As sequestration looks more likely by the day, the Defense Department faces the challenge of a new fiscal reality. After more than a decade of increasing budgets, the Pentagon has been slow to react. Its five-year budget plan, released last February, planned for continued growth — despite calls from both parties to cut federal spending and the deficit.
The Pentagon’s new 2013 budget plan would bring the base defense budget down only slightly from its current $530 billion level and hold it relatively flat in future years. Sequestration, by comparison, would reduce the 2013 defense budget to about $472 billion — roughly the same as 2007 spending, adjusted for inflation.
This new fiscal reality will require hard choices. The department will have to rethink its roles and missions, adjust its strategy and target budget cuts accordingly.
But even if cuts are targeted and informed by strategy, the timing of sequestration and the abruptness with which cuts must be implemented further constrain DoD’s options. It takes time to reduce personnel costs, close bases and implement efficiencies — many of which will likely prove ephemeral. This means that weapon systems funding could be hit hardest — which could adversely affect the defense industrial base and, ultimately, jobs.
But the hardest choices may not be what to cut but what to keep. Washington cannot, and should not, protect all sectors of the domestic defense industry, nor can it assume that the defense industry will always be ready to produce whatever national security requires.
As for-profit companies, defense firms cannot afford to maintain a broad range of weapon design and production capabilities if there is no funding. In 1997, for example, the British navy wanted to develop a new class of nuclear attack submarine, only to find that the British defense industrial base no longer had the necessary design or production skills. Fortunately, the Royal Navy could turn to a U.S. firm for the lost expertise. But if the Pentagon finds itself in a similar situation, to whom would it turn?
Given that some industrial sectors could be lost, the Pentagon must develop a long-term strategy that identifies what capabilities are critical to a healthy and adaptable defense industrial base. In an era of fiscal austerity, this is not easy.
From tanks and aircraft carriers to unmanned aerial vehicles and reconnaissance satellites, it is easy to identify several dozen sectors that will likely be deemed critical by some military or congressional constituency. But strategy is about choice — and sustaining every current sector would not only be unaffordable, it would be no strategy at all. The demands of strategic choice suggest that the number of broad industrial sectors the Pentagon can preserve by preferential investing cannot be more than a handful.