Friday, July 23, 2010

Pentagon Faces Growing Pressures to Trim Budget


July 22, 2010

Pentagon Faces Growing Pressures to Trim Budget


WASHINGTON — After nearly a decade of rapid increases in military spending, the Pentagon is facing intensifying political and economic pressures to restrain its budget, setting up the first serious debate since the terrorist attacks of 2001 about the size and cost of the armed services.

Lawmakers, administration officials and analysts said the combination of big budget deficits, the winding down of the war in Iraq and President Obama’s pledge to begin pulling troops from Afghanistan next year were leading Congress to contemplate reductions in Pentagon financing requests.

Defense Secretary Robert M. Gates has sought to contain the budget-cutting demands by showing Congress and the White House that he can squeeze more efficiency from the Pentagon’s bureaucracy and weapons programs and use the savings to maintain fighting forces.

But the increased pressure is already showing up in efforts by Democrats in Congress to move more quickly than senior Pentagon officials had expected in trimming the administration’s budget request for next year.

And in the longer term, with concern mounting about the government’s $13 trillion debt, a bipartisan deficit-reduction commission is warning that cuts in military spending could be needed to help the nation dig out of its financial hole.

“We’re going to have to take a hard look at defense if we are going to be serious about deficit reduction,” said Erskine B. Bowles, a chief of staff to President Bill Clinton who is a co-chairman of the deficit commission. Senator Judd Gregg, a Republican from New Hampshire who is also on the debt commission, said that if the panel pushes for cuts in discretionary spending, “defense should be looked at,” perhaps through another base-closing commission.

Mr. Gates is calling for the Pentagon’s budget to keep growing in the long run at 1 percent a year after inflation, plus the costs of the war. It has averaged an inflation-adjusted growth rate of 7 percent a year over the last decade (nearly 12 percent a year without adjusting for inflation), including the costs of the wars. So far, Mr. Obama has asked Congress for an increase in total spending next year of 2.2 percent, to $708 billion — 6.1 percent higher than the peak under the Bush administration.

Mr. Gates is arguing that if the Pentagon budget is allowed to keep growing by 1 percent a year, he can find 2 percent or 3 percent in savings in the department’s bureaucracy to reinvest in the military — and that will be sufficient money to meet national security needs. In one of the paradoxes of Washington budget battles, Mr. Gates, even as he tries to forestall deeper cuts, is trying to kill weapons programs he says the military does not need over the objections of members of Congress who want to protect jobs.

Mr. Gates enjoys bipartisan support on Capitol Hill and has considerable sway within the administration. But while he may hold the line against major cuts for now, analysts say support for military spending could erode quickly once the Pentagon withdraws a substantial number of troops from Afghanistan.

“In the case of the Pentagon, they have been living very fat and very happy for so very long that they’ve almost lost touch with reality,” said Gordon Adams, who oversaw national-security budgets under President Clinton.

Senator Daniel K. Inouye, Democrat of Hawaii and chairman of the Senate Appropriations Committee, said that he would be looking first at tax increases and changes in Social Security and Medicare to lower the deficit, and that there was “no way” Congress would make major cuts in the military while more than 100,000 troops were still at war. But once most of them return, “I’m pretty certain cuts are coming — in defense and the whole budget,” he said.

The course of the war in Afghanistan will no doubt have an impact on the debate, as might the outcome of the midterm elections and ultimately the 2012 presidential race.

But the first signs of pressure on military spending have surfaced, as both the House and the Senate are moving to trim the administration’s Pentagon budget request for the fiscal year that starts Oct. 1.

The Democrats on the Senate Appropriations Committee voted last week to cut $8 billion from the Pentagon’s request for an $18 billion increase in its basic operations.

Representative Norm Dicks, Democrat of Washington and chairman of the House defense appropriations subcommittee, is planning to trim $7 billion from the administration’s budget request. “There’s a lot of support up here for restraint,” he said.

In the short run, the worries about the deficit could help Mr. Gates halt the two main arms programs he has identified this year — an alternate engine for the new Joint Strike Fighter and the purchase of five more C-17 cargo planes from Boeing.

General Electric and Rolls-Royce have been lobbying hard to save their engine, which would compete with another one for up to $100 billion of business.

Mr. Inouye said that with the administration’s opposition, “and faced with a deficit, that deal is dead.”

Mr. Gates sought to set the terms of the broader debate with a speech in May at the Eisenhower Presidential Library and Museum in Abilene, Kan.

“Military spending on things large and small can and should expect closer, harsher scrutiny,” Mr. Gates said. “The gusher has been turned off, and will stay off for a good period of time.”

Mr. Gates followed up with orders for the armed services and the Pentagon’s agencies to find $7 billion in spending cuts and efficiencies for 2012, growing to $37 billion annually by 2016.

Rahm Emanuel, Mr. Obama’s chief of staff, said the president fully supported Mr. Gates’s initiatives, which already have set in motion savings from canceling or trimming more three dozen weapons systems in 2009. “This is not business as usual,” Mr. Emanuel said.

Senior administration officials said they hoped Mr. Gates’s effort would help quiet critics who asked why military spending had been exempted from the president’s order for a 5 percent cut in the budgets of most domestic agencies.

At the moment, the administration projects that the Pentagon’s base budget and the extra war spending will peak at $708 billion in the coming fiscal year, though analysts say it is likely that the Pentagon will need at least $30 billion more in supplemental war financing then.

Two-thirds of Pentagon spending is on personnel costs. It is possible that the Pentagon will have to look for the first time at cuts to the health benefits provided to active and retired military personnel and their families.

Some analysts said the Pentagon would eventually come under pressure to reduce the size of the armed forces.

Mr. Adams, the Clinton administration budget official, wrote in a recent analysis that for “any real savings on defense budgets to occur, end strength must shrink.” But the Pentagon strongly opposes cutting the number of troops, said Peter R. Orszag, director of the president’s Office of Management and Budget.

“Secretary Gates and the military leadership have made it very clear that they do not support a reduction in end strength,” Mr. Orszag said.

He said there is little comparison to the last period of significant cuts in military spending and personnel — in the 1990s, after the collapse of communism.

“During the end of the cold war, one could imagine a significant downsizing of the American military,” Mr. Orszag said. “That is a fundamentally different proposition than the situation we find ourselves in today.”

·  Copyright 2010 The New York Times Company


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