This Week at War: Winners and Losers of the Defense Budget

Is Donald Rumsfeld still at work at the Pentagon? The twice-former defense secretary came to the Pentagon in early 2001 with a plan to shift expenses away from manpower and toward technology, but 9/11, Iraq, and Afghanistan pulled him away from that course and eventually pushed him out of the building. But judging from the news out of Washington this week, Rumsfeld’s high-tech, lean headcount vision for the U.S. military has finally prevailed. The Pentagon’s new way forward could hardly be more Rumsfeldian.

On Jan. 26, U.S. Defense Secretary Leon Panetta outlined the Pentagon’s next five-year budget plan, beginning in fiscal year 2013. Budget Day at the Pentagon always gets the attention of defense contractors and congressmen concerned about maintaining the flow of federal dollars to their districts. But things were a little more dramatic this year. Panetta was required to chop $259 billion over the next five years, enroute to a $487 billion cut over the next decade.

Panetta and his lieutenants used the strategic defense guidance released earlier this month to steer the new budget. That guidance calls for the Pentagon to focus on the Asia-Pacific and Middle East regions and prepare for high-technology threats rather than the extended counterinsurgency operations that had been the focus over the past decade. Those who expected a shift in funding from ground forces to naval, air, and space capabilities were not surprised by Panetta’s briefing. Like an aging Rust Belt industrial corporation, Pentagon budget planners realize that they need to save money on headcount, cull unneeded capacity, and reinvest in where the future will be.

The chairman of the Joint Chiefs of Staff, Gen. Martin Dempsey, said that listing today’s winners and losers was the "least productive" way of analyzing the budget. He and Panetta asserted that the reshaped U.S. military will be a much better match for the strategic situation the U.S. will face in 2020. Contrary to Dempsey’s view, discussing the budget’s winner and losers is the best way to understand the 21st century Pentagon that Panetta and his team are trying to build. Here are a few:

Winners

1. Long-range bombers . After steady declines over the past two decades, the new budget puts a stop to further cuts to the Air Force’s long-range bomber forces. Plus, the Air Force’s next-generation bomber will receive full funding for its development and rollout, presumably by the end of the decade. The new focus on the Asia-Pacific region, with its vast spaces and relatively few bases for U.S. short-range strike planes, means that long-range bombers are now more important than ever. Panetta apparently agrees.

2. Aircraft carriers . The Navy will retain all 11 of its big flat-tops, with the new Gerald Ford-class generation of carriers presumably fully funded. The new emphasis on the Pacific and Indian Oceans are the justifications for protecting the Navy’s crown jewels. Last year, there were rumors that the aircraft carrier USS George Washington, based in Japan, would be scrapped rather than go through an expensive mid-life overhaul. In putting an end to that talk, Panetta has also attempted to dispel doubts about the U.S. commit to its Asian allies.

3. Attack submarines and cruise missiles . Although the construction of one Virginia-class attack submarine, scheduled beyond 2017, will be slightly delayed, the Navy’s attack subs are otherwise a high priority in the new budget. And future subs will be fitted with an extra module allowing them to carry more land-attack cruise missiles. Once again, the need for long-range striking power against potential adversaries in Asia and the Middle East is good news for the Navy’s submarine force, and for Northrop-Grumman, one of the sub’s contractors. Navy cruise missiles played a major role in the opening phase of the Libyan campaign last year. In a potential showdown with Iran, these subs and cruise missiles would undoubtedly be back in action.

4. Special operations forces . Bin Laden raid heroes SEAL Team Six pulled off a dramatic hostage rescue this week in Somalia, putting special operations forces back in the news. (Not to mention the major attention they received in the president’s State of the Union address.) With stabilization and counterinsurgency now out of favor, the White House and Panetta are counting on special operations forces to hunt terrorists and assist in suppressing threats posed by weapons of mass destruction. Less discussed, but a large part of Panetta’s strategy, will be the use of special forces and other adviser teams to maintain training programs that build the military capacity of allies in Europe, Latin America, and Africa, areas that have been downgraded by the new strategy.

5. Electronic warfare, drones, and cyber operations . Panetta repeatedly emphasized the need for the U.S. military to maintain its technological superiority, to compensate for its reduced numbers and stretched geographical responsibilities. Even after the wars in Iraq and Afghanistan end, the Pentagon intends to keep its ability to maintain continuous drone surveillance over 65 spots on the globe, with the capability to surge that to 85 if necessary. Advanced radar and electronic jamming are high priorities. Generous new funding for cyber operations reflects the Pentagon’s concerns about the vulnerability of its networks and its interest in offensive cyber capabilities in the post-Stuxnet era.

Losers

1. Ground forces . As predicted, the active duty Army will decline over the next five years from 570,000 to 490,000 troops, with the Army disbanding at least eight of its 45 active-duty brigade combat teams. The Marine Corps will also shrink from 202,000 to 182,000, losing at least one of its nine infantry regiments, some of its aircraft squadrons, and a number of support units. The Pentagon will withdraw two of its four remaining Army brigades from Europe.

2. Pay and benefits . Over the past decade, military personnel costs — outside of the increased costs for war funding — rose 30 percent above inflation over the same period. That would cease by 2015, Panetta warned. Over the past decade, Congress has increased military pay faster than the increase of pay in the private sector. Panetta’s warning implies that future military pay will likely lag behind. Panetta also warned that military retirees will pay more for their health insurance, although still less than those in the private sector pay. Finally, Panetta will appoint a commission to redesign the military’s retirement plan, but promised that everyone currently serving will see no changes.

3. Old ships and planes . Panetta recommended retiring seven of the Navy’s oldest cruisers and two of its oldest amphibious ships. The Air Force will retire 27 of its oldest C-5 transport planes along with 65 of its oldest C-130s. According to the Pentagon, the ships don’t have modern capabilities and the transport aircraft won’t be needed after the Army’s headcount reductions take place.

4. Joint Strike Fighter . Although Panetta pledged to defend the Air Force, Navy, and Marine Corps versions of the troubled F-35 fighter, he is also putting the brakes on the overall program. Full production of the plane will be delayed and more testing will occur first. The program seems likely to survive for now. However, we should not be surprised to see production stopped early sometime next decade, as the Air Force and Navy’s long-range strike aircraft take priority in future budgets.

5. Contractors and bases . Panetta pledged to find an additional $60 billion in administrative efficiencies over the next five years, on top of the $150 billion supposedly squeezed out by his predecessor Robert Gates. This will mean further pressure on the innumerable contractors providing support services to the department, not only to the Pentagon itself, but at military bases around the world.

As for all of those bases, Panetta has proposed reconvening the dreaded (at least by congressmen) Base Realignment and Closure Commission. Senators and congressmen clings tenaciously to the military bases in their districts, since they are conduits of federal money to their constituents. A smaller military might mean a smaller need for bases. But Pentagon planners need to be careful. Once bases are converted to parks, strip malls, or college campuses, the Pentagon will never get those training areas back. And that could pinch, should planners need to reconstitute military units during a future crisis.