Desperately seeking Gates’ $400 billion savings

Carl Conetta. Project on Defense Alternatives Note, 30 April 2011.

Why is our defense spending so high and apparently out of control? Plenty of ink has been spilled addressing this question, including my own short, The Pentagon’s Runaway Budget.

Andy Bacevich may get closer to the key political dynamics in Why Military Spending Remains Untouchable.

There is no better example of the dysfunctional political dynamic governing the Pentagon budget than President Obama’s affirmation (April 13, 2011) of the claim that Secretary of Defense Gates has “already saved” the nation $400 billion in defense expenditure. And there is no better illustration of the poverty of our discourse on this subject than the fact that the claim goes largely unchallenged.

Most of the $400 billion in earlier DoD “savings” that President Obama has attributed to Secretary Gates are not “savings” in the ordinary sense of the word. They do not show up as reductions in DoD budget plans from one year to the next, as shown below. At best, they represent DoD marginally adjusting its programs and aspirations to marginally deal with spiraling cost growth.

Rough analogy: Having said it would deliver a “fully-loaded” Cadillac for a specified price X, and having discovered that this estimated price is entirely unrealistic, a car dealer trims back some of the features and delivers something less for the full promised price. Most consumers would call this a gyp, not a savings.

The alternative would be for DoD to further boost subsequent budget requests to fully reflect cost growth, and let Congress and the Executive reconsider what they wanted to buy. I suppose one could say that DoD has “saved” these authorities from the headache of making this decision. Fully confronting a realistic pricing of current programs might lead to a thorough-going rethink of our defense posture and modernization efforts. But that’s too much to consider.

Now, let’s try to find those $400 billion in “savings”….

THE $400 BILLION

1. Much of the $400 billion that Secretary Gates is claimed to have saved derives from his April 2009 announcement of program cuts. Gates claims that the systems and programs he cut in 2009 would have eventually cost more than $300 billion. However, at least some of this was immediately reprogrammed, meaning: DoD used the savings to buy other things.

April 2009 Gates Defense Budget Recommendation Statement

2. In August 2010 and January 2011, Secretary Gates outlined additional “cuts” and “savings” totaling $178 billion. Of this, $100 billion was immediately reprogrammed to purchase other things or cover other costs. The remaining $78 billion was supposed to be released from the Pentagon orbit to help pay down the deficit. In the August 2010 statement, we find Gates’ claiming that his earlier 2009 effort has already saved more than $300 billion.

August 2010 Gates Statement on Department Efficiencies Initiative

Jan 2011 Gates Statement on Department Budget and Efficiencies

PDA summary chart re: the $178 billion

3. How much (if any) of the earlier “more than $300 billion” in savings was similarly given over for deficit reduction? Looking at actual budget plans, what do we see? The first $300 billion was announced in April 2009 and it might reasonably have shown up as difference between the last Bush budget plan (FY09) and the first Obama budget plan (FY10).

Comparison between these two budget plans is easy for the years 2010-2013:
– Bush FY09 planned total spending for 2010-2013 = 2.155 trillion
– Obama FY10 planned total spending for 2010-2013 = 2.183 trillion

An increase is not a reduction, therefore: no savings apparent in the near years.

4. Obama’s next budget plan (FY11) foresaw a significant increase over his first. So, no savings apparent there either.

5. Only in the next plan – the FY12 plan – do we see a reduction in planned spending between FY12 and FY11 plans. In the nine years that overlap between the FY11 and FY12 plans, we see a reduction of about $233 billion.

But the FY12 plan follows Gates’ second announcement of cuts and savings (summarized in #2 above). So, at least, $78 billion derives from that and not the earlier cuts. Indeed, when we compare the FY12 plan with the FY11 plan for the years 2012-2016, there is a reduction in planned spending of $76 billion. Still no apparent impact from the April 2009 “cuts,” however.

6. Well, as noted above, the total difference between the FY11 and FY12 plan for the years 2012-2020 is $233 billion. 233 minus 78 = 155. This additional planning rollback of $155 billion shows up for the years after 2016. So maybe we’ve found at least $155 billion of the earlier supposed cut? Maybe it just took 2 years to register? Maybe.

“Maybe” because the Obama FY12 budget rolls back planned spending almost exactly to the levels foreseen in the Obama FY10 budget …being the budget that was larger than the final Bush budget and being the budget that showed no impact from Gates’ April 2009 offer. To put it another way: Obama’s FY12 budget simply rolls back the future spending plan he produced in FY11 to the level he had proposed in FY10. The FY12 plan simply disappears the increase proposed in FY11.

7. The other possible (likely) reading of all this is that: (i) None of the original $300 billion “saved” ever left the Pentagon,
(ii) The $78 billion that Gates offered up to deficit reduction is the only “savings” really specified so far to actually show up as a reduction in planned spending, and (iii) The other $155 billion that the FY12 plan subtracts from the FY11 plan involves as yet unspecified cuts and efficiencies.

Comments are closed.