Can the Defense Budget Shrink Without Risking National Security?

Hawks and military leaders say it can't be done—but from the back office to the battlefield, there's plenty of excess spending.
Jacquelyn Martin/Reuters

Every municipal police and fire department has mastered the oldest bureaucratic budget maneuver in the book: If told to cut your budget slightly, don’t eliminate unneeded positions, buy less fancy office furniture, or delay buying new cars and equipment.

Just announce the closure of an entire police or fire station.

As the Chicago Tribune reported not long ago, "'Everybody on the City Council is in favor of facilities consolidation until they start to talk about the police station in their neighborhood,’ said Ald. Ricardo Munoz, 22nd, who added that he would fight attempts to close the station in his ward.”

Since protecting citizens’ lives is the first duty of government, public-safety functions are usually the last to feel the effects of tightened budgets. This is especially true at the federal level, where cuts to the defense budget are generally portrayed as assaults on the nation’s very existence. There are a variety of reasons to tread softly on any sort of defense cuts: You only get to err by under-defending the country once. The battlefield edge today, and even more so in the future is a product of advanced—and expensive—technologies. Those who put their lives on the line for the rest of us deserve the best equipment and protective gear, and the most reasonable pay and benefits, that we can afford.

But does that mean that we cannot cut the defense budget without short-changing national security? To hear some tell it the answer is “no.” But the Defense Department is part of the same government that most Americans abjure for its inefficiency, waste, and fraud. In fact, you can find just about everything that’s wrong with government in the defense budget. Oklahoma Republican Senator Tom Coburn, no liberal, has derided the Pentagon as the “Department of Everything” for its wide-ranging activities.

Of all the services that critics complain the Pentagon needlessly duplicates—from schools and rec centers to scientific research and grocery stores—the most expensive is health care. Ten percent of the Pentagon’s non-war budget—$53 billion—goes to health care. As with civilian health care, savings are achievable here but face implacable opposition from military retirees. But as no less a military enthusiast than John McCain said last year on the Senate floor, “We are going to have to get serious about entitlements for the military just as we are going to have to get serious about entitlements for nonmilitary.”

Fortunately, there are ways to cut defense spending without hurting military capabilities. Besides maintaining its war-fighting capability, DoD, like any entity, maintains a back-office bureaucracy to oversee its business functions. That overhead accounts for roughly 40 percent of its budget. It’s hard to compare different industries, or even government agencies, but one examination of 25 industries showed average overhead rates ranging from 13 to 50 percent, with the average across all industries being 25 percent. A RAND study of overhead and administration costs among defense contractors found them to be “tremendous drivers” of weapon costs at 35 percent. The largest domestic programs—Social Security and Medicare—get by with costs in the single-digits.

Cutting Pentagon overhead to the average would save roughly $80 billion a year. Looked at another way, the department employs 800,000 civilians. Not only is that more than the population of four states, it’s not quite half of all civilian federal employees, more than twice as many as the next-largest agency (Veterans Affairs), four times the number of civilian employees at the Department of Homeland Security and basically the size of all the remaining federal agencies combined. Think there might be some savings possible there?

And that understates the “back office.” There are also 560,000 active-duty military personnel who "never deploy," and an estimated 700,000 "ghost" civil servants—contractors doing government jobs—meaning that as many as 2 million people who will never face the enemy are on the Pentagon payroll. Coburn has called for staffing a quarter of these jobs -- handling supply chain, transportation, human resources, and communications services—with cheaper civilian employees, which would save $5 billion annually. When Defense Secretary Chuck Hagel launched a Strategic Choices Management Review earlier this year to study the impact of further budget reductions on the department and to develop options to deal with additional cuts, four leading defense think tanks conducted an analysis of their own to find cuts. Each of the tanks recommended reducing the Pentagon’s civilian workforce, by amounts ranging between 10 and 27 percent.

Presented by

Eric Schnurer is president of Public Works LLC, a public-policy and management-consulting firm that works with state and local governments across the country. He has served as a gubernatorial chief-of-staff and speechwriter or policy adviser to governors, senators, and presidential candidates.

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