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Facing the Future: the US 2017 Defence Budget

April 27th, 2016

By Dr Rowan Allport – Senior Fellow

February’s publication of the White House’s $582.7bn 2017 Department of Defense budget request marked the last such event under the Obama administration. As expected, Republican defence hawks in Congress were less than happy with what was put forward. Although a deal in late 2015 has, in theory, already broadly set the 2017 defence budget, many GOP representatives are now concerned that planned outlay is insufficient and want to see further spending. Whilst the debate holds the potential to drag on for much of this year, there is no escaping the irony that almost everyone agrees that defence spending is too low, with even the pre-deal Obama budget plan for 2017 seeking around $23bn more than is now being asked for. At the root of this is dysfunctional Washington politics: the restrictions to both defence and non-defence spending imposed under the Budget Control Act of 2011 and its sequestration provisions – legislation that was in part designed to be so draconian that it would never be fully implemented – prevents money being allocated in a normal way. Although it is somehow difficult to imagine that many of Donald Trump’s supporters follow the minutiae of the goings on inside the Beltway, it is not hard to see why they believe some of the things they do about the way many of those in the US capital conduct business.

The budget is intended to facilitate the provisions of the 2014 Quadrennial Defense Review (QDR), the Pentagon’s latest national security and defence strategy. That paper was published only days in advance of Russia’s annexation of the Crimea and a few months before ISIS overran much of Iraq and Syria. As such, many have questioned why the US is continuing to calibrate its defence provisions on a set of outdated assumptions. It could still be argued that the overarching posture the QDR outlines is in part sound – that stance being for a US military that is capable of homeland defence, global counterterrorism operations and deterring aggression; with the contingency that if the latter failed, US forces would “be capable of defeating a regional adversary in a large-scale multi-phased campaign, and denying the objectives of – or imposing unacceptable costs on – a second aggressor in another region” (tacitly, these aggressors are assumed to be China, Russia, North Korea and Iran). It is, however, highly questionable as to whether the detail of the QDR – most importantly in relation to overall force size – allows for such a spectrum of commitments to be met. Perspective is of course important: the US maintains by far the most powerful military in the world. But the sheer scale of the challenges that need to be confronted even under the limited approach of the QDR are daunting, and what the US military is now tasked with is even more substantial: in addition to these core roles, it is faced with continuing operations in Iraq, Syria and Afghanistan, as well as the complex hybrid war threat posed by states including Russia.

The situation faced by the US military with regards to its commitments has only been made worse by an ongoing funding crisis. The current financial drawdown began in FY 2010, but quickly careered out of control in the face of a wider conflict between Republicans and Democrats regarding US public spending. The Budget Control Act of 2011 – which partially ended that year’s budget impasse – imposed $487bn in defence cuts over the following decade, with a further $495bn in sequestration were a long-term settlement to the budget debate not reached. Inevitably, no agreement was made and sequestration was imposed. Although two partial legislative work-arounds in 2013 and 2015 have handed a few tens of billions back, the budget is still not at the necessary level for even the minimalist requirements of the QDR.

One tactic that Republican defence hawks have attempted to utilise is to provide extra funds for the main budget via the Overseas Contingency Operations (OCO) account – money notionally allocated to pay for military operations (for example, 2017 is projected to see $41.1bn of OCO funding go toward the war in Afghanistan, and $7.5bn to the war against ISIS in Iraq and Syria), which is not limited by the provisions of the Budget Control Act of 2011. Last year saw efforts in Congress to bypass restriction by adding $38bn of unrequested funding to the OCO account, ultimately leading to a veto by President Obama on the grounds that Congress had not provided matching additional funding for domestic programmes. The OCO trick has been repeated in the 2017 budget request to the tune of $5bn – this time with presidential approval. But the seemingly perpetual nightmare of US fiscal politics means that even if the deal on spending struck in late 2015 sticks, the Pentagon faces being right back at square one when the new president takes office next January.

The strain exerted by both ongoing commitments and financial pressures is best conveyed by looking at current force readiness levels. Only one in three US Army brigades is prepared for operations due to limited training resources, less than half of the required level; just fifty per cent of the US Air Force is fully prepared for high-intensity war, primarily as the result of an aging fleet and repeated deployments; US Navy ships are struggling to maintain a full global presence due to a lack of ship numbers and unmet maintenance requirements; and many have blamed cuts to US Marine Corp training and maintenance for a series of fatal aviation accidents. Even with the resources requested and projected under the 2017 budget submission, the level of force readiness specified under the QDR is not expected to be reached by the US Army, Navy and Marines until 2020, and the US Air Force will take until around 2028.

Examining the substance of the 2017 defence budget request, it is clear that the overarching theme is one of trading the procurement of new equipment for money to both increase readiness in the short term; and research, development, test and evaluation (RDT&E) funding to prepare for the longer term. Across all the armed forces branches, in exchange for a total of $6.8bn in procurement cuts, an additional $6.5bn of the base budget is intended to go towards operations and maintenance (O&M) in order to improve force readiness, and an extra $2.8bn is earmarked to be diverted to funding RDT&E.

The decision to reduce or delay the procurement of new hardware has both an internal military and wider political logic. On its own merits, the funding saved on cuts and deferments will have a significant impact on both the short-term readiness and long-term capabilities of US forces. Fundamentally, the US isn’t going to lose a war for want of a few pieces of equipment, but could well suffer catastrophically due to poor force readiness or being significantly behind the technical curb. More broadly, however, the procurement cuts – together with many of the reductions in overall force mass – have been put forward because these are the areas that Congress is likely to push back on the hardest. Whilst former Defense Secretary Robert Gates had sought to crack down on such work-arounds, recent years have seen a drift back towards the practice of the submission by the branches of the military of ‘Unfunded Priorities Lists’ – essentially items the Pentagon wants but cannot afford – in order to acquire additional resources via a sympathetic Congress. This year has seen a bumper set of requests from the US Army, Air Force, Marines and Navy – in part directed at retrieving what they ‘sacrificed’ in the main budget.

Looking at the individual services in turn (inclusive of their reserve and national guard components), it is relatively easy to observe how the strategy for increasing readiness levels both directly and indirectly will be made manifest. For the US Army, with a core 2017 budget request of $123bn plus $25bn in OCO funding, O&M will be the only one of its major areas of expenditure to see a spending increase. The intention is to utilise this money to enhance training efforts in order to move towards two-thirds of the regular Army’s thirty brigade combat teams being ready for operations, as opposed to the current one-third. Other efforts to increase readiness levels will focus on specific theatres. Most notably, funding for the European Reassurance Initiative – launched in the wake of Russia’s operations against Ukraine – is planned to increase this year from $789m this year to $3.4bn in 2017, with $2.8bn of it going to the Army. This additional money will pay for the permanent rotational presence of an armoured brigade in Eastern Europe, the forward stationing of Army Prepositioned Stocks to support a further armoured brigade in a crisis, and the continuation of the existing programme of training exercises.

The US Air Force is allocated $151.1bn from the main budget, with a further $15.8bn from the OCO fund. Despite claims that the service somehow ‘won’ the budget round via a $5.1bn funding increase, the cash injection only reflects the level of trouble the USAF is in. Tasked not only with traditional air operations, but also with supporting two of the three branches of the US nuclear triad and the space-based elements of defence, claims by the USAF that it is “facing a modernization bow wave in critical nuclear and space programs over the next ten years that, under current funding levels, we simply cannot afford…” ring alarmingly true – and also help explain the 2028 forecast date for a return to full operational readiness. To support the regeneration of capabilities, the Air Force’s base O&M budget will be increased, but much of the additional funding is being tipped into RDT&E. More broadly, operations against ISIS are also taking their toll on readiness due to the depletion of munitions inventories. To date, around 40,000 air-launched weapons have been deployed against the group, largely by the USAF. To replace what has so far been expended, the OCO component of the 2017 budget provides $1.8bn for 45,000 replacement bombs and missiles across the services to ensure sufficient stocks.

The US Navy’s situation is more complex: an overall cut of $3.9bn is on the horizon, with the 2017 budget projected to seeing it receive $155.4bn in core funding and $9.5bn from the OCO account. As with the other services, the focus is on both restoring combat readiness and a move back to preparation for high-intensity warfare. The core change with regards to the latter has been a shift from a doctrine that emphasised ‘presence’ to one more focused on conventional combat. The chief manifestation of this has been the cutting of the Littoral Combat Ship programme – a class of two vessel types which allow the Navy to keep up fleet numbers, but which lack firepower and survivability – and the redirection of the funding towards more advanced weapons systems. The next five years will also see the purchase of additional fighter aircraft to replace worn and unreliable airframes. Base O&M funding is being increased, but the Navy is primarily focusing on implementing its Optimized Fleet Response Plan to undo the damage of years of deferred maintenance.

Finally, for the US Marines – whose base budget of $23bn and $1.6bn in OCO comes out of the above Navy total – the 2017 budget request represents an end to planned contractions in the size of the force. However, despite the presence of additional money for maintenance and training in order to improve readiness, fears persist that the increase will not be enough to compensate for past cuts.

If enhancing readiness is focused on solving today’s problems, it is RDT&E funding that is crucial for the future. The Department of Defense’s $71.8bn RDT&E budget projected for 2017 for the most part consists of funding for routine programmes, but a significant (if hard to define) investment is being made in what is being referred to as the ‘Third Offset Strategy’. The approach is so named as it marks the third such US programme designed to identify ways to respond to the advantages held by an enemy force. During the 1950s, the First Offset sought to deploy nuclear weapons to counter the superiority the Soviet military in Europe held in conventional force numbers. During the 1970s and 80s, with the US having lost the nuclear advantage, the Second Offset developed and fielded precision guided weapons and advanced command and control systems to tackle the same problem. The Third Offset will seek to address both the loss of the US monopoly on precision guided weapons and a lack of force mass. In the initial stage, the approach will simply centre on purchasing and fielding additional advanced munitions to sustain some sort of quantitative edge. In particular, anti-aircraft and anti-ship missiles – both capabilities that have seen a certain amount of neglect in the era of counterinsurgency operations in Afghanistan and Iraq – will see considerable investment. The longer-term focus, however, is on qualitative superiority – both in relation to equipment and the doctrine for its use. Additional RDT&E funding is therefore crucial, with areas including cyber and electronic warfare, human-machine teaming and countering anti-access and area denial capabilities seeing particular attention. Specific programmes include the development of the ‘arsenal plane’, the High Speed Strike Weapon and the Hyper Velocity Projectile – all largely overseen by the Pentagon’s Strategic Capabilities Office. However, given that funding will still be limited, much of this new technology will be grafted onto old platforms: notably, the arsenal plane is likely to be derived from the B-52H bomber or C-130 Hercules – both designs from the 1950s.

The financial situation faced by the Pentagon is an unenviable one. There is a need to simultaneously fight today’s wars, prepare for contingences, fund modernisation and invest for the long term. The stresses evident in this year’s budget also largely come before the much-anticipated ‘bow wave’ of bills to fund a number of programmes – most notably the recapitalisation of the US nuclear triad – start to become due in the 2020s. But hope that a solution to these problems exists can be found in the simple truth that – for the moment at least – the decline in the US military is being inflicted not by a foreign power or unassailable financial pressures, but failure at the political level. The current budget crisis that has stifled defence spending emanates from (perfectly reasonable) concerns surrounding the US budget deficit and national debt. However, much of the deficit and debt itself can be traced back to the takeover of the Republican Party by radical right wingers who have opposed tax rises even in the face of an aging population, war and badly warn infrastructure – despite the US having one of the lowest tax rates of any major nation. That it is also the GOP leading calls for more defence spending is an irony not lost on many. The multi-trillion dollar tax cuts proposed by the leading current Republican presidential candidates (who also, naturally, wish to ‘fix’ the military) are simply the endgame of decades of steadily increasing disconnect from reality.

For 2017, there will be a need for the Pentagon to muddle through with a compromise approach that both stops the rot and lays the seed corn for the future. This is the essence of the year’s budget proposal. However protracted the debate surrounding it, and whatever is contained in what will eventually become the National Defense Authorization Act 2017, the real challenge can only start to be addressed from next year and beyond.

About Rowan Allport

Dr Rowan Allport is a Senior Fellow who leads the HSC's Security and Defence team. Rowan holds a PhD in Political Science and an MA in Conflict, Governance and Development from the University of York, as well as a BA (Hons) in Politics, Philosophy and Economics from the University of Hull. Specialising in strategic analysis and international security, Rowan's primary areas of interest lie in the defence issues in and around the NATO region, interstate conflict and US foreign policy discourse. He is also the lead author of HSC's recent The Two Per Cent Solution: an Alternative Strategic Defence and Security Review report.