A Defense Budget for Cold War 2.0

By Alan W. Dowd, ASCF Senior Fellow

It may seem incongruent, on the heels of a budget deal that will pour $738 billion into the Armed Forces, to argue that Washington is depriving the Pentagon of vital resources. But it’s true. Here’s why.

Years

The $738 billion earmarked for the military in the FY2020 budget represents a 3-percent increase over FY2019, as Defense News reports. However, defense experts say the Pentagon needs $750 billion next year to carry out its many missions and to make needed upgrades.

As an AEI analysis explains, the budget deal helps repair military readiness but fails to rebuild or modernize the military. To carry out the goals of the new National Security Strategy, according to AEI, the Navy needs to grow from 290 ships to 355. The Army needs to expand from 478,000 active-duty personnel to 540,000. The Air Force needs to grow from 312 squadrons to 386.

To achieve these and other modernization-rebuilding goals, as AEI points out, military leaders argue that they need between 3-percent and 5-percent growth in the Defense budget annually over several years—about $550 billion in additional spending over the next five years. The FY2020 budget falls short of that.

The Pentagon needs these extra resources largely because it was starved of resources by the bipartisan gamble known as sequestration.

In 2011, the Army’s active-duty end strength was 566,000; after sequestration, it had fallen to 476,000. By the way, the Army’s active-duty force was 480,000 before 9/11. In other words, sequestration left America with a smaller Army in a time of war than it fielded in a time of peace.

Before sequestration, the Marine Corps fielded 202,100 active-duty personnel; after sequestration, there were only 184,000 Marines on active duty. By 2014, half of the Marines’ fixed-wing fighters were grounded due to sequestration. By the end of 2016, only 41 percent of Marine aircraft were able to fly.

Before sequestration, the Navy had 288 active deployable ships. After sequestration, the Navy had 275. These numbers aren’t even close to America’s maritime needs. “For us to meet what combatant commanders request,” according to former CNO Adm. Jonathan Greenert, “we need a Navy of 450 ships.” A government-funded study concludes the U.S. needs 14 aircraft carriers (the Navy has 10 operational), 160 cruisers and destroyers (the Navy has 84), and 72 attack submarines (the Navy has 52). After sequestration, 53 percent of Navy aircraft could not fly—twice the historic average.

As Undersecretary of the Navy Thomas Modly observes, we have “less than half of the Navy we had 30 years ago, but arguably three times the responsibility.”

As to modernization, “The U.S. has not developed a new heavy bomber in three decades,” the Lexington Institute points out. Initial operational capability of the yet-to-be-built B-21 will not come until 2025. Between now and then, just 12 percent of America’s aging bomber fleet will be able to penetrate and survive a near-peer enemy’s air defenses.

Add it all up, and sequestration had a devastating impact. By shrinking the reach, role and resources of the Armed Forces, sequestration caused long-term damage to both the military and the nation it defends. “No enemy in the field has done more to harm the readiness of our military than sequestration,” according to Gen. James Mattis.

Yes, the Trump administration mercifully ended sequestration’s maiming of the military. But as Mattis explains, “It took us years to get into this situation, it will require years of stable budgets and increased funding to get out of it.”

Yet the president doesn’t sound committed to a multi-year reinvestment in the Pentagon, noting recently, “We now have a very strong military. A lot stronger after this last budget. And then at some point very soon I’ll be able to cut back.”

Threats

A pared-down Pentagon might make sense if our enemies were beating their swords into plowshares. But we know the very opposite to be true.

America’s military is waging an open-ended global war on terror; engaging in proxy conflicts and counterinsurgency operations around the world; containing Iran and North Korea; defending more allies in Europe and Asia than ever before; policing the old domains of land, sea, air and space as well as the new domain of cyberspace; and deterring two near-peer competitors in what increasingly looks and feels like Cold War 2.0.

Yet today’s defense outlays (as a percentage of GDP and federal spending) are nowhere close to what they were during the Cold War. For most of the Cold War (setting aside the very high levels of defense spending in the early 1950s), Americans spent between 5 and 9 percent of GDP on defense(see pages 149-152):

• In 1953, the U.S. committed 69 percent of federal outlays and 14 percent of GDP to defense.
• In 1968, the U.S. invested 46 percent of federal outlays and 9 percent of GDP in defense.
• In 1984, the U.S. spent 26.7 percent of federal outlays and 5.8 percent of GDP on defense.

Today, we invest just 3.1 percent of GDP—and 15 percent of the federal outlays—in defense. These percentages offer some perspective on the Pentagon’s FY2020 $738-billion budget allocation.

If China and Russia continue to edge the world toward Cold War 2.0, perhaps it’s time for Congress and the White House to contemplate shifting defense outlays back up to Cold War levels. Before scoffing at this, consider the realities.

China is claiming control over international airspace and waterways, turning coral reefs into instant islands to bolster its claims, and fielding a power-projecting military. China’s military spending has mushroomed 164 percent since 2008. On the strength of this spending binge, China will soon deploy 73 attack submarines, 58 frigates, 34 destroyers, five ballistic-missile submarines and two aircraft carriers. The Pentagon reports China deploys more than 2,800 warplanes and has a bristling missile arsenal with “the capability to attack large ships, including aircraft carriers, in the Western Pacific.”

PRC leader Xi Jinping offers an ominous exclamation point to these numbers: “We must insist on using battle-ready standards in undertaking combat preparations, constantly enhancing officers’ and troops’ thinking about serving in battle, and leading troops into battle, and training troops for battle.”

Given the size and capabilities of America’s military, the balance of power would seem to favor America—until we consider that America’s military assets and security commitments are spread around the globe, while China’s are concentrated in its neighborhood.

In the past 12 years, Vladimir Putin’s Russia has waged cyberwar against NATO member Estonia; invaded and dismembered NATO aspirant Georgia; deployed missiles that violate the INF Treaty; invaded Ukraine and annexed Crimea; shot down a civilian airliner; hacked into Western political systems and used weaponized leaks to undermine democratic institutions; armed the Taliban in Afghanistan; remilitarized its Arctic facilities; and increased military outlays by 125 percent.

To be sure, Putin’s military is a shell of the Red Army. But Putin is using his army to threaten NATO, destabilize U.S. allies and undermine the settled outcomes of Cold War 1.0.

If we are in the midst of Cold War 2.0—and it seems we are—it’s worth noting that during Cold War 1.0 we never invested less than 4.7 percent of GDP in defense.

Reversals

In 1953, President Dwight Eisenhower worried about spending too much on defense. “Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, [is] a theft from those who hunger and are not fed, those who are cold and are not clothed,” he said.

At the time, Washington was diverting more than 60 percent of the federal budget—and 14 percent of GDP—into defense. In that light, Eisenhower’s concerns about out-of-control military spending make sense. But today, Washington is doing the reverse of what Eisenhower worried about: squeezing the Pentagon to pay for a growing smorgasbord of domestic programs.

Just look at what drove sequestration. Even though the Pentagon accounted for 17 percent of federal spending at the time sequestration came into force, it was ordered to cough up half the savings mandated by sequestration, which led Sen. Angus King to point out something too many policymakers overlook: “The growth in the budget right now is in mandatory programs, and particularly in health care costs: Medicare, Medicaid, Children’s Health Program. That’s what’s driving the federal deficit... not defense.”

The Foreign Policy Initiative detailed this dramatic shift in the federal budget by outlining how Medicare, Medicaid and Social Security accounted for about half of federal spending by 2015 (up from 40 percent in 2009 and 26 percent in 1974), while Defense accounted for 17 percent of federal spending by 2015 (down from 21 percent in 2009 and 30 percent in 1974).

In short, domestic programs are consuming ever more of the nation’s tax dollars, while the Pentagon’s piece of the pie continues to shrink. Without a course correction, things are going to get worse, as an avalanche of new debt starts to bear down on us.

In 2010, a bipartisan federal commission appointed by President Barack Obama offered a roadmap that will lead us toward a more sustainable economic future. The so-called “Simpson-Bowles Commission” called for creating a special committee empowered to trim 2 percent from discretionary spending annually; eliminating tax loopholes and broadening the tax base; cutting congressional and White House budgets; freezing pay for Members of Congress and other civilian federal employees; reducing the federal workforce through attrition; ending Medicare-Medicaid dual eligibility; updating the way civil-service pensions are calculated; and gradually increasing the Social Security retirement age by indexing it to life-expectancy. This plan would shrink the deficit; keep federal spending at or below the historical average of 21 percent of GDP; ensure long-term solvency for Social Security; and steadily reduce the debt to 40 percent of GDP. It would also ensure that we have the resources needed to defend our nation and deter our enemies. But Obama never endorsed the commission’s recommendations, and Congress never acted on them.

Defense shouldn’t be used as a piggybank for other programs, and the American people must remember there can be no Social Security without national security.