Funding for the wars in Afghanistan and Iraq totals $159.3 billion in the FY 2011 request. The budget request continues the trend of declining funding for Iraq, as troops levels there subside, and increasing funding for Afghanistan. The budget request does not include a projection for war costs in future years. Instead, it includes “allowances” of $50 billion per year for FY 2012 to FY 2015, the same amount that was used in the FY 2010 budget request as a placeholder for future war funding.
The future cost of the wars depends on a number of external factors that cannot be known in advance, such as operational tempo, fuel prices, and the number and composition of forces deployed in future years. While the cost of each conflict depends on many variables, previous analysis by CSBA has demonstrated a strong correlation between the number of troops deployed and the total annual cost. Based on the most current information on troop levels and costs, the annual cost per troop since FY 2005 has averaged $1.2 million in Afghanistan and $0.69 million in Iraq, in constant-year FY 2011 dollars.
The trends in the defense budget outlined here, particularly growth in military personnel costs and the historically low ratio of procurement to RDT&E funding, are cause for concern. If these trends are not reversed, it will not be possible for the Department to maintain its current force structure and capabilities without significant increases in funding above the current level. Secretary Gates has made preserving the force structure a top priority, and as part of his efficiencies initiative has directed the Department to find savings in other parts of the budget that could be directed to force structure and acquisitions. However, efficiencies alone are not likely to result in the magnitude of savings required.
The largest source of savings proposed is to reduce spending on support contractors by 30 percent over the next three years. According to Congressional Research Service estimates, this could generate savings of $3.6 billion annually once it is fully implemented. Smaller cuts include the elimination of Networks and Information Integration (NII), J6, Business Transformation Agency (BTA), and Joint Forces Command (JFCOM). While these eliminations appear to be justified,the total savings achieved will depend greatly on how they are implemented. If these organizations are eliminated without corresponding reductions in the headcount of military personnel, DoD civilians, and support contractors, the savings will be limited. The initiatives announced by the Department so far are a step in the right direction, but they do not address some of the fundamental issues that plague the defense budget, such as the rising cost of military healthcare.
To its credit, the Department has made specific,targeted cuts to programs and activities it has deemed to be a lower priority. This is a sound approach, and if applied to the rest of the defense budget it is one that will ultimately make the military more efficient and effective in the long run. The alternative is to simply spread the cuts around evenly throughout the Department. The risk with this approach is that it does not prioritize programs and activities within the budget and could result in a military that looks and operates much like the one we have today, but is smaller and less capable.
The challenge for policy makers in such a constrained budget environment is to adequately fund for the support and modernization of our national defense capabilities without spending one dollar more than is necessary. Rooting out waste, inefficiency,and low-priority activities within the defense budget is a difficult and delicate task. In some cases, it will mean lost jobs. In other cases, it will require taking on vested interests both within the Pentagon and outside the building. While the prospect of a flat or declining defense budget may seem like a daunting challenge, particularly while the nation is still engaged in two ongoing wars and unemployment is over 9 percent, it should also be viewed as an opportunity. It can provide both the fiscal and political imperative to jettison programs and activities that are no longer needed—budget artifacts from a bygone era—and focus more effectively on the capabilities needed to deter, fight, and win wars in the future