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A Tale of Two Hearings: The Defense Budget Reduction Dialogue July 30, 2010

Posted by Elizabeth Cutler in Analysis.
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On July 20, 2010, the House Committee on Oversight and Government Reform Subcommittee on National Security and Foreign Affairs held a hearing titled, “Rethinking Our Defense Budget: Achieving National Security through Sustainable Spending.” All witnesses but one emphasized the imperative need to understand, critique, and reign in defense budgets. Dr. Gary Schmitt of the American Enterprise Institute was the exception, and he expressed concern that a reduced defense budget would make the U.S. more vulnerable to the growing military strength of China and other foreign powers.

Two days later the House Armed Services Committee received testimony on a similar topic from senior Pentagon budgeters.  Leadership from each service and the Office of the Secretary of Defense outlined ways in which their offices are striving to improve business operations and management during this time of financial hardship.

Experts in the first hearing focused their comments on defense budget strategy, and the official testimony discussed the more technical complexities of putting sound business plans into practice. The representatives of each DoD office told similar stories of offices entrenched in complex business operations overhauls and efforts to find ways to save scarce resources while operating at full capacity. This difference in the witnesses’ focus highlights the gap between the very serious fiscal situation soon to face the Pentagon and the rather superficial response that DoD has offered so far.

Individual summaries of each testimony follow and the testimonies in full can be accessed by clicking on the witnesses’ names.

Carl J. Conetta, Co-Director of the Project on Defense Alternatives

Conetta testified that the defense budget has grown at an unsustainable rate and jeopardizes the certainty of “[America’s] most powerful national security instrument: the US dollar.” He stated that deficit spending feeds debt accumulation, which is how we have landed in a national economic situation comparable to time of World War II. In short, the US needs to focus on economic recovery followed by a reduction in deficit spending and develop a national security strategy that is more cost-effective.

Benjamin H. Friedman, PhD., Research Fellow in Defense and Homeland Security Studies, Cato Institute

Friedman testified that the administration’s non-war defense spending request for FY 2011 ($549 billion) is unwise. He advocated for a defense strategy and budget that reflects restraint on the part of the US. Friedman stated that when examining the defense budget, it is imperative to examine the strategy behind it at the same time. Furthermore, he stated that a popular justification for a large defense budget as preparation against future rivals is not the most logical because “the best hedge against an uncertain future is a prosperous and innovative economy, unburdened by excessive debt and spending.” This emphasis on repairing the flagging economy echoed parts of Conetta’s testimony.

Todd Harrison, Senior Fellow for Defense Budget Studies at the Center for Strategic and Budgetary Assessments

Harrison shaped his testimony around five areas of potential savings in the defense budget: achieving greater efficiencies, refocusing on the core business of defense, reforming the military personnel system, reforming the acquisition system, and altering the force structure. With regard to the second area, Harrison noted that many DoD-funded programs and activities deviate from the basic mission of DoD to “provide the military forces needed to deter war and to protect the security of our country.” Harrison also noted that DoD is the largest singular employer in the US and, as a result, DoD personnel policies affect the federal budget significantly and thus also require attention when analyzing overall defense spending.

Gary J. Schmitt, PhD., Director of the Program on Advanced Strategic Studies at the American Enterprise Institute for Public Policy Research

Schmitt testified that, in spite of the country’s economic challenges, we are actually spending too little instead of too much. He questioned the Sustainable Defense Task Force’s assumption that the growth in defense spending has contributed significantly to today’s economic crisis. Schmitt also expressed doubt about the report’s perspective that costs can be cut without jeopardizing military effectiveness. Citing issues from failed states to the growing assertiveness of China, Schmitt cautioned that significantly reducing the “resources that go to the US military seem short-sighted, to say the least.” Schmitt stated that although he disagrees with much of the Sustainable Defense Task Force report, he agrees that the budget debate is a necessary one.

Gordon Adams, PhD., Distinguished Fellow, Project on Budgeting for Foreign Affairs and Defense, The Henry L. Stimson Center

Adams testified that defense planners have not yet addressed the “emerging tidal wave” posed by the country’s ever-increasing debt and deficits. He cautioned that, just as support skyrocketed for “unprecedented growth in the defense budget” at the beginning of the American presence in Iraq and Afghanistan, we ought to expect a parallel decline in this support as US troops being to withdraw from both countries. This matters because the “wars have contributed significantly to the lack of discipline in defense budgeting.” Adams further stated that tangible defense savings will involve a reduction in end strength. Adams concluded that “greater discipline in defense mission planning” is imperative for addressing today’s challenge.

On July 22, 2010 the House Armed Services Committee received testimony regarding managing the Department of Defense in a time of tight budgets. Leadership from each service of DoD testified, all outlining ways in which their offices are striving to improve business operations and management during this time of financial hardship. Summaries of each testimony follow and the testimonies in full can be accessed by clicking on the witnesses’ names.

The Honorable Elizabeth A. McGrath, Deputy Chief Management Officer, Department of Defense

Ms. McGrath highlighted the department’s Strategic Management Plan (SMP).  This plan has focused DOD on five cross-functional, enterprise-wide business priorities: supporting the all-volunteer force, supporting contingency business operations, reforming the DoD acquisition process and support processes, enhancing the civilian workforce, and strengthening financial management.. Ms. McGrath’s office will release an updated SMP in the next fiscal year, incorporating guidance from the 2010 Quadrennial Defense Review.

The Honorable Joseph W. Westphal, Undersecretary of the Army

Dr. Westphal expressed a commitment to finding ways to save money in the Army’s current budget and spend their funds wisely and efficiently as part of DoD’s overall goal of finding $100 billion in savings. The Army is also heeding guidance from the Government Accountability Office in order to develop an effective Business Systems Architecture and Transition Plan that will improve its business operations and information technology infrastructure.

The Honorable Robert O. Work, Undersecretary of the Navy

Mr. Work testified that the Navy is committed to improving its business operations, which will include “in-sourcing [in order to] promote efficient, and economical operation by optimizing personnel utilization.” While contractors “will remain a vital source of expertise,” this measure is expected to make the Navy’s business operations more efficient. Furthermore, Mr. Work testified that the Navy will strive to meet the goal presented in the FY 2010 NDAA for the DoD to reach audit readiness by September 30, 2017. The Marine Corps has already achieved audit readiness on its Statement of Budget Resources and the Navy will continue to strengthen financial controls and standardize financial processes in order to work towards reaching this goal.

The Honorable Erin C. Conaton, Undersecretary of the Air Force

Ms. Conaton also cited the QDR, DoD Strategic Management Plan, and recommendations from the GAO as sources of guidance for the Air Force’s efforts to improve business operations. The Air Force plans to complete their Business Transformation Plan by March 2011 and is also striving to meet the 2017 audit readiness goal. Mr. Conaton testified that the Air Force has already begun to implement a management improvement plan titled Expeditionary Logistics for the 21st Century (eLog21) and next plan to implement information technology that support streamlined logistics.

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