Historically, most attempts to mobilize public support for a reduced military
budget have failed. Activists have worked for decades, at both the national and
local level, on strategies to convert defense to non-defense activities, to
little avail. Most approaches to conversion have tended to be micro-plant by
plant or community by community. The main advocates in the past for national
level policies were progressive union leaders, such as Doug Fraser of the
United Auto Workers or William Winpinsinger of the International Association of
Machinists. Now, these leaders are retired, and their unions racked with the
pain of unemployed workers. Their legislative battles are now mostly
defensive.

Conversion advocates have imagined that companies in the business of meeting
defense contracts could find something else to build. The same handful of
examples is always cited, such as Grumman's development of aluminum canoes or
Raytheon's microwave ovens. But most defense contractors are terrible at
shifting into commercial markets, and government has failed to stimulate a
large-scale "demand side" conversion program by changing what it procures from
industry.

President Clinton won high praise for many of his initial diversification
plans, such as dual-use (commercial and military) technologies; however,
congressional Republicans have tried to scuttle this program along with
Clinton's investments in education and training. In this year's budget, the
president requested $500 million for the Technology Reinvestment Program within
the Defense Department; it has been zeroed out in the House and halved in the
Senate, with final decisions awaiting a conference committee. Bischak, whose
commission monitors congressional action on conversion programs generally,
estimates that total cuts in all conversion-related programs, including those
programs located in other government departments, could be as high as 50
percent from Clinton's original proposals.

The Economic Policy Institute's Jeff Faux says that it is clear in retrospect
that serious conversion required large-scale public-sector projects, which
would literally create demand and direct new investments in, say, a new
generation of public transportation. United Auto Workers' Barbara Warden
lobbied for a small-scale conversion-style program in which the federal
government would guarantee small loans for small and middle-sized suppliers who
did wish to diversify but who couldn't obtain capital in the private markets.
This $50 million program, which would cost the federal government only if the
firms defaulted, finally passed Congress last year but still faces persistent
opposition. The main argument against such assistance is a kind of voluntary
budget wall. Republicans, and some Democrats, want nothing in the defense
budget that doesn't go directly for defense. The argument that the Defense
Department is no place for programs to aid displaced defense workers, or to
foster commercial applications of military technology, would not be a problem
if the domestic budget contained money for these programs, but it doesn't.

Thus, we come full circle. Until congressional Democrats have national policies
that can ease the pain of defense workers and their communities, and confront
directly the question of a post-Cold War economy, they have few alternatives
but to walk in lockstep with the president. And, unless the president finds a
compelling reason to reexamine the Pentagon's plans, and to make the case for a
leaner military, his policies are not likely to provide those economic
alternatives.

One awaits further action from outside Washington. The near-total silence over
the Pentagon and its sacrosanct budget began to give way to a smattering of
editorials, columns, and letters to the editor, raising the question: Why is
defense spending protected? As the rest of the federal budget comes in for
drastic cuts, that question deserves much greater public attention.



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