Todd Harrison, a fellow at the Center for Strategic and Budgetary Assessments, wonders whether the U.S. Department of Defense will need a financial bailout, for many of the same reasons General Motors needed one.
His essay (also posted at the Stimson Center's excellent blog on national security spending) lists the similarities. Like GM, the DoD has personnel costs, including generous fringe benefits, that are weighing down the budget and making it more difficult for the Pentagon to adapt to changing circumstances. Second, like GM, the Pentagon's lengthy and turf-protecting decision-making process has resulted in acquisition programs that have not adjusted to changing times. Third, the slump in the economy is going to limit the Pentagon's "revenues" just like it is limiting GM's.
Harrison recommends weapons acquisition policies that are less technologically ambitious. More controversially, he recommends less generous fringe benefits for servicemen, especially retirement pay.
Rather than cutting compensation, those looking for savings, flexibility, and a more nimble military should examine the option of rolling back the headcount increases since 2003 in the Army and Marine Corps. According to a Congressional Budget Office study (see page 7), reducing the Army's headcount by 65,000 active and 9,200 reserve would save over $90 billion over 10 years. F-22s and DDG-1000s are not the only things that cost a lot of money.
With unresolved commitments in Iraq and Afghanistan, this sounds like a ridiculous idea. But the next leadership team at the Pentagon will face a very stressful budget challenge. The U.S. is facing asymmetric challenges on the high end (space systems, cyber, air and naval anti-access) and on the low end (terrorism, political subversion, global non-state challengers). Pentagon leaders will find themselves in the world after Iraq and Afghanistan, sooner I expect rather than later. What utility will the large general purpose ground forces built up for those wars have in the world after those wars?