Players in budget war game plot $500B in Defense cuts

Wednesday - 11/28/2012, 12:17pm EST

Jared Serbu, DoD reporter, Federal News Radio

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A consensus is emerging in Washington that even if Congress finds a way to cancel the automatic budget cuts of sequestration, the Defense Department is in for more spending reductions over the next decade. A new exercise by one think tank shows the department has a lot of different ways to handle those cuts — some more thoughtful than others.

Defense experts at the Center for Strategic and Budgetary Assessments designed a sort of budget war game under the following premise: Congress will undo sequestration, but DoD will still take roughly the same budget cut: $519 billion over the next decade. But under CSBA's scenario, and unlike under sequestration, the cuts would be spread over 10 years rather than happening all at once, and the Pentagon could decide precisely what programs to fund and at what level.

To run the game, CSBA gathered about 70 people this past summer — retired military officers, DoD civilian leaders, defense industry executives and experts from other think tanks — organized them into seven groups and, for the purposes of the exercise, granted them anonymity so they could make choices more freely. They were given about 600 options for either cutting or increasing funding for programs.

Mark Gunzinger, senior fellow, CSBA

The results, said Mark Gunzinger, a senior fellow with the group, were all over the map.

"We saw every approach. We saw groups that were truly strategy-driven, listening to the future first, all the way to people who said, 'Well, this is the way the building works so we'll work this way too. We'll cut everything, everyone will share pain and now we have a budget,'" he said during a briefing with reporters Tuesday. "That's not terribly well-driven by strategy. In fact, failure to make real strategic choices is essentially the same thing as sequestration."

Looking 10 years down the road

The think tank doesn't endorse or decry any of the individual spending decisions any of the seven groups made, but CSBA did reach some conclusions from the project. Organizers gave high marks to two of the groups that decided to think about what capabilities the military as a whole will need for the next 10 years rather than running through the typical Pentagon budget process, which allows individual military services to set their own priorities and then submit them for approval to the defense secretary and later to OMB.

CSBA's Todd Harrison said throwing those procedural stovepipes out the window turned out to be a huge breakthrough.

"They decided not to start the process by saying, 'All right, what are we going to cut?' Because if you do that, you've got your airpower guy saying you can't cut aircraft, you've got your seapower guy saying you can't cut ships and everybody's on the defensive," he said.

"Instead they said, 'All right, what's important in the future? What are we going to add money to?' Everyone decided what they thought the really critical capabilities for the future would be. Everybody got to win. Everyone got to pick the winners. Then they said, 'All right, now we've run up a bill and we're going to have to get rid of some things.' But everybody already got what they wanted, so they were willing to give up more, even in their own pet areas that they might otherwise have been protective of."

Other groups basically followed the Pentagon's standard budgeting formula and began with the idea that cuts had to be made rather than starting with investments in the military's most important joint priorities. They essentially gridlocked while trying to protect all of their own programs and cuts were made more or less evenly across the military's programs in order to meet the half-trillion dollar savings target.

Harrison said once those groups saw what their more strategically-minded counterparts had done within the same fiscal parameters, they had quite a bit of remorse.

"There was not a lot of consensus around the table. People's arms were crossed. It was like, 'If you're going to do that to me, I'm going to this to you," he said. "It was the service-centric approach you would expect out of DoD. And there was a lot of dissatisfaction at the end, because the other teams had cut more deeply but they used that money to invest in new capabilities. These teams were sitting there saying, 'Man, I wish we had that.'"

Identifying DoD's 'crown jewels'

But as far as what capabilities the military will need in the future, the teams had a fair amount of agreement. CSBA asked the experts to identify the military's "crown jewel" priorities that shouldn't be scaled back under any circumstances.

They unanimously agreed on several: Both offense and defensive cyber capabilities, special operations forces, undersea warfare platforms and a next-generation long-range strike bomber.

Todd Harrison, senior fellow, Defense Budget Studies, CSBA

They also concurred that some programs would have to endure reduced funding, including the Pentagon's most expensive weapons program, the F-35 Joint Strike Fighter.

"Their reasoning was that it might give time for the program to mature a little bit more before we proceed with full-scale procurement," Gunzinger said. "One team cancelled the F-35 outright, reasoning that the new kinds of scenarios we have ahead of us in the Pacific with very long ranges and challenges to our forward bases give less support to short-range aircraft."

Despite the wide divergence in approaches the teams took, they found other areas of commonality. For instance, Harrison said, under any approach to a half-trillion dollar budget reduction, the DoD civilian workforce is going to have to shrink.

"All of the teams made significant cuts, ranging from 20 to 40 percent reductions in the civilian workforce. I can't necessarily say that's part of a strategy, but it is something that all the teams went to when they needed more resources," he said.

Gunzinger and Harrison said it's not surprising that the teams found ways to cut DoD's budget. After all, they said, that gradual $519 billion cut would be roughly in line with previous downturns in defense spending following the conclusion of wars. The interesting part, they noted in a report based on the exercise, was that at least a couple of teams found ways to start with a strategy and build a budget around it.

Gunzinger, who worked on strategy inside the Pentagon for 35 years, said the system is still not designed to allow that.

"The point still is that the services develop their [program operating memoranda] independently, and then they're reviewed by the [Office of the Secretary of Defense] at the end of the budget process. So, there's a lot of momentum behind those budget submissions already by the time they start to have the strategic choices discussion," he said. "If you have that discussion up front, before the POMs are developed, it might actually drive some different investments."

Picking budget winners first

Gunzinger and Harrison said the most important lessons learned from the budget study groups are that DoD needs to think about the military the nation will need a decade from now when it builds a budget, and it has to pick budget winners before it decides where to cut. To do that, it also needs to take a holistic view of military capabilities rather than letting each service set its own wish list in stone.

"If you want to begin with the end in mind, if you want to think ahead to the future and then work backwards into what you need to be doing today, that's got to be a joint thing. You can't have services doing it independently, it won't work," Harrison said. "If you want to pick the winners first, again, this has got to be a joint exercise from the beginning."

"This isn't just our opinion, this came out of the teams," said Gunzinger. "We discussed the process and the way things were, and the teams acknowledged, 'Gosh, that's kind of not the way we do it today.'"

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