Raise the anchor or lower the ship: defense budgeting and planning.

• Author: Schlesinger, James R.

Defense Budgeting and Planning

It is not the strongest of the species that survives, nor the most intelligent, but rather the one most adaptable to change.

Charles Darwin

Strategy is always simple, but it is not for that reason easy.

Karl von Clausewitz

Since the days of Athens and Sparta history is replete with states that have acquired pre-eminence, have then become complacent in their moment of triumph, and have thereby failed to recognize and to correct emerging weaknesses. There is at least a growing risk that the United States, given its present foreign policy course, will follow in this unhappy tradition. The danger lies in the developing mismatch among our foreign policy ambitions, our strategy, our forces, and the resources we are prepared to devote to achieving our foreign policy and defense goals.

That is not to say that the dangers are imminent, or that the United States, like those earlier great powers, faces the prospect of being defeated or overrun. For a long time, we shall have far too much raw power for such an outcome. Yet, unless we pay attention to the emerging mismatch, over time we are likely to suffer foreign policy and military setbacks - avoidable setbacks. We can, no doubt, carry on for a few more years on our present course without undue harm resulting. Ultimately, however, our neglect of deeper seated problems will catch up with us.

The prevailing condition of American preponderance, in which few regions of the world are beyond our reach or influence, is not only exceptional but artificial. It was brought about by the sudden and unexpected collapse of the Soviet Union and the end of Cold War bipolarity. Inevitably, this exceptional period must fade, and to that we shall have to adjust. But beyond that inevitable adjustment, we shall have to make a fundamental choice among (1) spending far more on defense than we are spending, (2) retrenching on our present, ambitious foreign policy, and (3) accepting the higher levels of international risk involved in maintaining our existing commitments while allowing our defense capability to decline, which would tempt others to challenge us. We shall be forced to make that choice because of the developing strategy-forces-budget mismatch. Sooner rather than later, it will be a case of raise the anchor or lower the ship.

The Underlying Resource Problem

The first element in the emerging mismatch is the prosaic one of resources. The United States has embraced the role of the world's principal stabilizing power, the one universal power. Yet military spending continues to decline both relatively and absolutely. Even now, the resources we are prepared to devote to defense are, at best, only marginally adequate for our mission - even in the favorable and exceptional circumstances of U.S. preponderance and the absence of a peer-competitor. Since we are now living on capital, extensively if not recklessly, the condition of the military services must inevitably deteriorate - unless there is a significant increase in spending authority. Such an increase is precluded by the existing budget agreements, which, at best, hold military spending flat. In truth, there continues to be a slow diminution in real terms.

Currently, the United States spends barely more than 3 percent of its gross domestic product on defense. There is no way that the United States can sustain over time the forces that the Clinton administration states to be essential - or the foreign policy that those forces support - on 3 percent of the GDP.(1) That is not a matter of analysis; it is simple arithmetic. To continue to fulfill our present commitments and to re-equip the approved force levels for the more challenging years of the next century would require roughly 4 percent of the GDP. That should not appear as a surprising figure for a nation that aspires to be the sole universal power. Even before Pearl Harbor, in Fiscal Year 1941, the United States spent 4.1 percent of its GDP on defense. Yet despite growing requirements for procurement funding to re-equip the forces, increasingly tenuous states of readiness, and a growing problem in recruitment and retention of military personnel, the percentage of GDP projected to be spent on defense continues to decline to 2.6 percent in FY 2002. Quite simply, with these budgetary limits there is no way to get there - that point in the twenty-first century when the United States should be able to field the forces the administration states are required to meet the military challenges - from here.

Throughout this decade, we have been shielded from the necessity of major procurement expenditures, first, by the substantial shrinkage of the force structure and, second, by allowing the principal equipments inherited from the Cold War years to age. Obviously, such action is tolerable only in the short run. The United States now spends just over $40 billion a year on procurement. Yet depreciation on our military equipment (at replacement cost) runs to over $100 billion per year.(2) Moreover, there is the additional cost of building an appropriate inventory of sophisticated munitions, and, in the longer run, the need to maintain, and ultimately update or replace, hardware-related facilities for development and testing.

In short, the United States has been enjoying an extended procurement holiday. Quite early in the next century, at the latest, we shall be obliged to spend far greater sums on procurement. Alternatively, we can watch the force structure itself age and erode - until it will no longer be capable of sustaining the ambitious world role that we have embraced.

Take the case of the Navy. At our current rate of procurement, some six ships a year, the Navy would shrink to a force of just over two hundred ships - a reduction of more than 60 percent from the Reagan years. Would such a force be sufficient to provide the worldwide presence to match our responsibilities, in a period in which the challenge will certainly have grown much more formidable than it is in today's favorable circumstances? The question is almost rhetorical. The answer is: obviously not. It would make painfully true, once again, Kipling's observation early in the century: "Far-flung our navies melt away." Yet, what has been stated for Navy ships is probably equally pertinent and more pressing for tactical aircraft and, down the line, for ground forces equipment.

What are the prospects? They do not appear particularly promising. In the period after 2010 the Department of Defense (DOD) believes that a new peer-competitor of the United States may emerge.(3) That would also be the time, according to recent pronouncements, when we shall be proceeding to expand NATO to include portions of the former Soviet Union. But as well, it will be the time when expenditures on entitlements programs will be escalating, as the baby boom retires - and the overall budget is projected to go severely into deficit. And last, it is at that very same time that the effects of the aging of major items of equipment and the erosion of our military capabilities will become apparent. Unless we were to alter our present course, in that combination of circumstances we would have no prudent choice but to retrench on our foreign policy objectives and commitments.

Budgets are flexible. Thus we might solve the problem of the arrears in procurement through reallocation. In theory, we could reduce funds for operations and further shrink the present force structure - and thereby provide more funds for modernization. While in principle we should be able to do so, in practice we would encounter formidable difficulties. The operations tempo of the U.S. Armed Forces is now at an all-time peak for peacetime. Force deployment in the post-Cold War years, driven by "military operations other than war", has been far more frequent, far larger, and of far longer duration than during the Cold War itself. That is a reflection of our expanded foreign policy role and of our willingness, in practice if not in theory, regularly to serve as the world's policeman. The myriad problems of ethnic unrest, internal conflict, and...