Defense transformation: a battle the U.S. cannot afford to lose.

• Author: Walker, David M.
• Position: Commentary

The U.S. armed forces clearly deserve an "A" for effectiveness. At the same time, the Defense Department earns about a "D" for economy, efficiency, transparency and accountability.

The problems are especially severe in basic financial management, information technology; acquisition practices, contract management, inventory control and basic business operations. In fairness, these are long-standing problems and significant efforts have been made recently to address them.

The Pentagon needs to face the fact that many of its basic business processes are outdated and wasteful. Nine of the 25 areas on the Government Accountability Office's most recent high-risk list are at the Defense Department, where inefficient practices continue to squander billions of dollars that could be used to boost readiness, improve the quality of life for our troops and fund investments in new systems and technologies.

A frugal mindset will be vital as budgets become tighter. It seems like only yesterday that many economists and government officials were projecting budget surpluses for years to come. The underlying conditions for a longterm structural deficit were in place, however, even during the economic expansion of the 1990s. We now face decades of federal deficits largely became of soaring health care costs, an aging population, reduced revenues, mounting bills for the war in Iraq and the fight against terrorism. Difficult choices are inevitable.

But those choices can be eased if we take steps now to make government more economical, efficient and effective. Transforming the way government does business will be crucial to helping federal agencies carry out their missions during a period of budgetary constraints. We have a window of opportunity to ensure that basic government functions, from national defense to social insurance programs, are secure and sustainable over the long term.

A crunch is coming, and eventually all of government will feel its impact. Although national defense and homeland security have received generous funding in recent years, this cannot continue indefinitely. Defense budgets of the future almost certainly will be tighter.

Unfortunately, the government now keeps score in a way that obscures our true financial condition and fiscal outlook. The official U.S. gross debt now stands at about $7 trillion, which works our to about $24,000 for every man, woman and child in this country. But if you factor in the current dollar value of unfunded commitments for programs such as Social Security, Medicare and veterans' health care, the burden for every American rises to more than $140,000.

The GAO analyses paint a chilling picture. If current tax and spending policies remain unchanged, the federal government would be reduced to doing little more than paying off the interest on the national debt by 2040. At that point, we would have to cut federal spending by more than half or raise taxes...