Here is the latest edition of my column at Foreign Policy:
1) The Pentagon's entitlement spending problem,
2) The U.S. is a spectator at Afghanistan's end game.
The Pentagon's entitlement spending problem
A recent report from the Center for Strategic and Budgetary Assessments (CSBA) explained the dismal trends that are bogging down the Pentagon's budget. Over the past decade, the budget, after subtracting out inflation, has almost doubled. Yet during that time, the number of aircraft and warships has declined and those that remain have gotten older. Funding has expanded at Reagan-like levels. But compared to the Reagan years, there has been relatively little modernization resulting from all of that spending.
The operational costs of fighting the wars in Iraq and Afghanistan are a large part of the problem. According to the CSBA, 20 percent of defense spending (including supplemental budgets) between 2001 and 2010 went to operational costs of those two wars. But the remaining 80 percent of the spending doesn't seem to have produced much new capability.
The rapid escalation in the cost of new weapons -- partly caused by frustrating mismanagement in research and procurement practices -- has resulted in a bleak return on investment for taxpayers. In 1985, during the peak of the Reagan defense buildup, the Pentagon bought 338 new tactical fighter aircraft and 23 new warships, among other items. In 2008, procurement spending was 33 percent higher after adjusting for inflation, yet the department could afford only 56 new airplanes and 7 new warships. One wonders whether the increases in weapons quality have been worth the inflation in unit costs.
But it is the Department's personnel costs that will pose the biggest headache in the future. Just like entitlement spending in the domestic budget, salaries, health care, and family services benefits granted today compound into the future and are politically impossible to retract. In order to reduce stress on ground troops making repeated deployments to the war zones, Defense Secretary Robert Gates expanded Army and Marine Corps headcounts by 92,100 immediately after taking office in late 2006. Meanwhile, Congress has consistently upped the ante on the Pentagon's salary requests. Just like everywhere else in the economy, the Pentagon's health care bill has run wild, tripling the rate of inflation in the rest of the economy since 2001 -- it now consumes nearly a tenth of the Pentagon's base budget. And in order to retain experienced personnel constantly separated from their families, Congress has expanded a variety of family benefits.
The result has been a growth in inflation-adjusted personnel costs from $73,300 per head in 2000 to $126,800 in the 2011 budget. When it comes time for Congress to roll back defense spending, this compensation will be untouchable. Training, maintenance, and equipment modernization will suffer the cuts.
Gates has rightly made the preservation of the all-volunteer force his top budget priority. Military success depends first and always on the quality of the soldiers in an army. That requires competitive compensation.
But just like any other enterprise struggling under financial pressure, the military will soon have to examine whether there are new paradigms that might allow one soldier to make the same contribution to security that ten or a hundred previously did.
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