US Orders Biggest Defense Cuts Since Before 9/11

By Thom Shanker and Christopher Drew, The New York Times

06 January 11

It is difficult to say if this represents a long-term trend, but it's certainly a departure from White House policy over the past decade. -- ma/RSN

he White House has ordered the Pentagon to squeeze almost all growth from its spending over the next five years, which will require eventually shrinking the Army and Marine Corps and seeking controversial increases in the fees paid by for retired, working-age veterans for their health insurance, Defense Secretary Robert M. Gates said Thursday.

The reductions of up to 47,000 troops from the Army and Marine Corps forces - roughly 6 percent shrinkage - would be the first since the terror attacks of Sept. 11, 2001, reversing the trend ever since. They will be made easier by the withdrawal under way from Iraq, and will only begin in 2015 - just as Afghan forces are to take over the security mission there according to agreements with NATO.

But Mr. Gates said the cuts in Pentagon spending were hardly a peace dividend, and were forced by a global economic recession and domestic pressures to find ways to throttle back federal spending. Indeed, the announcement of his proposal, which Congress would have to approve, came on the same day as word that he would be adding about 1,400 Marines in coming months to the forces fighting in Afghanistan.Mr. Gates said the budget proposals reflect the "extreme fiscal duress" felt by the United States Government, and he acknowledged that protecting American global interests and sustaining the entire gamut of American power required the military to take a tough look at its spending practices.

The Pentagon's proposed operating budget for 2012 is expected to be about $553 billion, which will still reflect real growth, even though it is $13 billion less than expected. But then the Pentagon budget will begin a decline in the rate of growth for two years, and then will stay flat - even with inflation - for fiscal years 2015 and 2016. Over five years the reductions would amount to $78 billion. (The Pentagon operating budget is separate from a contingency fund that pays for the military's combat and stability efforts in Afghanistan and Iraq.)

The actual size and shape of future military budgets will continue to be reset by annual spending proposals from the president, and those in turn will be based on shifting economic factors – decline or growth – and threats around the world, as well as by Congressional action.

But, for now, the Army is expected in 2015 to begin cutting its active-duty troop levels by 27,000, and the Marine Corps to reduce its active-duty ranks by up to 20,000. Together, those force reductions would save $6 billion in 2015 and 2016.

Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, said all four service chiefs supported the proposals, and that the military would still be able to manage global risks.

The Army's current active-duty end strength is 569,600, and the Marine Corps, which like the Army has grown in numbers since 2001, has just over 202,000 in its active component. Senior Marine Corps officials had already been examining cutting their force size to more efficiently and effectively carry out the Corps' historic mission. And both services would remain larger than when Mr. Gates became defense secretary four years ago.

Had the armed services and Pentagon bureaucracy not already found significant ways to operate more efficiently, the impact of the budget cuts ordered by the White House would have been far more significant on troop levels and war-fighting equipment.

The armed services had identified about $100 billion in savings over five years: The Army had found $29 billion, the Air Force $34 billion and the Navy and Marine Corps $35 billion.

About $70 billion of those savings - found through operating efficiencies and cancellations of weapons systems - are to be reinvested by the services into personnel and quality-of-life accounts, as well as into weapons purchases and weapons modernization.

But $28 billion of those efficiency savings must be devoted to paying unexpected bills for such things as rising fuel costs and maintenance, but that was preferable to raiding current operating funds to meet those unanticipated expenses.

Separately, the Defense Department bureaucracy had identified about $54 billion more in savings over five years, from such things as reducing contractor hiring, freezing personnel numbers and reducing the number of admirals, generals and senior civilian slots, as well as closing or consolidating headquarters.

Many of those changes can be carried out unilaterally by the Pentagon or the armed services. But some - especially increases in fees for the military's health-care system, called Tricare - require Congressional approval, and have been rejected before.

A battle over increasing Tricare fees will pit the efforts of the Pentagon to contain the exploding cost of health care for eligible retirees against the pain and emotions of those who say they have already "paid up front" with service in uniform. Congress has been reluctant to raise those fees.

Total health care costs for the Pentagon, which is the nation's single largest employer, top $50 billion a year, a tenth of its budget and about the same amount that it is spending this year on the war in Iraq. Ten years ago, health care cost the Pentagon $19 billion; five years from now it is projected to cost $65 billion.

But Tricare fees have not increased since 1995. Mr. Gates was expected to press for increasing the cost of health insurance premiums and spot fees for retirees and their families, not for those on active duty or military retirees 65 and older.

Mr. Gates said his proposals for Tricare would save $7 billion over five years.

Mr. Gates also announced cuts in several weapons systems, led by the cancellation of the Marine's Expeditionary Fighting Vehicle, a combined landing craft and tank for amphibious assaults. The Marines had already spent over $3 billion on the $14.4 billion program.

Mr. Gates also said that the Pentagon would save $4 billion by delaying purchases of the new F-35 Joint Strike Fighter aircraft, made by Lockheed Martin. He said the structure and propulsion system of one of the three versions might need to be redesigned, and he was placing that model, made for the Marines, "on the equivalent of a two-year probation." He said that if that model could not be fixed, "then I believe it should be cancelled."

Mr. Gates said the Navy would have to buy or refurbish more than 150 F/A-18's as a hedge against further delays on the F-35, adding billions in additional costs.

Federal officials said Mr. Gates had been seeking to increase the basic Pentagon budget, excluding war costs, to $566 billion for fiscal 2012, but had to push the White House to approve $553 billion, or $13 billion less.

That would be a slight increase over the $549 billion that the Pentagon had sought for 2011 and the moderately lower numbers that Congress is considering for this year.

Gordon Adams, a Clinton administration budget official who served on Mr. Obama's transition team, said he understood that White House budget officials initially wanted to shave the Pentagon's request by at least $20 billion for 2012.

Mr. Adams said Mr. Gates viewed this as breaking an earlier promise, and he met with President Obama three times before Christmas to get at least $8 billion restored. Mr. Gates was also able to persuade the White House to reduce its demands for cuts over the next five years to $78 billion from $150 billion.But even so, Mr. Adams said, "I think the floor under defense spending has now gone soft" But given the Congress authorizes government spending a year at a time, he said, the projected numbers beyond 2012 "are up for grabs. Don't count on any of it."

Once Mr. Obama releases his budget proposals in February, the battle will shift to Capitol Hill, where it is hard to predict how the cross-currents will shake out now that the Republicans control the House. Some of the most senior Republicans want to keep increasing the Pentagon budget, while new members linked to the Tea Party think the military should shrink along with the rest of the government.