“How realistic do we think it is that the defense budget will have taken a sudden drop in 2013 and then suddenly rise back up in 2014, and somehow these budget caps will magically go away? It just doesn’t seem very likely,” he said. “If you look back at defense spending, at least since the end of World War II, I cannot find a single instance where the budget did something like that, where the base budget dropped 10 percent in one year and then suddenly rose by 10 percent the next year. It just doesn’t happen.”
Harrison said it’s time now for DoD to see the handwriting on the wall and start taking actions to reduce it structural cost growth so in can accommodate what he sees as inevitably lower future budgets. He pointed to three spending categories: military personnel, infrastructure costs and civilian personnel salaries.
With regard to civilian personnel, most of whom are paid with O&M funds, the Pentagon already has more workers than it can afford in the current year under sequestration, so it plans to furlough virtually all of them for approximately 14 work days beginning in June.
“But once we start the new fiscal year on Oct. 1, you’ve still got the same number of civilian personnel on the payroll. If we’re going to stay at those lower budget caps, that’s not affordable. They’re going to have to downsize the force, and it’s time to start planning now,” he said. “That takes time. It’s not the kind of thing you can wait until the start of the fiscal year for. I think it’s something they need to start planning for right now and make some smart, targeted reductions in the civilian workforce to get ahead of this curve.”
DoD would need to cut civilian workforce by 100,000
DoD’s civilian workforce has grown by about 100,000 people over the past decade, and Harrison’s ballpark estimate says the department would need to reduce its headcount by roughly that same number in order to bring its operation and maintenance budget in balance with other needs under the 10-year budget caps.
The department is already undergoing a de facto civilian downsizing by virtue of a hiring freeze that’s been in effect since January, foregoing most of the approximately 1,500-2,000 new hires it brings aboard in a typical week. But that’s not the most elegant way to trim the workforce.
“The problem with a hiring freeze, on top of a pay freeze, on top of a pay cut that everybody’s already taking because of the furloughs, is that they’re not targeted reductions across the force. They’re self-selected reductions. The worst way to downsize your workforce is to put people through something painful and then see who leaves voluntarily,” he said. “The people who are going to leave voluntarily are the people who are more likely to be highly skilled and can find work more easily outside of government. Those are probably the kind of people you want to keep. The people you’re left with are more likely going to be people who don’t think they have good prospects outside the department, or who are close to retirement eligibility and don’t want to lose their benefits by leaving early.”
For military personnel, CSBA’s projections on the crowding out of the budget assume that DoD will not cut end strength any further than it already proposed in last year’s budget, but realistically, Harrison said the military side of the manpower equation will have to shrink as well. But he said it’s vital for DoD to take steps right away to begin to slow the trajectory of the year-over-year increases in the costs it incurs for each uniformed service member.
Ten years ago, DoD spent an average of $70,000 per year on pay and benefits for each soldier, sailor, airman or marine, not counting the cost of benefits paid through other agencies, like education and health programs funded through the Department of Veterans Affairs or tax benefits handled by Treasury. Today, according to CSBA, that number is $110,000, and still growing.