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Best Case For Sequester Is Still Disaster, Top Experts Say

Posted by Sydney J. Freedberg Jr. on


CAPITOL HILL: The best case for sequester is still a disaster – but we’re not going to get the best case. That’s the common denominator from a range of budget options rolled out today by an extraordinary alliance of four thinktanks.

Their consensus recommendations to cut military readiness, Army brigades, Navy carriers, Air Force ICBMs, and an array of aircraft – including, in three of the four groups’ proposals, the F-35 Joint Strike Fighter – came from a kind of fiscal wargame. The simulation was developed by the influential Center for Strategic and Budgetary Assessments to explore alternative ways to implement approximately $500 billion in cuts to defense spending over the next 10 years. [Click here for detailed slides]. The subtle sting: They arrived at their dire conclusions based on what CSBA budget expert Todd Harrison admitted were “some very generous assumptions.”

Finding over $500 billion in cuts was a manageable misery under CSBA’s rules for the budget wargame, said Robert Work, the former undersecretary of the Navy, who now heads the Center for a New American Security. But that doesn’t reflect the rigid restrictions of the current sequestration law, which, among other things, requires cutting the exact same amount, about $52 billion, every year for the next 10 years.

That’s “craziness,” said the always-blunt Work, a retired Marine Corps artilleryman. “If we have to hit the targets year by year, the wheels will come off, and I speak from personal experience….We will go back to the 1975 era when I had to buy toilet paper for my Marines.”

Because it takes more time to implement cost-effective and strategic savings than to just hack desperately at low-hanging fruit like combat training and technology development, agreed Harrison, “[it] actually makes a big difference whether or not the cuts are backloaded.”

Backloading – phasing in sequestration over time instead of dropping the annual budget by over $50 billion all at once – is precisely what the Army Chief of Staff, Gen. Ray Odierno, has been begging the Congress to do for over a month. He repeated his plea again this morning at the Atlantic Council’s downtown DC offices. “What I’ve said in my testimony is backload the cuts, because then I can do it using end strength, modernization, and readiness in an equal way,” Odierno said. “That doesn’t mean I agree with the amount of the sequestration cuts, but if I’m going to get ’em, if you backload ’em past ’17, I can do it properly.”

Without some leeway to ramp down budgets over time, instead of dropping $52 billon overnight, said Odierno, “we’re going to have a three to four year window of significant unreadiness.” The reason? To save money, you have to get rid of people: Costs per servicemember have soared since 9/11, with the biggest impact on the Army, which as the most manpower-intensive service spends 45 percent of its budget on personnel. But compensation rules make early retirements and separating soldiers ahead of their contracts more expensive in the short term than just keeping them on the payroll.

“I cannot take people out fast enough to meet sequestration numbers,” Odierno said. “Next year I can get about $2 billion out of people,” no more. That means the cuts must come disproportionately from weapons programs and from readiness. The Army has already stopped most training for most units. “We are now taking a significant risk in training,” Odierno said, and every bit of training, maintenance, or modernization deferred this year adds to the cost next year, when the budget will be just as tight. As the pain compounds over time like interest on a debt, he said, “we’re on this roll that’s going to continue to eat at readiness.”

Odierno and the four thinktank teams agree on the need to backload the sequestration cuts so the Defense Department has time to cut personnel. “That’s where we get the savings,” Work said. “It’s the only way we can make this work.”

The rest of the consensus recommendations, however, look like Odierno’s nightmare scenario. All four cut exactly half the Army’s heavy armored brigades used for all-out combat, as well as many of its civil affairs units for “hearts and minds” missions. Overall, all four recommended that the active-duty Army, already set to shrink to 490,000 soldiers by 2017, be further cut to 420,000, 410,000, or even 327,000. (Three groups recommended active-duty cuts from 70-78,000, as well as smaller cuts to the Army Reserve and National Guard; the outlier, the team headed by the Center for Strategic and International StudiesClark Murdock, recommended cutting 163,000 active soldiers but adding 100,00 to the Reserve and Guard).

“One thing I’m worried about, in everybody’s declaration that there’s going to be no more ground wars, we don’t need any more ground forces, [is that] we’re going to make the Army too small,” Odierno said. “I see nothing on the horizon yet that tells me we don’t need ground forces.”

None of the assembled think-tankers felt particularly sanguine about the prospects for world peace, either. (Work did say that “we’re not likely to engage in a direct conventional conflict with a high-end adversary in the near- to mid-term,” but he saw other non-state and “hybrid” threats materializing instead). The most consistent dissenter of the four groups, the American Enterprise Institute team led by the hawkish Tom Donnelly, went so far as to say “we have to reverse the withdrawal that’s now underway in the Middle East,” which his AEI colleagues clarified to me afterwards meant asking our Arab allies to host significant US ground forces. (Read Donnelly & co.’s detailed sequestration lamentations here). But even the AEI team cut the Army by 78,000 soldiers to free up funds for higher priorities in air, sea, space, and cyber forces.

In fact, one surprise from today’s report was how much consensus there was among the participants, who ranged from AEI conservatives like Donnelly and MacKenzie Eaglen, a BreakingDefense contributor, to Work, who just left the Obama administration to head the Democrat-founded CNAS. The highlights:

Sighed CSIS’s Murdock, “No one would recommend these kind of draconian cuts or the kind of risks associated with them, but these are the kind of cuts you have to make to meet the numbers.”

Yet these were numbers crunched under what the organizers admitted were implausibly optimistic assumptions. Besides the flexibility to phase in cuts over time rather than rigidly hitting the same target year after year, for example, the fiscal wargame assumed that Congress would eventually accept all the Obama administration’s proposals to rein in the cost of military compensation – both pay and, even more important, healthcare – which legislators have repeatedly rejected. It also assumed that all the savings from unspecified “efficiencies” already baked into budget forecasts.

“The odds of all those savings coming through are low,” said Harrison, who’s studied the history of past reform efforts. They are, he said scornfully, “phantom efficiencies.”

Major reforms are unlikely to reduce overhead and inefficiency in the Defense Department, agreed Murdock. “I’m giving up on it, because the system hasn’t had the internal fortitude to do it,” he said. “[It’s] a department that has not been able to change the fundamental way it’s done business for the last 20 years.”

When the brutal reality of the sequester cuts finally sinks in, Murdock went, “perhaps then… all elements of the political system will recognize that if we do not address these kinds of fundamental reform issues, the nation’s security will be badly weakened.”

This coming Monday, in fact, experts from the four thinktanks and many others will roll out a plan for just such a “fundamental reform.” Details are sketchy so far, but Work in particular recommended getting past congressional gridlock with an approach modeled on the Base Reduction And Closure (BRAC) process, whereby instead of voting on each individual change to military compensation or acquisition regulations, Congress would be presented with a whole package for a single up-or-down vote.

“We have to address this overhead,” Work said. If we actually can make the Pentagon spend money more efficiently, he said, in the day’s one note of optimism, “the problem becomes much less dire.”

What do you think?