Defense Cuts Must Be Part of Fiscal Solution, Secretary Says

WASHINGTON, May 24, 2011 — Cur­tail­ing defense spend­ing must be part of the solu­tion for the nation’s finan­cial woes, Defense Sec­re­tary Robert M. Gates said here today.
Gates told an audi­ence at the Amer­i­can Enter­prise Insti­tute that the Unit­ed States faces a seri­ous fis­cal predica­ment that, if not addressed soon, could become a cri­sis affect­ing the nation’s cred­it, con­fi­dence and posi­tion in the world.

Pres­i­dent Barack Oba­ma has set a goal of hold­ing growth in base nation­al secu­ri­ty spend­ing slight­ly below infla­tion for the next 12 years. That would save about $400 bil­lion, the pre­pon­der­ance of which would come from the Defense Depart­ment, the sec­re­tary said. 

“I have long believed — and I still do — that the defense bud­get, how­ev­er large it may be, is not the cause of this country’s fis­cal woes,” Gates said. “How­ev­er, as mat­ter of sim­ple arith­metic and polit­i­cal real­i­ty, the Depart­ment of Defense must be at least part of the solution.” 

The sec­re­tary said he under­stands those who believe that the only rea­son the nation faces tough choic­es in defense spend­ing is that the Pentagon’s bud­get isn’t as large as it should be. He not­ed that it is a much small­er per­cent­age of the nation’s gross domes­tic prod­uct — the out­put of goods and ser­vices pro­duced in the Unit­ed States – than it used to be. 

“Defense expen­di­tures are cur­rent­ly a low­er share of GDP than most of the last half cen­tu­ry, and a much low­er per­cent­age than dur­ing pre­vi­ous major wars,” the sec­re­tary said. “When Pres­i­dent [Dwight D.] Eisen­how­er warned of the ‘Mil­i­tary Indus­tri­al Com­plex’ in 1961, defense con­sumed more than half the fed­er­al bud­get, and the por­tion of the nation’s eco­nom­ic out­put devot­ed to the mil­i­tary was about 9 percent. 

“By com­par­i­son,” Gates con­tin­ued, “this year’s base defense bud­get of $530 bil­lion – the high­est since World War II adjust­ed for infla­tion – rep­re­sents less than 15 per­cent of all fed­er­al spend­ing and equates to rough­ly 3 and a half per­cent of GDP – a num­ber that climbs to about 4 and a half per­cent when the war costs in Iraq and Afghanistan are includ­ed.” Still, Gates said, he does­n’t fore­see a return of defense spend­ing to lev­els sparked by the Sovi­et threat in the sec­ond half of the 20th century. 

“Absent a cat­a­stroph­ic inter­na­tion­al con­flict or new exis­ten­tial threat, we are not like­ly to return to Cold War lev­els of defense expen­di­tures, at least as a share of nation­al wealth any­time soon,” he said. “Nor do I believe we need to.” 

The threats and poten­tial adver­saries the nation faces today are dan­ger­ous and daunt­ing for their com­plex­i­ty, vari­ety and unpre­dictabil­i­ty, Gates said. “But as a mat­ter of nation­al sur­vival,” he added, “they do not approach the scale of the Sovi­et mil­i­tary threat that pro­vid­ed the polit­i­cal and strate­gic ratio­nale for defense expen­di­tures that con­sumed a sig­nif­i­cant por­tion of our economy.” 

Anoth­er rea­son why Cold War-lev­el defense bud­gets prob­a­bly won’t return — at least as a share of GDP – is that the nation’s finan­cial con­di­tion has changed, whether mea­sured in the size of debt and deficits, ratios of retirees to work­ers, or the share of the fed­er­al bud­get con­sumed by entitlements. 

“The mon­ey and polit­i­cal sup­port sim­ply aren’t there,” he said. 

Gates detailed efforts over the last two years to rein in Pen­ta­gon over­head costs and imple­ment oth­er effi­cien­cies, and he said more needs to be done in that regard. 

“I believe there are more sav­ings pos­si­ble by culling more over­head and bet­ter account­ing for, and thus bet­ter man­ag­ing, the funds and peo­ple we have,” he said. “But one thing is quite clear: these effi­cien­cies efforts will not come close to meet­ing the bud­get tar­gets laid out by the pres­i­dent, much less oth­er, high­er tar­gets being bandied about.” 

Still, he said, per­spec­tive is important. 

“What’s being pro­posed by the pres­i­dent is noth­ing close to the dra­mat­ic cuts of the past,” he said. “For exam­ple, defense spend­ing in con­stant dol­lars declined by rough­ly a third between 1985 and 1998. What’s being con­sid­ered today, assum­ing all $400 bil­lion comes from DOD over 12 years, cor­re­sponds to a pro­ject­ed reduc­tion of about 5 per­cent in con­stant dol­lars – or slight­ly less than keep­ing pace with inflation. 

“Nonethe­less,” he added, “meet­ing this sav­ings tar­get will require real cuts – giv­en the esca­lat­ing costs of so many parts of the defense bud­get – and, as a result, real choices.” 

U.S. Depart­ment of Defense
Office of the Assis­tant Sec­re­tary of Defense (Pub­lic Affairs) 

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