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. This does not imply a naí¯ve technological fix or a pricey substitution of capital for labor. The answer may be in who the military recruits into its ranks, what they are trained to do, and how they are organized and led when deployed. Perhaps the looming budget crunch will result in long-overdue innovations that were never contemplated when times were flush.
The U.S. is a spectator at Afghanistan's end game
The Obama administration's proposed July 2011 deadline to begin a withdrawal of troops from Afghanistan dominated the Senate Armed Services Committee's hearing this week to confirm Gen. David Petraeus as the new commander in Afghanistan. Ben Rhodes, a deputy national security advisor, explained to the New York Times, "We want the Afghans to understand that we're going to be expecting more out of them, so to the extent that it conveys a sense of urgency, that's an important message." To some extent, the White House's incentives are working; Afghan President Hamid Karzai is already delivering much more than before. But what he is delivering is far different from what Rhodes and his colleagues had in mind.
The Afghanistan end game may be arriving much sooner than expected. Negotiations between Karzai, Pakistani military and intelligence officials, and Taliban leaders seem to be advancing. And in spite of the surge of troops to Afghanistan, the United States may end up being a spectator as Karzai and his interlocutors work out their own truce.
Karzai realized long before Gen. Stanley McChrystal's defenestration that he had to develop alternatives to Washington's plans. He undoubtedly also concluded that Pakistan, with the sanctuary and support it provides to the Afghan Taliban and its control over supply routes (for all sides) into the theater, has vastly more authority over any outcome than the United States. As a corollary, Karzai has likely concluded that U.S. military operations in Helmand and Kandahar provinces are irrelevant to the calculations of Pakistani officials and Taliban leaders. Finally, Karzai would seem to have little confidence that Afghanistan's own security forces will be useful any time soon. All reasons for Karzai to ignore the U.S. playbook and make his own deal. Thus his decision to engage Pakistani officials to broker talks, first with Gulbuddin Hekmatyar and now with the Haqqani network.
What is Pakistan's interest in brokering a truce right now? Its long term goal is to minimize India's influence in Afghanistan. A settlement that ends with Islamabad's Afghan proxies intact and inside the Afghan government will help further that goal. But why cooperate with Karzai now? Although Pakistan seeks a different end state than the United States, it has no interest in seeing the Americans lose the war. Pakistani leaders do not want to see a bitter United States pack up and leave as it did after its defeat in Vietnam. That would leave Pakistan cut off from U.S. aid and left to fend off India by itself. Thus there is an incentive to broker a deal that will appear to be a U.S. success and that will help officials in Washington save face.
U.S. leaders seem to be resisting a deal that leaves top-level Taliban leaders in the game. They fear that this will look more like surrender than success. What these officials need to realize is that their minimal bargaining leverage over Pakistan is likely to be even more minimal next year after the surge has run its course.
U.S. officials might not like what Pakistani and Afghan leaders are discussing with the Taliban, but after considering the alternatives, they might conclude it's the best deal going.