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Smarter Cuts Needed

Secretary of Defense Chuck Hagel has just announced that he is cutting major headquarters, including his own Office of the Secretary of Defense, by some 20 percent. This is a welcome development, for there is little doubt that headquarters are vastly bloated. But the cost savings that will be realized are minuscule in the context of a defense budget of more than $500 billion a year; the immediate reductions that Hagel announced to his own front office will save only $1 billion over five years–i.e., $200 million a year. The pressure is on to cut more because Congress is unlikely to turn off sequestration, at least not in full, which could result, when combined with previous cuts, in a defense budget $1 trillion smaller than projected over the next decade.

There is no way to responsibly cut that amount from the Defense Department without hampering our power-projection capability–and hence the entire underpinning of our domestic security and of the international security system. But if we are going to have to make nearly impossible choices, then the least-bad alternative is to cut back personnel costs which have soared in the past decade–and, one hopes, plow some of the savings into training, readiness, and procurement to rejuvenate our sagging military capabilities. (Ha! Dream on! The savings are likely to wind up financing civilian entitlement programs.)

As the last several defense secretaries have warned, the Defense Department faces soaring costs for pay and benefits legislated by a Congress understandably eager to reward current service personnel and veterans for their contributions. The Washington Post succinctly summarizes the problem:

Putting veterans’ care aside, the military’s health care costs have grown annually by 6.3 percent for the past decade, rising to $52.2 billion in the department’s most recent budget proposal. Health care spending now accounts for about half the military spending on personnel costs, and 9.5 percent of the defense budget. The military now spends just as much on salaries as it does providing health care benefits.

And that total is expected to grow. Todd Harrison, a policy analyst at the Center for Strategic and Budgetary Assessments, recently crunched the numbers on what would happen if personnel costs kept growing at the same rate they have for the past decade, and the overall defense budget only kept pace with inflation. Under that scenario, the entire defense budget would be consumed by paying benefits, both for health care and other services, in 2039.

Put another way, if we stay on the current trajectory, the Defense Department will become a giant HMO that occasionally blows up a terrorist or two.

This is obviously an unsustainable trajectory, but to do anything about it, the Defense Department will have to enlist Congress’s help, which so far has not been forthcoming. Congress prefers to cut defense, and other discretionary programs, across the board, thereby hurting readiness. Lawmakers are too scared to support targeted cuts to benefits and pay that will bring a backlash from the powerful veterans’ lobby.

It is well past time for legislators of both parties to step up to this difficult task. If they want reductions in military spending, this is where they should pursue them–while keeping in mind that it is still irresponsible to cut the “top line” (i.e., total defense outlays) in a world where the demands on the U.S. military only continue to grow.