How to determine the right amount for defense

As the debate over sequestration rages on, a thematically broader dispute – an inevitable result of the former – has also erupted: what is the necessary amount of funding for defense, and how should it be determined? How to know whether a proposed defense budget topline is adequate or not?

Grover Norquist and other defense cutters want the defense budget to be cut down to an arbitrary amount and be forced to make tough, even disastrous, choices. Mitt Romney wants to tie defense spending to GDP by pegging it at 4% of America’s economy. Others have given other figures. Whose figures and methodology are right?

For the answer, we should look to the Reagan Administration, which employed the best possible methodology to determine the correct size of the defense budget.

The Reagan Administration never set the defense budget’s size at any arbitrary number – high or low – whether in dollar terms or as a %age of GDP. Instead, it conducted a holistic review of America’s defense needs every year.

Here’s how it worked: every year, ahead of the budget’s drafting, the generals and the leaders of the intel community sat down and, one by one, assessed the capabilities and intentions of America’s potential adversaries. They then determined what was needed to counter enemies’ capabilities. Then, they compared what was needed to the military’s structure and what it already had in its toolbox. If anything (new capabilities or an adequate number of troops or weapons) was lacking, they added it to next year’s budget request. If maintaining the present force size or inventory of weapons was deemed needed, that was designated as a need.

Then, all the needed units, troops, weapons, and programs were added together into an integrated whole and officially called for in the Program Objective Memorandum (POM), the basis for all budgetary work. The costs of all programs listed in the POM (i.e. deemed necessary) were calculated and summed up. That was the defense budget request for the next FY.

Jed Babbin, who served in the DOD in the 1980s and was later an Assistant SECDEF under the elder President Bush, recalls it as follows:

“Back in the good old days (1981-1988) we had something called “defense guidance,” which was the basis for something else called the “POM.” The annual defense guidance process combined the best thinkers from the intelligence community and the military. They’d sit down and — one by one — assess our adversaries’ intentions and capabilities.

Once that assessment was done, they would analyze what we needed to have in the military tool box to deter or defeat the threats and compare it to what we already had or we’d already planned. They would propose to retire outdated weapons, resize and reshape our forces, and then come up with an outline of what we needed to pay for and invest in to ensure the threats were answered. That was the defense guidance for the year.

At that point, the Pentagon’s bean counters would turn it into the “program objective memorandum” — the sacred “POM” — from which the Pentagon’s budget would be derived. It sounds simple, but defense guidance was an enormously complex intellectual exercise.

Until we perform that process again, we can’t know what our military forces need to be able to do to answer the many threats we face. Obama is leading us down a blind alley, and the only certainty is that what we will have — in ten or twenty years — won’t be what we need.

That gap in capabilities will, inevitably, be filled. Either with a properly-designed force, or with the bodies of those serving in one that was designed to fit a budget cut rather than the threats.”

President Reagan himself explained that the process was done as follows:

“What seems to have been lost in all this debate is the simple truth of how a defense budget is arrived at. It isn’t done by deciding to spend a certain number of dollars. Those loud voices that are occasionally heard charging that the government is trying to solve a security problem by throwing money at it are nothing more than noise based on ignorance. We start by considering what must be done to maintain peace and review all the possible threats against our security. Then a strategy for strengthening peace and defending against those threats must be agreed upon. And, finally, our defense establishment must be evaluated to see what is necessary to protect against any or all of the potential threats. The cost of achieving these ends is totaled up, and the result is the budget for national defense.”

And that is how the defense topline, and the defense budget’s content, should be determined today. The DOD and the intel community first need to identify all threats to America, its national interests, and its allies. Then, they need to determine what weapons, units, and capabilities are needed (and in what quantity) to deter them. Then, they need to compare that to the military’s current size, structure, inventory, capabilities, training, and doctrine. Then, they need to identify any changes that need to be made – any additions of new weapons or capabilities or increases of the quantity of existing ones. Then, the cost of all of this needs to be summed up, and that should be the defense budget topline.

Unfortunately, that is not how the defense budget is determined these days. The Obama Administration has targeted it for deep cuts on its first day in office. In FY2010, over 30 crucial weapon programs were closed solely to satisfy budget cut diktats from the OMB. The first tier of the BCA mandates another $487 bn in cuts – which are forcing the DOD to make stupid decisions, e.g. retiring 7 Navy cruisers which have 20 years of service life left – prematurely, and the sequestration mechanism of the BCA would mandate another $550 bn in cuts, down to just $469 bn in FY2013 and $493 bn in FY2022 at the end of what would be “the sequestration decade” – totally inadequate budget toplines.

It is for that reason that the 2012 Republican Platform says (and rightly so) that:

“We must immediately employ a new blueprint for a National Military Strategy that is based on an informed and validated assessment of the potential threats we face, one that restores as a principal objective the deterrence using the full spectrum of our military capabilities.”

THAT is the right way to budget for defense.

Interestingly, some supporters of deep defense cuts, such as Grover Norquist, have, on one occasion, claimed that they, too, support such a review-based way of budgeting for defense. But even if they’re sincere about that (Norquist has contradicted that remark with demands of arbitrary budget caps),


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