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The Budget Caps and America’s Security Needs

by Peter Huessy

Income inequality cash moneyThe President’s Fiscal Year 2016 Budget makes a defense spending request that exceeds the Budget Control Act (BCA) spending cap for FY16 by $35 billion with a “base” defense spending request of $534 billion, while also asking Congress for an additional $51 billion for what is known as Overseas Contingency Operations(OCO) that are, under law, not subject to the spending caps.

Of the amount requested by the President, for what is known as the “base” defense budget, $209.8 billion is for operations and maintenance (O&M), $107.7 billion is for procurement, and $69.8 billion for research, development, test, and evaluation (RDT&E).The remaining costs (largely personnel) are exempt from any cuts.

For the OCO accounts, $40.2 billion is for O&M, and $7.3 billion is requested for procurement with half of that for the US Army.

With the defense budget request $35 billion above the BCA limits, Congress will need to decide if the budget caps should be eliminated or whether some very significant budget cuts will be forthcoming.

A trio of former U.S. Secretary’s of State– State George Schultz, Henry Kissinger and Madeleine Albright– testified recently before the Senate that America’s security is being seriously threatened by Russian and Chinese aggression as well growing Islamic terrorism, and that cutting significant funding from the Department of Defense (DOD) might end up jeopardizing our national security.

One area which has been targeted by defense spending critics has been the nuclear modernization accounts. Should the nuclear accounts be cut as some arms control enthusiasts have proposed? Or should Congress eliminate the spending caps, prioritize our defense spending, eliminate excess defense facilities and forces, but then provide the new funding needed for modernization of the remaining force including our nuclear accounts?

In short, a quid pro quo might be put on the table. The Congress concurs with DOD proposed cuts in unnecessary and wasteful spending, which the Department of Defense has previously identified in budget submissions to Congress going back many years but which Congress has been reluctant to approve,) and in return Congress approves much needed funding for modernization, including nuclear modernization.

The trade would commit the country over the next 5-10 years (the timeframe of most Congressional budget agreements to funding modernization while at the same time streamlining DOD forces, reform the DOD acquisition and personnel system, and as the new NDIA President Craig McKinley has proposed, adopt a national security strategy first and then support a budget that implements the strategy, not the other way around.

The defense budget caps obviously are inconsistent with the administration’s defense strategy as the administration’s defense budget request to Congress—required to implement that strategy–is $35 billion above the budget caps.

Some defense critics, as we mentioned, have proposed keeping the budget caps in place and cutting very significant portions of the defense “investments” in the budget including $75-$100 billion in nuclear modernization over the next decade.

Such cuts would come largely out of the $115.3 billion in overall annual DOD procurement and the $70 billion for RDT&E accounts. Combined, this pot of $185 billion for RDT&E and Procurement buys weapons and military equipment now (procurement) as well as developing future weapons technology (research and development).

First, are we spending too much on weapons?

Traditionally procurement has generally been a ratio of 2.1 to 1 compared to research (making weapons with better technology). That ratio is now 1.4 to 1, a reduction of one third in the historical ratio, an indication we are buying considerably less equipment than has previously been the case. That is reflected both in the number of weapons programs that have been eliminated—-including over 20 aircraft production lines– since 2009 as well as the $1.2 trillion in reduced DOD budget requests during that same period.

Second, given the Navy and USAF are modernizing our nuclear deterrent, are these two services “hogging” the defense budget? Actually, the USAF budget is only half of the overall defense budget compared to what it was at its post WWII peak (1958), and the Navy budget is some 22% below its peak percent of the defense budget (1948).

Third, are the “investment” requirements of the nuclear programs too high percent of overall DOD investment? Let’s take a look.

The annual nuclear platform related modernization accounts—RDT&E and Acquisition—comprise three pots of DOD funds. First, the $3.1 billion for the costs of the current planned 12 submarines of the US Navy Ohio Replacement Program and the now deployed 14 Navy Trident submarines. Second, $460 million for the Minuteman III intercontinental ballistic missile (ICBM) leg of the Triad consisting of 450 launch facilities (silos), 400 nuclear-tipped missiles and 50 launch control centers. And third, a placeholder $100 million annual investment in the nuclear bomber leg of the Triad, understanding that the nuclear portion of the new dual conventional-nuclear bomber investment is roughly 1.5% over the life of the new bomber’s planned acquisition costs, according to former senior DOD officials.

The exact amount of strategic aircraft spending that should be allocated to the “nuclear accounts” is up for discussion but it is without question that the aircraft would be built whether or not the US had a nuclear arsenal or not. Delaying its production will add to current O&M costs as well as significantly harm US conventional capabilities especially in the ISR category.

The submarine reactor and respective warhead costs of the Triad also are part of the new required investment.. But we should remember, much of the DOE/NNSA warhead account expenditures are needed irrespective of whether the US modernizes its nuclear Triad platforms. The US is trying to make our warheads safer and easier to maintain and such an effort is required irrespective of whether the US would modernize and replace its existing nuclear weapons platforms of submarines, land based missiles and dual-use bombers. Simply

sustaining our current warheads compared to the proposed life-extension programs (LEP) would be just as costly and perhaps even greater in cost in that maintaining old warheads is getting increasingly expensive. In addition, whether the US nuclear warhead arsenal and stockpile is 500, 1000, or 3000 warheads has not effect on the need for a modern infrastructure which is also a key part of nuclear modernization.

And also we should understand the new platforms will provide significant cost savings. The new bomber’s fuel and 0&M efficiencies, the new submarines lack of a refueled reactor requirement, and Minuteman’s new “plug and play” technology will save over the life of these systems in excess of $20 billion In contrast, the Triad legacy platforms will require more and more costly sustainment and maintenance as we delay their modernization and replacement.

Thus the question should be; “what reasonable amount of the DOE/NNSA expenditures could accurately be considered related to the modernization– as opposed to sustainment– of the Triad”? A reasonable number, though only a rough estimate– is $2.8 billion for weapons activities particular to the bomber, submarine and ICBM Triad and related warhead work, (as distinct from ongoing infrastructure requirements).

Added to that is an estimated $3.6 billion for the USAF and Navy platforms which carry the warheads.

Thus the US Department of Defense and Department of Energy are proposing to make $6.4 billion in “nuclear investments” in FY2016 or 3.4%of the $185 billion in annual DOD “investments”.

One might believe from much media coverage that DOD is putting forward a major expansion of the US nuclear arsenal. In fact the opposite is occurring. The modernization is part of a major build-down of US weapons (nuclear warheads) and platforms, known as strategic nuclear delivery vehicles (SNDVs or missiles and planes).

Remember, while this is being done, the number or type of nuclear warheads is declining from 8 to 5, and the overall stockpile of nuclear weapons is being cut. Over 1000 nuclear warheads await dismantlement. Another 1000 will come out of the reserve stockpile and deployed weapons as New Start is complied with.

In 2018 when the terms of the nuclear arms New Start treaty between the US and Russia goes fully into effect, the US deployed or “in the field” nuclear weapons will number 1550 compared to 2200 allowed under the 2002 Moscow Treaty between Russia and the United States. (Special bomber weapons counting rules will allow roughly 1800 warheads to actually be fielded but under the Treaty will count as 1550).

So the current nuclear modernization is not a “buildup”—we are not adding weapons to our nuclear arsenal—it is a “build-down”. As we modernize we are also implementing arms controls and reducing our warheads, a dual track which according to one poll, some 77% of the American people support.

We have not seen numbers of deployed nuclear warheads at this level since early in the Eisenhower administration—even though today both China and Russia are significantly increasing the lethality of their modernized nuclear forces.

So to put this in simple economic terms, the US is planning to invest roughly 3.4% of the entire DoD investment portfolio in nuclear deterrence, what the nation’s senior leadership says is the backbone of our nation’s security. And as USAF Maj General Garret Harencak has explained, the cost of building this effective, credible, stabilizing and “second to none” nuclear deterrent is a “bargain”.

As for the option of pushing off into the future this modernization effort, the Commander of the Strategic Command, Admiral Cecil Haney, said recently “I would just say you can’t not invest in these kinds of capabilities when you look at the modernization of strategic forces of other nations.”

And he further explained that we have delayed modernization too long, “…To the point where we…can ill afford to continue to do that.” He then warned “…those investments…are required, from my perspective as a combatant commander, in order to do my number one mission, to deter strategic attack against the United States of America, our homeland, and to deter attack against our allies…”, emphasizing “…It’s not an area that we can just wish away. We have to