The Easiest $100 Billion in Fiscal Showdown Negotiations

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The Easiest $100 Billion in Fiscal Showdown Negotiations

Negotiations over the fiscal showdown are approaching the end game as talks between President Obama and Speaker Boehner show signs of progress towards a deal. The latest offer by the Obama administration to the GOP includes $100 billion in Pentagon reductions over the next decade, or $10 billion a year from a base budget of over $500 billion. This figure is substantially below the consensus that has emerged across national security think tanks – and even the defense industry –  that agree the Pentagon budget can be reshaped to be more efficient and effective by smartly managing reductions and setting new investment priorities that reflect 21st century needs. Below, we review how think tanks across the spectrum would go beyond $100 billion to reshape the Pentagon.

A $100 billion reduction over the next decade – just $10 billion a year – could be easily met without affecting combat power. For example:

Acquisition reform – at least $100 billion over the decade: The United States plans to spend over $2 trillion over the next decade to acquire new equipment. But Pentagon acquisition practices are infamously inefficient. A study by the Stimson Center found that efficiencies in acquisition practices, including better contracting, commercial off-the shelf purchasing when appropriate and streamlining how the military creates requirements for new equipment could save $100 billion or more over the next decade.

Updating maintenance practices – $10 billion per year: A report by the Lexington Institute found that “modernizing antiquated sustainment policies and procedures” by using greater performance-based standards for contractors and smarter supply chain management can “save between $5 and $10 billion a year.”

Retirement reform – $13 billion per year: According to the Task Force for a Unified Security Budget, “while the military’s retirement program serves only a small minority of the force, it provides exceedingly generous benefit, often providing 40 years of pension payments in return for 20 years of service. As a result, the program now costs taxpayers more than $100 billion per year.” The Task Force notes that one alternative, a 401k-style retirement system that would outperform most private sector plans, would save $13 billion per year in the near term, perhaps more in the future.

 Maj. Gen. Paul Eaton (Ret.), senior NSN advisor, adds, “The current retirement is unjust to the brave men and women who serve less than 20 years, is too rigid, does not factor in risk differences in service  and must be reviewed in the face of recent, substantial, increases in pay.”

Reduce nuclear weapons costs: Ploughshares reports that the Pentagon plans to spend nearly $700 billion on nuclear weapons over the next decade. In that sum, there is plenty of room for reductions. For example, Jeffrey Lewis of the Center for nonproliferation studies explains that current plans for “Modernizing the approximately 400 B61 gravity bombs in the stockpile will cost $10 billion,” enough to finance a year’s worth of the proposed $100 billion reduction in Pentagon spending.  This enormous investment is being undertaken despite the fact that “senior military and civilian officials have repeatedly stated, in private and public, that the B61 has no military utility. One senior official with European Command told a task force created by the defense secretary, ‘We pay a king’s ransom for these things and … they have no military value.’ There is no military mission for these weapons; they exist largely to fulfill political needs,” writes Lewis.

[Stimson Center, 11/12. Lexington Institute,  Summer/2012. Task Force on a Unified Security Budget, 10/12. Paul Eaton, 12/18/12. Ploughshares, 9/12. Jeffery Lewis, 9/5/12]

National security thought leaders agree: the Pentagon budget can be reduced well beyond $100 billion over the next decade. As reported in The Hill, a recent National Security Network study of recent major reports on Pentagon spending found a consensus on reducing spending levels : “Several high-profile defense think tanks from across the political spectrum are on relatively the same page, in terms of what kind of financial hit the Pentagon should take in the coming decade…The study, compiled by Washington-based National Security Network, found the average spending reduction to DOD coffers recommended by these think thanks came to just over $510 billion over the next ten years. That number dwarfs the $100 to $300 billion top defense industry leaders proposed in early December as the most budget reductions the Pentagon could handle, while maintaining national security priorities worldwide.” [The Hill, 12/17/12. NSN Study, 12/12]

Specific proposals vary, but all reshape Pentagon spending by integrating strategy and budget to maintain or increase American power to meet future needs:

Project on Defense Alternatives (PDA) – $543 billion: in a report entitled, “Reasonable Defense,” PDA outlines $543 billion in savings over the next decade. The savings are guided by a strategy that emphasizes cost-effectiveness, counter-terrorism and deterring other states from aggression. [PDA, 11/14/12]

Center for a New American Security (CNAS) –$150 billion: in a report entitled, “Sustainable Preeminence,” CNAS outlines an approach that can accommodate up to $150 billion in savings over the next decade on top of the FY2013 request. This approach would more efficiently implement the strategic rebalancing currently underway and emphasize power projection, leap-ahead technology, and interoperability between services. [CNAS, 5/23/12]

Center for American Progress (CAP) – $1 trillion: in a report entitled, “Rebalancing our National Security,” CAP with the Task Force on a Unified Security Budget outlines $1 trillion dollars in defense savings over the next decade in the form a unified security budget that would encompass multiple national security institutions. It broadly seeks to reduce American reliance on military power, pursue offshore balancing and increase funding for “preventative” national security initiatives undertaken by the State Department and other organizations. [CAP, 10/31/12]

Stimson Center – $550 billion: in a report entitled, “A New Defense Strategy for a New Era,” the Stimson Center outlines a strategy it calls “strategic agility” that prioritizes power projection, vital rather than conditional national interests, technological superiority and finding large amounts of efficiency savings in business practices and personnel policies. The report presents a number of scenarios to achieve different levels of savings, the most relevant of which is its “smoothed sequestration” scenario that finds $550 billion in savings over the next decade. This option is presented in two modes defined by different levels of efficiency savings. [Stimson Center, 11/12]

RAND Corporation $213 billion: in a report entitled, “A Strategy-Based Framework for Accommodating Reductions in the Defense Budget,” RAND presents multiple strategies to a defense drawdown, the most salient of which is to “shift geostrategic focus to Western Pacific.” By focusing cuts in ground forces, this option achieves up to $213 billion in savings over the next decade. [RAND, 11/12]

Project on Government Oversight (POGO) – $688 billion: in a report entitled, “Spending Even Less, Spending Even Smarter,” POGO outlines a plan that would increase efficiency by better matching acquisition to real-world threats and by reducing dependence on overpriced contractors. [POGO, 5/8/12]

What We’re Reading

NBC News correspondent Richard Engel and his four-person crew have been freed unharmed after being kidnapped inside Syria and subjected to five days of forced moves and death threats.

Leaders in Baghdad and the semiautonomous Kurdistan region are warning they are close to civil war — one that could be triggered by Exxon Mobil.

Iraqi President Jalal Talabani was hospitalized after suffering a stroke that left him in “critical but stable condition”, government officials and lawmakers said.

Iran’s president says Western sanctions could cause a short delay in Tehran’s nuclear program but will not slow it down substantially.

Russia sent warships to the Mediterranean to prepare a potential evacuation of its citizens from Syria, signaling that President Bashar al-Assad’s key ally is worried about rebel advances that now threaten even the capital.

Egypt’s opposition will hold new protests against an Islamist-backed draft constitution that has divided the nation but which looks set to be approved in the second round of a referendum next weekend.

Four white men in South Africa face treason and terrorism charges over an alleged plot that included plans to attack the ongoing African National Congress political party convention and kill President Jacob Zuma and others.

A wave of bombings, shootings and hand-grenade attacks blamed on Somali militants prompted Kenya to order all refugees and asylum seekers to report to two camps and to bar them from living in towns.

A UN court ordered the release of an Argentine naval ship impounded by Ghana over a debt dispute.

Mexican President Enrique Pena Nieto says he is setting up a new police force to tackle crime and violence, as part of a shift in the drugs fight.

Commentary of the Day

Walter Pincus discusses America’s obligation to reduce its nuclear arsenal.

Michael Auslin questions whether Japan’s new president Abe Shinzo  will take a hard stance against China.

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