August 20, 2014

The Right Approach: 'Challenging Every Assumption' on Defense Budget Priorities

In recent interviews and speeches, Defense Secretary Chuck Hagel says the military is “challenging every past assumption, every past formula” for allocating budget resources as he tries to reorganize the military for 21st century challenges in the face of a rapidly tightening budget.

Hagel appears to be on the right path in encouraging top Pentagon officials to take a fresh look at everything in setting defense priorities. But uncertainties about sequestration and the Fiscal 2014 budget in general are complicating that work.

In January a new round of sequester cuts is scheduled to reduce the military’s budget cap by $21 billion. The Pentagon faces nearly $1 trillion in overall spending cuts over the next decade due to the budget caps and sequestration put in place by the Budget Control Act. In FY 2012, the defense budget was $670 billion.

Pentagon Comptroller Robert Hale says he implemented $37 billion in cuts required by the sequester earlier this year in part by delaying sending army units through the Combat Training Center, harming their combat readiness.

Hagel and Hale maintain that continuing with sequestration in its current form -- which involves many arbitrary cuts -- would continue to degrade military readiness.

Exacerbating current funding problems, Hale says, is the “extraordinary situation” with the Pentagon’s FY 2014 budget -- which, like the rest of the federal budget, has not yet been set by Congress. The congressional budget conference committee is currently deciding where to set spending levels for the entire federal budget, which includes deciding what to do about sequestration.

Military health and pension costs are a particular concern. They continue to grow at an unsustainable pace, consuming half of the Pentagon’s budget and limiting the resources to fund military operations, training and research.

Congress, which ultimately controls military health care and pension policies, has been reluctant to make even modest changes requested by the Pentagon and the administration to reduce these costs.

Lawmakers, for example, have refused to raise TRICARE’s extremely low health insurance premiums, or to increase co-payments and deductibles for “TRICARE for Life,” the supplementary coverage for military retirees receiving Medicare Part B benefits.

At the Reagan Defense Forum last weekend, Chairman of the Joint Chiefs of Staff Martin Dempsey stated his support for a multi-year plan to reduce the growth of pay and benefits for education, housing and health; the proposal has already been met with skepticism by lawmakers.

In the keynote address this month to the Global Security Forum at the Center for Strategic and International Studies, Hagel warned that current policy would lead to an “unbalanced” force, one that is “well-compensated, but poorly trained and equipped, with limited readiness and capability.” He urged Congress to “permit meaningful reforms as they slash the overall budget.” That sounds like good advice.