Gates Aims to Find $100 Billion in Savings Over Five Years

The Department of Defense recently announced that it will aim to cut over $100 billion from existing programs over the 2012-2016 period in order to redirect savings to maintaining and building the force's warfighting capabilities, according to a department news article. We're glad to see Defense officials cracking down on unnecessary and less effective spending in the Defense budget, but we were also hoping that some of the savings would also be used to actually bring down total defense spending.

Deputy Secretary of Defense William Lynn made it clear that these proposed savings are "not an attempt to reduce the defense budget, or top-line." Shucks.

According to Lynn, the Defense Department needs 2 to 3 percent in real growth each year to update technology, recapitalize and modernize, and give troops what they need. Beginning in 2012, the department expects just 1 percent growth for five years. To ensure that top-line defense spending doesn't increase to cover the gap, Defense officials are searching for savings.

In a release Friday, Secretary Gates argued that:

"To sustain necessary investment levels for Department of Defense mission essential activities, we must significantly improve the effectiveness and efficiency of our business operations. Doing so will increase funding available for our mission functions from efficiency savings in overhead, support and non-mission areas."

Adding more specifics to where the dictated savings will be redirected, the release also stated that:

"The services will be able to keep savings within their budgets and at least two-thirds of the reductions should be transferred to produce increases in funding for personnel in units, other force structure costs, readiness, procurement and research development test and evaluation (RDT&E) accounts."

Here's where the proposed savings will come from:

(Billions of Dollars) FY2012 FY2013 FY2014 FY2015 FY2016 Total
Army $2 $3 $5.3 $8 $10 $28.3
Navy $2 $3 $5.3 $8 $10 $28.3
Air Force $2 $3 $5.3 $8 $10 $28.3
Defense Agency/Field Activity Goal $1 $2 $3 $4 $7 $17
Total $7 $11 $18.9 $28 $37 $101.9
Memorandum: Department of Defense Budget $566 $582 $598 $616 $635 $2,997

The savings required each year will grow from just $7 billion in 2012 to $37 billion in 2016, calling for equal savings in overhead and unnecessary costs from the Army, Navy, and Air Force.

CRFB believes that Secretary Gates's proposal to identify savings is good for three reasons--well, maybe two and a half. First, it's great that the Defense Department and all of its agencies will be working to cut back on low-priority and unnecessary spending to be able to fully fund higher priorities. (In doing so, the Defense Department will also be showing us, and the President's Fiscal Commission, which programs aren't high on the priority list and are prime-for-the-cutting.)

The proposal is also fiscally beneficial because saving $100 billion will almost certainly prevent any top-line increases, or requests for increases, for the Defense budget. Although this won't make our deficits any better, it shouldn't make them any worse.

But, unfortunately, not making our fiscal hole any deeper just simply won't be enough. We have to eventually climb out. Identifying defense savings and reduction for the purpose of deficit reduction should also be part of this proposal, and any future proposals. 

See our previous post on Secretary Gates's statements on the need to reduce defense spending.