But adversaries are well aware of the United States’ overwhelming advantage in the middle and are instead moving to either end of the spectrum: irregular warfare on one end and high-end, asymmetric warfare on the other. The challenge for DoD, as it was for GM, is that the competition is adapting faster than it can keep up.

A telling example is the Marine Corps’ Expeditionary Fighting Vehicle (EFV), an amphibious vehicle designed to move Marines from ship to shore and then, once on land, to serve as a ground combat vehicle. In a high-end conflict against a sophisticated adversary, the ships launching the EFV from sea would likely not be able to get the EFV within range of the shoreline because they would be vulnerable to attack by anti-ship missiles, rendering the EFV useless. On land, the vehicle’s flat bottom is vulnerable to roadside bombs, making it unsuitable for irregular warfare as well.

Moreover, just as the slowing economy complicated GM’s efforts to revitalize its business, the state of the overall federal budget will prevent DoD from spending its  way out of these problems. Deficits are at record levels, and OMB projects that interest payments will rise at a real rate of 13% annually over the next ten years. If these trends continue, by 2018 interest payments on the national debt ($725 billion) will exceed total national defense spending ($698 billion) for the first time in modern history. President Obama’s plan for the base defense budget slows growth over the coming years, but it nevertheless puts him on track to spend more on defense in a single four-year term than any other president since World War II, adjusting for inflation. The combination of record deficits, soaring interest payments, and an already high level of defense spending makes any significant increase in the defense budget unlikely.

As a result, the Department of Defense must make some difficult decisions. If the overall defense budget remains relatively flat over the coming years, continued increases in personnel-related costs will crowd out funding for acquisitions.