Introduction

America's armed forces are facing a convergence of events that poses challenging questions for the future. Eight years of warfare in two theaters have understandably consumed the energy and institutional focus of the military ser­vices--particularly the U.S. Army and Marine Corps--and worn out equipment at a rate that will require consider­able recapitalization. Furthermore, a robust defense requires a growing U.S. economy, but the economic recession has placed a tremendous burden on the federal government and taxpayers, swelling the chorus of voices calling for cutting the defense budget to pay for domestic initiatives. Many policymakers are searching for another peace divi­dend, which simply does not exist. Finally, President Barack Obama and Congress have openly committed to change the course of American foreign and defense policy.

The U.S. military's grueling counterterrorism and counterinsurgency operations in this decade have focused the Pentagon's attention on near-term priorities of winning in Iraq and Afghanistan, training for counterinsurgency, shifting a majority of stateside equipment to Central Command, using the Guard and Reserves as operational forces, dramatically increasing the pay and benefits of servicemembers and their families, and reforming the acquisition process to field platforms more quickly. The military's enhanced proficiency in irregular warfare--especially given that the U.S. shed these capabilities after the Vietnam War--is a welcome contribution to building a force capable of the full spectrum of military missions. However, the unpredictable international security environment and the long-term planning necessary to field new weapons systems require a military capable of accomplishing a number of broadly defined objectives. These include a Navy that can project power through the maritime domain, an Air Force that can control the skies, an uninterrupted global logistics network, and appropriately sized U.S. ground forces that are sufficiently trained and equipped for both conventional and irregular warfare missions.

The Battle of the Defense Budget

The level of spending required to perform a broad range of missions will require steady, robust funding for several years. Predictable levels of defense spending will allow the military to reset, rebuild, and modernize arsenals and train forces for all types of warfare. However, forcing the military to make unnecessary trade-offs, accepting too much risk, assuming that potential threats will never materialize, or not reducing global military commitments in line with changes in defense strategy could ultimately produce a hollow force that is unready, unable, or too small to fulfill its operational demands or that is at a technological disadvantage on the battlefield.

The current global economic downturn has prompted many to observe that it is somehow necessary to reduce spending. Regrettably, the U.S. defense budget is typically the first target of budget cuts to free funding for domestic programs. Declarations that "tough choices" will be needed on military procurement in the coming years are wide­spread. Even Secretary of Defense Robert Gates reiterated this mandate during recent testimony before Congress.[1] He then followed through with this mandate by proposing a number of significant procurement changes within the defense budget next year.[2]

Modernizing Military Compensation

Instead of discussing what the military can do without--sacrifices that are often paid with life and limb--the debate over hard choices should focus on the unsustainable costs of the military's archaic compensation system. Restructuring how Congress pays the military to make it more cost-effective and responsive to the needs of today's highly mobile workforce would produce significant cost savings for the military. It would also enhance the ability of the all-volunteer force to recruit and retain the most talented individuals the nation has to offer.

Congress should promote the principles of choice and flexibility for military benefits, particularly health care and retirement. Congress should begin by launching a five-year pilot program to replace some current in-kind ben­efits with cash as proposed by the Tenth Quadrennial Review of Military Compensation. Congress should mandate that the Pentagon report on ways to focus the TRICARE military health care system more on prevention and adopt civilian practices such as an open enrollment period. These types of reforms would help to stabilize and ultimately reduce overall personnel costs. Dollars freed within the defense budget should immediately be reinvested, specifi­cally for modernization.

Reforming Defense Acquisition

While defense acquisition reform is popular in theory, the sheer size and scope of defense acquisition will make reform difficult unless it is broken down into manageable pieces. First, Congress needs to learn to abstain from typ­ical risk-averse behavior patterns. Members of Congress have often given in to the temptation to overregulate the defense market, which contributes to cost overruns and often inhibits small businesses from breaking into the defense market. Funding a robust procurement account will allow for higher build rates, which will stimulate con­tractor competition, increase per-unit savings, and provide a steady workload for the nation's defense industrial base. Congress should also restore the balance between research and development (R&D) and procurement to pro­vide incentives for contractors to push programs into the hands of the military.

Pentagon leaders should work to shorten the contract bidding process and to create an enduring template for producing simple acquisition criteria to reduce the number of protests. As it grows, the defense acquisition work­force must bolster its systems engineering capabilities within buying divisions to reduce reliance on contractors. Finally, Congress should carefully review and approve ways to allow defense contractors to broaden their base of customers abroad, which will reduce costs to the U.S. military and bolster interoperability among allies.

Reforming Entitlements

Finally, the runaway spending on mandatory entitlements (primarily Social Security, Medicare, and Medicaid) threatens to consume all federal revenues and crowd out the defense budget if left unchecked. Although not politically popular, reforming these programs to limit their growth is one of the real "tough choices" that Congress needs to make.

In addition to reforming defense programs and entitlements, Congress needs to spend the defense budget more wisely. One popular proposal for saving money and reducing the defense budget is to root out all supposed fraud, waste, and abuse in defense spending. However, the level of fraud, waste, and abuse has historically been relatively modest compared to total defense spending. Nevertheless, government leaders should take every responsible measure to use tax dollars wisely in providing the best support for the military. Areas in need of reform include private contracting in combat zones and the unnecessary use of emergency supplementals to fund operations that have predictable sizes and scopes. Better addressing fraud, waste, and abuse will require sufficient funding to hire and properly train an adequate acquisition workforce that can manage the number and complexity of defense contracts.

Preparing the Military for the Future

In the coming years, decisions on America's global military commitments, defense requirements, and the size and scope of the defense budget will largely determine whether America's military will be prepared for the challenges ahead. As history has shown repeatedly, the effects of defense policy decisions--good and bad--reverberate for decades after the policymakers and Pentagon political appointees have left office.

Mackenzie M. Eaglen is Senior Policy Analyst for National Security in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation. Eric Sayers, a Research Assistant in the Allison Center, contributed to this report.

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