Defense Spending No Longer Exempt from Scrutiny

There's been a lot of discussion over the past few weeks about spending in the Defense Department, following speeches made by Secretary Robert Gates in Maryland and Kansas on the need to rein in defense spending. Secretary Gates has taken aim at spending on Navy vessels and overhead, operating, and military health care costs, arguing for the need to transfer savings directly to the U.S. fighting force. It is very encouraging to hear from a top government military official that even defense spending should not be absolved from doing its fair share in efforts to reduce federal spending. (Check out CRFB's new Budget Simulator to choose among several possible reductions in defense spending yourself.)

Gates argued that all military spending "should expect closer, harsher scrutiny." He specifically mentioned that even spending on health care for military families and veterans needs to be evaluated, since the military health care system has not increased premiums for 15 years, despite the fact that the program's costs have more than doubled to over $50 billion in the past decade.

Defense spending has averaged roughly 21 percent of the budget since 1980, and reached a 17-year high of $669 billion in 2009. It could rise to as much as $682 billion this year. Federal spending levels on defense are second only to Social Security, but only since 1993 -- before which defense spending held the number one slot. Under proposals set forth in the President's FY 2011 Budget, defense spending would peak in 2011 at about $734 billion before falling to $667 by 2014 only to increase to $749 billion by the end of the decade, according to CBO.

Under current plans, the Defense Department expects to decrease troop levels in Iraq while increasing them in Afghanistan over the next several years. However, the savings from a rapid withdrawl from Iraq differ markedly than those of a gradual withdrawl. In the Budget and Economic Outlook and Estimate of the President's Budget, CBO has illustrated what future defense spending might look like under several scenarios:

Projected Defense Spending under Various Scenarios (billions)
  2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Baseline: Grows with Inflation $690 $701 $696 $705 $716 $730 $749 $761 $773 $795 $813
Troops Deloyed in Iraq/Afghanistan Decrease to 30,000 by 2013 $690 $699 $664 $638 $624 $624 $636 $643 $652 $671 $687
Troops Deloyed in Iraq/Afghanistan Decrease to 60,000 by 2015 $698 $721 $717 $703 $680 $664 $665 $666 $673 $692 $707
President's FY2011 Budget $698 $734 $695 $669 $667 $680 $699 $713 $726 $749 $769

Under current scenarios, the lowest yearly spending on defense that we could reach would be $624 billion in 2014, assuming that there is a rapid withdrawl of troops from Iraq and that no new fighting forces will be needed in other arenas. We need to be better.

In order to stabilize the debt at a reasonable level, all parts of the budget will have to be on the table. Recent calls to restrict government spending and cap discretionary outlays have exempted the defense budget. Calls like these from Secretary Gates are right on line - the defense budget will also have to "accept some hard fiscal realities" and will have to share, as other areas of the budget will have to do, in the efforts to reduce future deficits.

See our previous post on Tricare spending here, illustrating some of the tough choices we will all have to consider.