July 10, 2017
You Can’t Call the Cavalry on Two Percent
Ein kleines Gedankenexperiment on the consequences of spending targets
By James Hasik
In 2016, the US GDP was $18.56 trillion. Two percent of that amount is $371 billion. In context, the Pentagon estimates that China, arguably America’s biggest adversary, spent about $180 billion on its armed forces in 2015. The Trump Administration's 2018 multi-agency defense budget request was for $668 billion, or about 3.7 percent of trailing US GDP. As seems customary, the House and Senate Appropriations Committees have recommended more: $704 billion and $708 billion respectively. Thus, that two percent of US GDP would have represented about $297 billion less than the House’s figure—fully 47 percent less. Ponder that: what NATO asks of its member states, when applied to the United States, is slightly more than half what the Congress will likely approve.
The last time that American military spending was that low in nominal terms was 2002: $362 billion, excluding the supplemental funding for the Afghan War. Up until that point, Defense Secretary Rumsfeld had been contemplating cutting the US Army’s field forces to pay for further investment in his preferred priorities in missile defense and long-range strike. Since then, spending power has been dented modestly by mild inflation, and alarmingly by constant overseas deployments of kit that is only expensively maintained, but whose firepower has been far in excess of what is required to kill guerrillas. Fifteen years of continuous pay increases for the troops have also limited what’s available for either maintenance or recapitalization. In short, $371 billion would not purchase quite what $362 billion purchased fifteen years ago.
So what might two percent actually look like? Perhaps the Defense Department really could extract those excess back office costs that McKinsey & Company identified a few years ago for the Defense Business Board. While a figure of $125 billion is often bandied about in the press, the DBB called that a five-year sum. The actual target from McK was for a reduction from $134 billion in 2015 to $113 billion in 2020, so call that $21 billion annually into the future. Regardless of the base, $21 billion is about 7 percent of that gap between today’s US military spending and military spending at NATO’s two percent target. It’s not even close.
But whatever the feasibility, bank that, and then contemplate going long on the Rummy Option. Forgoing the entire US Army would close about $125 billion of that gap. Of course, that would throw out all the common support that the US Army provides the other services, and all of North American missile defense. But according to Article Five, each party to the North Atlantic Treaty only agrees to respond to attacks “by taking forthwith, individually and in concert with the other Parties, such action as it deems necessary.” If Warsaw or Berlin were threatened, perhaps America could send the fleet to secure the Atlantic, and just pull an Aegis destroyer closer to Washington. German Defense Minister von Der Leyen has been no fan of the two-percent target, but in such a case, even she might ask for a few more panzer divisions.
And yet, this would still leave another $151 billion to find! Remember that back in 2001, when the Bush Administration arrived in town, to “skip a generation of weapons” was a fetching idea. Plenty of the Pentagon's practices and spending plans looked really unsustainable without large spending increases. For example, on more than $700 billion annually, the higher sortie rates and higher costs of the Ford-class aircraft carriers are a debatable advantage. On less than $400 billion annually, the choice might be clearer. Any discussion of the Joint Strike Fighter program would be a whole other talk show.
Then there’s America's global policing, recently championed in the book The Will to Lead (Harper Collins, 2016), by former NATO Secretary General Anders Fogh Rasmussen. Juxtaposed against his earlier work From Social State to Minimal State (Samleren, 1993), that thinking might lead his countrymen to a strategy of “other people’s money.” A great deal of the roughly $200 billion the Pentagon spends on operations and maintenance every year disproportionately flows to support air and naval forces recurrently deployed to the Middle East and the Far East. Perhaps, as I have wondered, the US Navy can figure out how to keep watch with those new robo-frigates DARPA is building. Perhaps, as Admiral Mike Mullen said in 2005, “virtual presence is actual absence.” Five years later, though, the admiral would say that the national debt was the greatest threat to national security. Forget China: for further context, note that the federal budget deficit last year was about $550 billion, or most of what the Pentagon will spend this year. After the near-doubling of federal debt under the Obama Administration, it is now most clear that the party needs to end. Something will need to give, and not just in military spending, but in that two-thirds of the budget which the government calls “mandatory”.
Overall, my friends at the Cato Institute might say that the United States is spending too much on its armed forces, and that case can be made. For while there's a chorus around Washington resounding about how the proposed increases are yet too little, that echo chamber largely lacks a serious explanation of how America’s better than three-to-one financial advantage isn’t enough. Fairly, there’s an argument to be made that when allies free-ride, subsidizing their laxity remains in the national interest. And most fundamentally, bald-faced threats are emanating from the far side of the Pacific, and the annual increases in Chinese military spending have been large and recurring. Irrespective of the Trump Administration’s commitment to building a 355-ship navy, the United States really may be in no position to reduce its spending on warships and long-range aviation.
Perhaps, as I suggested above, the Pentagon could find ways to so thoroughly reengineer its force structures and deployment practices that it could deter or defeat all comers from sea to space on half the spending. That would still leave little room for huffiness from allies about the Trump Administration’s perceived lack of commitment to European defense. European and Canadian commitment to American defense will be long remembered in the dispatch of AWACS aircraft in 2001, and the subsequent long sacrifices of troops in Afghanistan. At the moment, though, the threat of invasion from beyond the Americas is essentially zero, and any actual landward threats to the United States can probably be rounded up by the Texas Rangers. In a two-percent world, American plans against landward threats to Poland might be limited to aircraft, cruise missiles, and marines. For if the US government proportionately spent what European governments spent, there would be no cavalry riding to the rescue.
James Hasik is a senior fellow at the Brent Scowcroft Center on International Security.