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A Closer Look at Department of Defense (DoD) Spending   (January 23, 2007)

Correspondent Paul M. challenged me to back my (wild, unsubstantiated) assertion that the DoD budget contains less waste than Medicare. This is important, so please follow along with an open mind. There are plenty of links for further reading.

Today I offer a glimpse into Pentagon spending. Please note that the Pentagon is a civilian agency. The U.S. Armed Forces do not budget the money or assign the contracts: this is done by civilians under the control of the President and Congress. Please keep this separation in mind. My stepfather was career Air Force, and I learned this distinction is key in any analysis of spending and "waste." (One person's waste is another person's job--and don't forget who controls spending: politicians, not Generals and Admirals.)

As for Pentagon waste: I am skeptical of both the spending and the claims that it can easily be slashed. The issues are very complex and I will try to lay out the most important ones for your review and comment.

Based on my own extensive readings, I believe most of the Service (Army, Navy, Marines and Air Force) leaders are acutely aware of shrinking budgets and the need to get "lean and mean" in staffing and hardware. To take but one example: the new DDX Destroyer will require a crew of 150 or so, 70% smaller than the one required to operate the current destroyer fleet. Since according to the GAO (see below), crew costs are the largest expense over the life of the ship, this reduction in crew size is a truly massive savings.

GAO DDX analysis

Navy's DDX site

The DDX is a revolutionary ship design which is an essential step forward in an era of cheap over-the-horizon missiles of the Exocet type: it's form factor radically reduces its radar signature, and its propulsion drive radically improves efficiency. The rest of world, including potential threats such as China, are not standing still. If you're going to have a military, then you want to enable it to win should conflict become unavoidable.

Please glance through this detailed article, for it says so much more than a description of this one ship class:

DDG-1000 Zumwalt / DD(X) Multi-Mission Surface Combatant Future Surface Combatant (globalsecurity.org)

Note that the U.S. Navy had about 600 ships in the Reagan-era build-up 20 years ago, and has declined to 375 ships. In other words, the Cold war dividend has already been paid in full. Now the fleet is scheduled to decline to 325 ships or less, and many (including this taxpayer) are concerned that it's simply not enough to maintain unchallenged control of the seas.

There have been studies (none I could locate today) which correlated overwhelming military superiority to peace, and military parity with war. In other words, if potential adversaries (such as China) sense that they can reach rough parity with your forces, then they are tempted to do so, and tempted to risk war. If they are hopelessly outclassed and outgunned, then they are unlikely to call your bluff. This makes perfect sense.

Thus the best way to avoid war with China or any other nation is to maintain overwhelming superiority. And as Stalin is proported to have said, quantity has its own quality. In other words, if you have six fine ships facing off against 40, odds of victory, no matter how excellent the ships and crew, are seriously diminished. At a minimum, you'll simply run out of weapons.

The globalsecurity.org article mentions several other key issues. The Navy wanted a winner take all contract, but Congress refused. Why? Because they need to spread the spending around, and as the fleet has shrunk, so has the number of shipbuilders. There are now only two in the U.S., which is a troubling statistic. As for submarines--if we stop building subs (and the fleet is already too small, in many analysts' opinions), then the workforce which disappears cannot be replaced. The knowledge of such complex machines cannot be re-stablished later without mistakes being made and much treasure expended.

To put it bluntly--much of the Pentatgon waste is a result of political meddling, otherwise known as "pork." I have seen studies which showed that Defense contracts go not to the best qualified contractors, but to whichever contractor is about to go bust. Thus the C-5a cargo aircraft should have been built by Boeing, which had the expertise to build superjumbo planes; but Lockheed was hurting, so they got the contract. The result: massive cost overruns and numerous quality issues with the aircraft. But it was politics all the way down the line.

This is not trivial. According to this article, the cost of outsourcing the ship to two suppliers will raise the price by $300 million a ship. That's not Pentagon waste, that's Congressional waste dumped on the Pentagon's lap. The Navy has to suck it up and cut their budget somewhere else so their political overlords can go home and brag about the pork they brought home to their district/state.

there's another politically motivated cause of waste: Congress doesn't want to budget the full costs of a weapon system in one year, because it ruins the illusion they try to maintain about being budget-conscious. So weapons procurement budgets are stretched out for years, boosting the overall costs of the system. As any business owner knows, overhead is a daily expense; if you could build three ships a year but you're told to do only 1.4 (yes, not even two), then your overhead costs eat you alive. The ships end up costing millions more just so Congress can keep the budget line item per contract artifically low.

If we wanted to save money, we'd budget the full $10 billion for the ships and have the yards build them as fast as was efficiently possible, not drag the procurement out over 10 years so it appears to be only $1 billion a year.

On the other hand, I am troubled by the F-22 Raptor aircraft contract, which has ballooned from $86 million per aircraft to $300 million per plane.

F-22 overruns

GAO report on the F-22

More on the F-22

The story includes the usual budgetary legerdemain mentioned above, of course, but it also highlights the "mission creep" syndrome in which a new weapons system gets loaded up with more and more missions, often rendering the final package unwieldy and costly.

The F-22 is the replacement for the F-15, and it shares many of the F-15's worst traits: a long lead time (the F-22 was started in 1986 and given the go-ahead in 1991), and the complexity of its missions and avionics. The basic idea is: to save money, get one plane to do it all: bomber, fighter, all-weather, long range, etc. etc. That's how planes end up taking 15 years to produce, and cost $300 million each.

Even worse, the F-22 is only supposed to be a "stop gap" aircraft until the deployment of the next generation F-35 Lightning. F-35 description

An alternative way was illustrated with the F-16, a light, one-pilot air superiority airplane designed by "fighter jocks." It was designed in a relative hurry and went into production in a hurry, and as a result it was far cheaper than the heavier, two-pilot F-15. The F-16 wasn't all things to all people; it was designed to shoot down the bad guys and achieve air superiority. Its bomb load was limited, as were its avionics and range. Maybe the U.S. needs a "fighter jock" designed replacement for the F-16 more than it needs a horrendously expensive "does it all" aircraft like the F-22.

Do weapons systems get cancelled? The cliche is that they don't, but they do. The Army's poorly named Crusader cannon was cancelled, as was the Navy's A-12 aircraft.

Not all programs are expensive flops. the F-18 Hornet went through an extensive redesign which lengthened the aircraft, extended its range, upgraded the engines to more powerful yet more efficient engines, and upgraded the avionics package. As a result, the Super Hornet can handle missions which in the Vietnam Era required no less than 10 different aircraft.

Wikipedia's entry for the F-18

the Navy's entry for the F-18

weapons load out graphic (all the various munitions the aircraft can carry)

The F/A-18 E/F acquisition program was an unparalleled success. The aircraft emerged from Engineering and Manufacturing Development meeting all of its performance requirements on cost, on schedule and 400 pounds under weight. All of this was verified in Operational Verification testing, the final exam, passing with flying colors receiving the highest possible endorsement. The Super Hornet cost per flight hour is 40% of the F-14 Tomcat and requires 75% less labor hours per flight hour.
Then there are the other DoD items which no one seems to know about or consider. The Veterans Administration is tasked with providing care to every veteran who seeks care, and that numbers in the millions. The VA budget is $35 billion a year, and should be higher.

The VA's website

The VA's budget

Then there's all the fundamental scientific research which is appropriated under the Pentagon, even though it benefits the nation in much the same fashion as the National Science Foundation grants. These include DARPA (Defense Advanced Research Programs Agency)

DARPA's budget

which is reliably criticized for various goofy research ideas-- www.defensetech.org

But which also funds robotics and other fields of non-military value.

The Office of Naval Research funds programs as varied as astronomy and drug development. ONR website

Then let's not forget that some of the Homeland Security boondoggle (talk about waste and fraud) has been slipped onto the Pentagon ledger, fairly or unfairly, it's hard to tell.

Though few mention it, the Iraqi War has drawn down the military's logistics, burning through equipment including National Guard stocks which are not being replaced.

Lastly, the "black budget" spy/intelligence programs are funded by the Pentagon, to the tune of perhaps $10 billion or so. Nnobody knows, everyone guesses; The C.I.A. also has "black budget" items.)

To summarize: the U.S. Military is tasked with winning whatever war its political masters (the President and Congress) choose to wage or engage, be they all-out wars with nuclear-armed opponents or "low-intensity" conflicts in distant parts of the globe. While considerable waste can be laid at the feet of a Pentagon (a civilian agency, recall) without sufficient oversight, wasteful contractors, etc., much more can be laid to political machinations. Why does the Military have offices in West Virginia? Look no further than Senator Byrd. Does Texas or California "deserve" this spending? No more than West Virginia. The point is that the Military's recommendations for saving money in basing are generally ignored.

Given the scope of the U.S. Military's mission and the number of its personnel and retirees, to say it should/could operate on half its current budget does not align with the complexity of the threats the Military is tasked with countering.

It can be argued that the Department of Defense's share of the U.S. GDP and Federal budget is near postwar lows. It consumed 7.5% of GDP in the Cold War years, and now accounts for about 4%.

Heritage Foundation commentary on DoD spending

The 2007 Defense budget is $439.3 billion, about the same as Medicare, which is $395 billion and rising rapidly.

The cost of Medicare is set to explode. Under current law, Medicare spending is projected to jump from $395 billion in FY 2007 to $504.4 billion in FY 2011 and to total roughly $2 trillion over that same period. source: Heritage Foundation commentary on Medicare spending

The entire Federal budget is $2.77 trillion. Here's a good listing and chart:

Federal Budget for 2007

The Interest on the National debt for 2007 is $243.7 billion--a 13.4% increase.

I find it appalling that plenty of people complain about DoD spending at $440 billion (of which perhaps $100 billion is VA, research, retirement, black-budget intelligence, etc.) but they rarely mention the rapidly increasing cost of servicing the debt. If you compare Defense budgets as a percentage of GDP or Federal spending, you have to conclude the deficit is not caused by Military spending, which has declined percentage-wise, but on the skyrocketing costs of social entitlements like Medicare.

So feel free to blast Pentagon "waste," but please educate yourself on the missions, staffing, weapons systems, threats and political meddling involved if you want to engage in a thoughtful debate.

I suggest that DoD spending--yes, there is waste, as there is in any vast government program--still delivers the results which the nation demands: military superiority via the ability to project power anywhere on the globe. In contrast, Medicare consumes roughly the same amount of money and delivers so little: we are not a healthy nation, but a sickly one, and the funding is largely wasted on procedures and drugs which do little good and often do tremendous harm. If the Armed Forces and the VA were cut in half, I fear for our nation; if Medicare were cut in half? I'm not so sure. More on that tomorrow.

For more on this subject and a wide array of other topics, please visit my weblog.


copyright © 2007 Charles Hugh Smith. All rights reserved in all media.

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