WHAT SHOULD AMERICA SPEND ON DEFENSE AND WHY?

JUSTIN T. JOHNSON

AUGUST 25, 2015

http://warontherocks.com/2015/08/what-should-america-spend-on-defense-and-why/

Just like with cheap car insurance, the United States might not see the consequences of under-spending on defense until something really bad happens. It is worth spending more today to be prepared for the challenges of tomorrow.

The debate about defense spending will likely reignite in September as Congress returns from recess and the end of the fiscal year draws near. Unfortunately, much of that debate will not be very helpful or informative.

Instead of arguing the merits of a particular military spending level, much of the debate will revolve around Democratic opposition to increasing defense spending without proportional increases to non-defense spending. The usual arguments for cutting defense spending will likely pop up as well. But what’s really needed is a more thoughtful debate. Once you get beyond the talking points and the political agendas, what should the United States spend on defense?

The Ideal Defense Budget Debate

Determining what the United States (or any country) should spend on national defense is much easier in theory than in reality. But let’s start with the theory.

The first step is determining the vital interests of the United States. What must we, as a country, protect? Almost everyone would agree that we must protect America and our citizens from attacks by terrorists or nation-states. But beyond protecting the homeland and its people, it gets more complicated. Should the United States protect its allies? International commerce and the commons in and on which this commerce happens? The human rights of individuals in other countries? These are the types of questions that need to be answered in order to determine the vital interests of the United States.

The next step is figuring out what threatens these vital interests. Some of these threats are obvious, such as nuclear war and terrorist attacks. Some threats seem to be growing, such as Russia’s aggressive actions and China’s cyberattacks. The goal should be a clear-eyed analysis of what truly threatens our vital interests today and what may threaten those interests in the future.

The third step is figuring out how to protect America’s vital interests from both the threats of today and those of the future. This will likely include elements of hard power (i.e. the military) and soft power (i.e. diplomacy, alliances, trade) used in concert to deter or, if necessary, defeat the threats. This should produce a cohesive strategy for protecting America’s vital interests. While outlining a full strategy is too large a task for this article, the most recent National Defense Panel report is a good bipartisan example that assesses vital interests and threats and then outlines a strategy.

Once you have a strategy, you need to develop the tools to implement that strategy. For the military, this means figuring out the capabilities and the capacity needed to execute the strategy. For example, protecting America from North Korean nuclear missiles may require an interceptor (a capability). But one interceptor is probably not enough — instead you need enough interceptors (capacity) to defeat all of North Korea’s nuclear missiles. While capabilities are usually pretty self-evident, questions of capacity are often more complex. Most Americans would agree that the U.S. Air Force should have the ability to defeat the best fighter aircraft of our potential adversaries. But should the Air Force be big enough to fight against more than one potential adversary simultaneously?

Answering questions of capability and capacity will lead directly to a defense budget. The U.S. Navy needs a certain number of destroyers at any given time and the average lifespan of a destroyer is known, so the number of destroyers that need to be built per year can be figured out. This process can be repeated for each military capability, which eventually produces a defense budget.

Of course, reality is not that simple. The defense budget is often constrained for economic or political reasons. The gap between what the United States actually spends and what it takes to fully resource and execute the strategy is risk. Unfortunately, risk is difficult to measure, but all too easy to ignore. A particular threat may be out of sight and out of mind, but it still exists and could still harm a vital interest of the United States. It’s similar to buying cheap car insurance. It may save a few bucks and turn out fine as long as you never have an accident. That is what it means to accept risk.

To be clear, a strategy-based defense budget should not be an excuse for a wasteful defense budget at any level. On the macro level, if the United States spends too much on defense, it is wasting the precious resource of taxpayer money and contributing to the burden of debt on future generations. The total defense budget should not be one dollar more than absolutely necessary. On the micro level, wasteful and inefficient programs prevent capabilities and capacity from being used to protect the nation’s interests. Additional reforms must be implemented so that every dollar is used efficiently and appropriately.

The Real Defense Budget Debate

So in theory, that is how a defense budget should be built. But where do things really stand? Since the imposition of the Budget Control Act in 2011, the base defense budget (excluding war costs) has gone down by 15 percent in real terms, while the threats to U.S. vital interests have, if anything, increased. The Heritage Foundation’s 2015 Index of U.S. Military Strength assessed the current capacity, capability, and readiness of the U.S. military as “marginal.”

In this context, President Obama has proposed increasing the base defense budget to $561 billion in FY2016, which represents a 5.8 percent inflation-adjusted increase over FY2015 defense spending. Republicans in Congress also want to spend $561 billion on defense, but plan to use overseas contingency operations (OCO) funding, or war budget, Budget Control Act spending caps. In other words, the defense spending debate will not really be about defense spending. The true driving forces of the debate are the use of a budget gimmick and Democratic opposition to increasing defense spending without proportional increases in non-defense domestic spending.

While the White House and Congress propose a defense spending level of $561 billion, many believe this is still well below a strategy-driven defense budget. AHeritage Foundation analysis suggested $584 billion as a starting point, a 10 percent increase over FY2015. The bipartisan National Defense Panel argued that the last budget proposal from former Defense Secretary Robert Gates in 2012 should be the minimum defense budget. For FY2016 that would be $638 billion, which is 20 percent higher than FY2015 in inflation-adjusted dollars.

Let’s assume for a moment that the defense budget was increased to the Heritage Foundation or National Defense Panel’s preferred levels in FY2016. Where would this money come from and where would it go? Both the Heritage analysis and the National Defense Panel point out that entitlement programs are driving the national debt and must be reformed. For example, with two months of FY2015 remaining, the three major entitlement programs have already spent$108 billion more than last fiscal year. Until these programs are reformed, the budget situation will remain very challenging for discretionary spending. TheHeritage Foundation analysis also proposes ways to save more than $50 billion in non-defense discretionary spending in FY2016 alone.

The reality is that imposing many of these reforms to pay for increased defense spending will be politically challenging. The tempting alternative is to either increase deficit spending or increase taxes. Neither is a wise route. Increased deficit spending (and therefore higher national debt) has been shown to hurt economic productivity. Similarly, increasing taxes also hurts economic productivity. Enacting reasonable entitlement reform and cutting non-defense discretionary programs is the best way forward. There is much debate to be had on how best to reform entitlement programs and where to cut non-defense programs, and it will not be easy, but it is the best path toward an economically strong and militarily secure country.

And where would this money go? The Heritage analysis proposes $31 billion in specific additions, primarily in preserving force structure and increasing readiness and modernization. This includes keeping the Army active duty end strength at 490,000 and the Marine Corps active duty end strength at 183,000. It also includes things like preserving the Navy cruiser fleet and accelerating F-35 purchases for the Air Force. Another obvious place to increase spending is in response to the military’s unfunded priorities lists. The FY2016 requests from each service total $21 billion and are largely focused on smaller items, such as an Army facility sustainment request for $912 million.

While these documents provide a good way to increase the defense budget by roughly $52 billion, defense spending advocates should be willing to recognize that increasing defense spending too rapidly can be wasteful. Immediate budget increases can preserve today’s force structure, increase readiness, and increase procurement quantities for current production lines. New technologies and systems, however, cannot be bought overnight and large cash infusions can actually wreak havoc. The ideal scenario is an immediate defense budget increase to preserve force structure while increasing readiness and modernization. This should be followed by a steady increase over time to allow for the development of future systems and technologies.

Whatever final defense budget number Washington settles on for FY2016, it will doubtless be well below the minimum level dictated by a rigorous, risk-informed, strategy-based analysis. Just like with cheap car insurance, the United States might not see the consequences of under-spending on defense this year. But when the accident happens, or when the threat grows so great not even Congress can turn a blind eye, the costs will be higher than if we had adequately invested in national defense today.

Justin T. Johnson is the senior analyst for defense budgeting policy in The Heritage Foundation’s Allison Center for National Security and Foreign Policy.