Gates Outlines $178 Billion in Savings and Efficiencies over Five Years

Defense Secretary Robert Gates announced today the specifics for how the Defense Department will reduce spending by $178 over the next five years compared to its 5-year defense plan released last year, above the original $100 billion target that Secretary Gates announced in June. The extra $78 billion in recommended savings is a welcome step from the Administration, and we hope they continue searching for savings in not only the Defense Department but throughout the federal budget.

The savings would be realized over the FY 2012-2016 period. The original $100 billion in savings will be identified through changes such as reducing service contractors by 10 percent a year for three years, freezing the number of certain command and senior civilian positions for a few years, considering consolidations of bases and facilities where appropriate, and consolidating the Department's IT systems to realize economies of scale, among other changes. See the full details here.

The additional $78 billion will stem from cuts to weapons systems and troop level changes. Identified cuts include the Marine Expeditionary Fighting Vehicle (a cut that has been embraced by several independent defense reports), the Slamraam missile, delayed production of the Marine F-35 jet, and small reductions in the size of the active duty members of the Army and Marine Corp starting in FY 2015.

(Numbers in Billions) Actual FY 2009 Actual FY 2010 FY 2011 FY 2012
DOD Base Budget (President's FY 2011 Budget) $513 $531 $549 $566
DOD Base Budget (2010 CR)     $531 (first half of year)  
DOD Base Budget (Revised Proposal) $513 $531 >$531 $553
Savings $0 $0 <$18 $13

Note: Base budget excludes costs of wars.

Secretary Gates also noted that he does not want to continue the rest of FY 2011 at FY 2010 levels, as under the current CR until it expires in March. Gates also stated in his speech that proposed FY 2012 spending levels are now $553 billion -- down $13 billion from last year's proposal for 2012 in the 2011 budget. But this $13 billion in savings will just be the beginning as savings build up on each other through 2016.

The additional $78 billion in cuts was absolutely a welcomed bit of news. However, DOD still intends to direct the $100 billion in savings from improved efficiencies toward other priorities within DOD instead of toward deficit reduction. While preventing topline defense spending from swelling in coming years is important, it is even more critical to actually reduce spending throughout the budget. Several independent groups and commissions -- including the Sustainable Defense Task Force (SDTF), the Fiscal Commission, and the Debt Reduction Task Force -- have called for defense cuts totaling in the hundreds of billions over the coming decade. Defense experts on the SDTF recommended nearly $1 trillion in defense cuts this decade "without compromising the essential security of the United States” and, for many recommended cuts, “without any arguable impact on our national security.”

Secretary Gates should be commended for identifying efficiencies and significant budgetary savings. There is growing consensus that defense spending should not be off the table in considering our debt reduction options. The savings targeted today will contribute significantly to the discussion.