DOD - All Chuck Hagel Needs to Know

"Everything Chuck Hagel needs to know about the defense budget, in charts" by Brad Plumer, Washington Post 1/7/2013

On Monday afternoon, President Obama will nominate former Nebraska senator Chuck Hagel (R) as secretary of defense. The confirmation hearings are likely to focus on Hagel’s views on Israel and Iran. Yet the biggest headache likely to face the next defense secretary will almost certainly be the U.S. military budget.

The United States spends far more than any other country on defense and security. Since 2001, the base defense budget has soared from $287 billion to $530 billion — and that’s before accounting for the primary costs of the Iraq and Afghanistan wars. But now that those wars are ending and austerity is back in vogue, the Pentagon will have to start tightening its belt in 2013 and beyond. If Hagel gets confirmed as secretary of defense, he’ll have to figure out how best to do that.

Below, we’ve provided an overview of the U.S. defense budget — to get a better sense for what we spend on, and where Hagel might have to cut:

1) The United States spent 20 percent of its budget on defense in 2011

Center on Budget and Policy Priorities

All told, the United States spent about $718 billion on defense and international security assistance in 2011 — more than it spent on Medicare. That includes all of the Pentagon’s underlying costs as well as the price tag for the wars in Iraq and Afghanistan, which came to $159 billion in 2011. (It does not, however, include benefits for veterans.)

U.S. defense spending is expected to rise in 2012, to about $729 billion, and then fall in 2013 to $716 billion, as spending caps start kicking in. (More on that below.)

2) Defense spending has been rising dramatically since 9/11

Here’s a historical chart of defense spending since World War II in inflation-adjusted dollars. There’s a big spike for the Korean and Vietnam wars. There’s another big ramp-up during the 1980s under President Reagan. Then defense spending got cut significantly during the Clinton years until soaring to historically unprecedented levels after 9/11.

U.S. defense spending is set to fall again in 2013, though it will still be as high in real terms as it was at the height of the Reagan build-up.

3) U.S. defense spending largely consists of soldier pay, weapons procurement, and operations spending

Source: Office of Management and Budget, Graph: Dylan Matthews

In 2011, the Pentagon spent about $145 billion on personnel pay and housing, $113 billion on weapons procurement, and $256 billion on operations — the last largely in Iraq and Afghanistan. Smaller amounts also were spent on R&D (about $66 billion) and nuclear programs ($18 billion), as well as construction, family housing and other programs ($5 billion).

My colleague Dylan Matthews created the graph above to show how these portions have changed over time. Personnel spending has stayed constant over the years, even as the number of soldiers in the U.S. military has shrunk (pay and benefits have increased). Weapons procurement can vary wildly. And operations spending has soared during the wars in Iraq and Afghanistan.

4) The United States spent more on its military than the next 13 nations combined in 2011

Needless to say, the United States remains the world’s dominant military power. The graph above comes from the Pete G. Peterson Foundation, which compiled data from the Stockholm International Peace Research Institute.

5) The U.S. military budget is poised to shrink in 2013 and beyond, although this won’t be the biggest downsizing it has ever faced.

Two big things are about to happen to military spending. The wars in Iraq and Afghanistan are winding down. And, thanks to the 2011 Budget Control Act, the Pentagon is facing both hard budget caps and a looming sequester that would cut defense spending by about $1 trillion over the next decade (compared to what was expected).

That seems severe. Although, as the graph above from the Center for Strategic and International Studies shows, even if the sequester is fully implemented, which no one expects, the drawdowns after Korea, Vietnam and the Cold War were far more drastic in inflation-adjusted dollars.

6) Even with the Budget Control Act, defense spending is likely to grow over the next decade, albeit more slowly

The chart above comes from Veronique de Rugy of the Mercatus Center, who points out that even with the Budget Control Act caps and the sequester, overall U.S. military spending will still grow in inflation-adjusted terms over the next decade. It will just grow more slowly than it otherwise would have. (And, of course, if Congress finds a way to avert the defense cuts in the sequester, as some members would like to do, then it will grow even more quickly.)

7) The Pentagon and Congress are already rejiggering the military budget in response to austerity

Photo: Raytheon

Back in January, the Department of Defense unveiled its proposed budget for fiscal year 2013 — a look at how it would deal with new budget constraints. As Wired’s Spencer Ackerman reported, the Pentagon wanted to downsize about 100,000 human soldiers and ramp up advanced weapons programs, including drones, bombers and missiles.

Of course, the Pentagon doesn’t have the final say. Congress eventually passed its own $631 billion defense appropriations bill in December that made some changes to the Pentagon’s vision. Many of the weapons systems that the Obama administration wanted to retire — such as three Navy cruisers — were kept in. The final did, however, make plans to reduce civilian and contractor personnel by 5 percent over the next five years.

8) The next secretary of defense will have to make further tough choices about the Pentagon’s budget

The chart above comes from a recent report from the Center for Strategic and Budgetary Assessments, which asked seven teams of experts to come up with ways to meet the Pentagon’s new spending constraints in the coming decades. It shows what areas different teams would cut — some experts advised heavily slashing the civilian workforce, others advocated cutting aircraft inventory. (There were some areas of consensus, though: surface ships were generally cut more than submarines, for instance.)

The cuts weren’t always painless. For instance: “Five of seven teams agreed that they could not fully resource their strategies under the assumed fiscal guidance unless they accepted near-term risk by reducing current readiness programs.” These are trade-offs Hagel will have to navigate.

9) Ordinary Americans want to cut defense spending far more than is already on the table

Back in May, the Stimson Center unveiled the results of a new survey asking U.S. voters about their views on defense spending. As it turns out, Democratic, Republican and independent voters all want to cut military spending far more severely than the sequester would and far, far more severely than either party has proposed. Congress isn’t likely to pay much attention here, but it’s a reminder that defense cuts tend to be extremely popular.