Analysis: Should DoD cut benefits or guns?

Tuesday - 6/8/2010, 10:55am EDT

Todd Harrison, senior fellow, Center for Strategic and Budgetary Analysis

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By Suzanne Kubota
Senior Internet Editor
FederalNewsRadio.com

The Defense Department is vowing to cut administrative costs so there's more money for combat support long term.

The problem, of course, is where to make the cuts.

Todd Harrison, a senior fellow at the Center for Strategic and Budgetary Analysis, makes the argument in a new report the dilemma a new form of the "guns and butter debate."

In the past, Harrison told Federal News Radio, guns versus butter implied weighing funding for domestic against defense spending. Now, he said, it's internal.

He defines the "butter" as paying for the "care and welfare of the people: pay and benefits and healthcare". On the other side is "the guns part of the budget, which pays for equipment and buying next generation weapons systems and training and operations."

"Going into the future," said Harrison, "these two different halves of the budget are increasingly going to be at odds with each other."

Harrison talked about some of the areas he expects to see cuts.

  • Bureaucracy Within Defense - "Administrative levels within the Pentagon," said Harrison are almost certain to be at the top of the cut list. Secretary Gates will be "looking at each of the different services and all the different headquarters staff they have, and questioning do we need all this."

  • Military Health Care - "Military health care costs right now consume about one-tenth of the base Defense budget, and it's growing. Health care costs are growing at a rate of five to seven percent above the rate of inflation. It's for a number of reasons, but the bottom line for DoD is they've got to get these costs better under control or it's just going to eat them alive."

    Harrison points out in his report "DoD provides healthcare and health insurance coverage to 9.6 million eligible beneficiaries, including active-duty troops, retirees, members of the Guard and Reserve, and dependents."

    Cutting care or raising costs has been a political third-rail: don't touch it if you know what's good for you. Harrison said that will need to change. "If they don't, if these trends are allowed to continue, the butter part of the budget like healthcare, are going to grow so much that it's going to be squeezing out investments in modernizing our force."

  • Pay Raises - While not technically a cut, Harrison said he expects to see lower raises in the future. Each year, said Harrison, pay raises for the military are proposed to Congress that equal "the average of what's going on in the private sector" and then Congress, for the past decade, adds on another half a percent.

Harrison said there's a very good reason for the services to find the cuts: a rebate, of sorts.

They're not just taking money out of the service's budgets. What they're doing is they're saying "if you can cut some of your administrative and overhead costs," and they're asking each of the services to do about a billion dollars or so in the next budget for fiscal year '12, "if you can cut that money out of administrative costs, we will then let you reinvest that within your own budget in modernization initiatives."

So money cut won't be money lost, said Harrison. "They actually get to reinvest it in themself."