A Methodology for Making the Right Trade-offs in Defense for the Decade Ahead
April 17, 2013
The president, civilian and military defense leaders, and some members of the Congress have spent the last year-and-a-half decrying the effects of budget cuts on the Department of Defense (DoD). Yet, topline reductions are only the first piece of the “double whammy” that defense faces today. Equally serious, the defense dollar has lost—and continues to lose—its purchasing power due to the aggregate impact of internal cost growth, for personnel, for operations and maintenance, and for acquisition programs. It is this second trend, on top of the budget cuts, that has driven the Defense Department to react so strongly to a sequester that, on the surface, looks like just an 8 to 10 percent cut. But it is going to feel much deeper, because it comes on top of another 8 to 10 percent cut (caused by the first set of budget caps imposed by the Budget Control Act of 2011), and at the same time, it is being hollowed out from within by internal cost growth. That is why a 20 percent reduction in the defense budget is going to feel a lot more like a 40 percent reduction.
This double whammy coincides with a time when DoD’s ability to incorporate strategy—ends, ways, and means—into a fiscally disciplined, constructed program has atrophied. The shifting priorities from a decade of war elevated current operations over long-range planning, as necessitated by two concurrent wars, and enabled by supplemental funding (in the Overseas Contingency Operations or OCO accounts), resulting in lost fiscal discipline. CSIS has assessed the consequences of continued inaction and the options—at the strategic level—for how better to align strategy and resources through disciplined planning.