JUNE 3, 2016
In 2014, following several high-level embarrassments, Secretary of Defense Chuck Hagel ordered two enterprise-level reviews of nuclear forces. Remarking on their findings, Hagel said, “The internal and external reviews I ordered show that a consistent lack of investment and support for our nuclear forces —over far too many years — has left us with too little margin to cope with mounting stresses.” Until now, documented problems with America’s nuclear enterprise have focused primarily on personnel issues— a lack of focus by the missile crews, pilots, technicians, or the leaders of those charged with handling America’s most powerful weapons. However, the persistent lack of investment in the nuclear enterprise suggests that the reasons for lapsed focus are actually structural, and thus require structural solutions. The findings of the 2014 nuclear enterprise reviews were not new. In 2008, Secretary of Defense Robert Gates fired Air Force Secretary Michael Wynne and Chief of Staff General Michael Moseley for their “drifted focus”away from the nuclear mission. New Air Force leaders spent the next six years refocusing the service on the nuclear mission. The nuclear enterprise’s structural problems require urgent attention, most of all how resources are allocated for nuclear forces.
While the question of how to restructure the nuclear force to keep it credible and affordable is an important one, this article addresses a more fundamental problem. Regardless of the composition of the nuclear force, policymakers will continue to defer modernization for these forces as long as the budget structure remains as it is.
Instead, the Department of Defense should adopt a “mandatory insurance” policy, requiring a constant, material percentage of every defense budget to be allocated to nuclear forces, with an entity in the Office of the Secretary of Defense determining the division between the Navy and the Air Force. The result would be that a constant percent of every defense budget, every year, would be for nuclear forces (a rough estimate based on projected modernization indicates that between 3-8 percent over the next three decades would be required). While we do not advocate for a specific transformation of the current nuclear triad, we assume that at least two of the three legs of the triad would be retained.
It is understandable that policymakers have foregone investment in nuclear weapons given the urgent operational need for conventional weapons. Yet, during the 25 years since the collapse of the Soviet Union, in times of relative peace and war, through every conceivable balance of party power in the executive and legislative branches, and under presidential administrations of four very different kinds, meaningful investment in nuclear forces has continually been deferred.
During the Soviet era, the Pentagon invested in platforms that it hoped would pose a robust and credible mix of conventional and nuclear deterrents to the Soviet Union and its allies. With the fall of the Soviet Union, however, the U.S. military was released from many of the constraints that bound it during the Cold War, thereby increasing the focus on conventional operations. The logic of nuclear deterrence and its associated force structure became much less clear. If we think of military forces as goods, during the Cold War nuclear forces were part of a basket of goods that satisfied current needs of policymakers. After the Cold War, however, nuclear forces were no longer meeting policymakers’ needs, and under-investment in nuclear deterrence reflected this reality. Nuclear deterrence moved into the basket of goods that may meet an uncertain future need, similar to life insurance or retirement savings. This is a problem.
Although consumers can be relied upon to buy things they need now, they tend to invest too little of their present income in future consumption. This behavior has precipitated what researchers Shlomo Benartzi and Richard Thaler call “the retirement savings crisis.” To deal with this crisis, Benartzi and Thaler recommend automatic enrollment in retirement savings plans, as well as other measures to create a structure that encourages sufficient investment in future gains. The authors believe that an analogous approach is essential to fixing the lack of investment in nuclear forces.
The Cost of Deterrence
A capable and credible nuclear deterrent is critically important to U.S. national security today, particularly in view of changes in Russia’s nuclear doctrine and destabilizing behavior, Chinese investments in advanced capabilities, and North Korea’s aggressive nuclear program, among other threats. However, without significant modernization of the aging systems, the capability and credibility of the current deterrent will come into question. Deputy Secretary of Defense Bob Work testified: “The choice right now is modernizing or losing deterrent capability in the 2020s and 2030s.” The problem, of course, is that the defense budgets are already under intense pressure from the 2011 Budget Control Act, and nuclear modernization requirements have been deferred for so long that they are now expansive and costly. Recent estimates for needed facilities, weapons, and infrastructure upgrades for the nuclear triad total $1 trillion over the next 30 years, even after cutting the nuclear stockpile in half since 2001. While defense department officials have insisted on maintaining the Cold War-era nuclear triad, fiscal realities must inform U.S. strategy.
Underinvestment in the Nuclear Forces
That the Department of Defense could not discipline itself to make the necessary investments in the nuclear triad is telling. Former Vice Chairman of the Joint Chiefs of Staff Admiral Winnefeld testified:
[A]ny remaining margin we have for investing in our nuclear deterrent has been steadily whittled away as we’ve pushed investments further and further into the future…The fact is there is no slack left in the system. We will need stable, long-term funding to recapitalize this most important element of what we do.
The budgetary structure, combined with the demand on the service budgets for conventional capabilities, meant that the Air Force and the Navy pushed necessary investment in nuclear modernization to out-years. In economic terms, this resulted from poor intertemporal choices.
Intertemporal choice refers to how people and organizations assign value and make decisions about two or more payoffs at different points in time. Buying something on credit is an intertemporal choice, as is saving current income for a future purchase. Economists and psychologists have found that people chronically over-value present gains relative to future costs, and under-value future gains relative to present costs. More simply, we tend to obtain something good now at too high a future cost, and we are unwilling to set aside a reasonable amount today for something good in the future. These problems of “self-control” in consumption are compounded when the future consumption has an insurance-like payoff that occurs only in an adverse event, such as with life insurance. America’s nuclear forces have been the victim of policymakers’ intertemporal preferences, which were informed by domestic, political, and other pressures. The relatively low cost of modernizing nuclear forces over the long term has continually been traded off for modernizing conventional weapons systems in the short term. This has led to the present condition of the nuclear forces: decay. This undermines U.S. nuclear deterrence and credibility while leaving the nation with a massive bill for nuclear modernization.
This failure needs to be addressed by changing the way resources for nuclear modernization are allocated. One way to do this is similar to a nuclear account which Secretary of Defense Carter promoted, except that Congress should mandate that this account be tied to a specific percentage of the defense budget. We recommend a top-line increase for the Department of Defense in the President’s budget to account for this mandatory allocation, but also recommend that the percentage remain constant regardless of the top-line appropriated by Congress. In this sense, the Department of Defense would be forced to adopt something akin to a “mandatory insurance” policy, in response to the failure of market forces to sustain a credible nuclear deterrent for the long term. The size and complexity of nuclear systems (think of ICBMs, ballistic missile submarines, long-range bombers, and C4I) requires long term investment to avoid overwhelming the department with the modernization costs when development of new platforms begins. Right now, the Pentagon faces an enormous modernization burden as all three elements of the triad require replacements.
America’s nuclear force has been a stabilizing presence in global security for decades. But maintaining that stability requires moral and financial commitment. Structural changes are required to maintain a credible and capable nuclear force for the future. Solving this problem requires a sustained and steady commitment of financial resources to the nuclear force, but the past 25 years have demonstrated that the current defense budgeting structure is incapable of this. The clear needs of the present always outweigh the uncertain needs of the future. The market failure in nuclear modernization requires a new and distinct structure for nuclear investment.
Lt. Col. Ben Jonsson is an Air Force pilot and member of the Carlisle Scholar Program at the U.S. Army War College. He has been a nuclear-certified crewmember in two aircraft.
Andrew Hill is the Professor of Organization Studies in the Department of Command, Leadership, and Management at the U.S. Army War College. He received his doctorate in business administration at Harvard Business School.
The views expressed in this article are those of the authors and do not reflect the official policy or position of the U.S. Army War College, the United States Air Force, the Department of Defense, or the United States Government.
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