Harrison and Gunzinger acknowledged that the exercise was conducted against some unrealistic assumptions, such as the idea that Pentagon spending can be divorced from politics. Strategy-based budgeting would be easy if Congress didn’t exist.

But Harrison insisted that the Pentagon should start setting priorities sooner, rather than later, because cuts are looming, regardless of what happens with the sequestration mandate.

From 1999 to 2011, annual U.S. defense spending increased from $360 billion to $537 billion in constant dollars, not including an additional $1.3 trillion spent on operations in Afghanistan and Iraq. The Obama administration and Congress have already agreed to halt further increases over the next decade by a total of nearly $487 billion. In January 2013, sequestration could trigger another $472 billion in total reductions over the same period.

“This means that serious belt-tightening is coming — a process that will be made even more difficult thanks to increasing manpower costs and the decline of the country’s European allies,” wrote CSBA President Andrew Krepinevich, in a recent study.

“Strategy is about setting priorities, and not everything can be a top priority,” he said. “U.S. forces are simply too expensive to be committed in large numbers to the defense of peripheral interests.”

Where possible, Krepinevich suggested, the United States should “use its resources in ways that impose disproportionate costs on its rivals” such as spy planes, stealth aircraft and advanced cyberweapons.

“One key resource currently being squandered by the Pentagon is time,” he said. “For much of the last 20 years, a relatively stable international order and generous budgets have enabled the United States to avoid making difficult choices about defense and strategy. Decisions were often dominated by the domestic politics of defense policy, parochial bureaucratic interests, and sheer inertia rather than rigorous planning. … Critical choices need to be made regarding the size and structure of the U.S. armed forces, their doctrine and equipment, and what are the most promising areas of future investment.”