Money & The Economy

Defense Issues Weekly

Defense Budget Unveiled


On Wednesday, April 10th, Defense Secretary Chuck Hagel unveiled the FY2014 defense budget request, to the tune of $526.6 bn for the base defense budget. It optimistically assumes – as the DOD previously did – that sequestration will be repealed. Accordingly, it is $52 bn over the budget cap set by sequestration for the DOD for FY2014: $475 bn.


Specifically, the DOD requests $137 billion for personnel, $99.3 billion for procurement, $67.5 billion for R&D, $9.5 billion for construction, and the rest for operations &maintenance, i.e. daily operations, training, the maintenance of existing equipment and bases, administration, etc.


In the budget submission, the DOD is requesting authorization for conducting crucial reforms of its personnel programs (most notably, healthcare programs that are eating the Department’s budget alive) and its base infrastructure (which is ca. 24% excess to its needs) through authorizing a BRAC round.


According to the Center for Strategic and Budgetary Assessments, personnel spending alone will consume 100% of the defense budget by FY2039, and, taken together with operations &maintenance spending, will consume all of the defense budget long before then – in FY2024, just 11 years from now. Accordingly, the DOD needs to make serious reforms in both areas. However, the Congress remains knee-jerk opposed to any such reforms, despite imposing a $1.1 trillion cut mandate on the DOD through the Budget Control Act. Congress is essentially telling the DOD “you must cut $1.1 trillion out of your budget per decade, and while doing you, you cannot touch personnel spending or bases in America.”


Excess bases cost the DOD billions of dollars per year to maintain. However, so far, parochial members of Congress have prevented BRAC from being authorized since 2005, despite past BRAC rounds now producing annual savings of $12 bn.


Critics claim that the 2005 round will not produce net savings until 2018. However, that round was not representative of BRAC, because its purpose was “transformation” and implementing Secretary Rumsfeld’s lofty visions for the military, not saving money like it was for previous four BRAC rounds. The previous four rounds achieved break-even point within 4-6 years at most, as confirmed by DOD Comptroller Robert Hale.


North Korea can target the US


An unclassified portion of a classified assessment by the Defense Intelligence Agency confirms “with moderate confidence” that North Korea can miniaturize nuclear warheads and mate them to ballistic missiles, including ICBMs.


That DIA assessment was quoted by Rep. Doug Lamborn (R-CO) during an April 11th, 2013, hearing of SECDEF Hagel and General Martin Dempsey. Both were caught off-guard.


The assessment says that North Korean missiles probably have “low reliability” for lack of advanced guidance systems as those possessed by Russia and China. However, even a missile with low accuracy can, if armed with a nuclear, chemical, or biological warhead, obliterate a major city, given cities’ large area.


The DIA’s assessment is confirmed by the fact that North Korea has twice – in 1998 and 2012 – delivered satellites to the orbit. The technology required to miniaturize satellites and mate them to ballistic missiles (Taepodong missiles delivered both satellites) is the same as that used for nuclear payloads.


North Korea currently has two ICBM types: the mobile KN-08, whose range is not exactly clear, and the Taepodong-2 which, according to different sources, has a range anywhere between 6,000 and 10,000 kms. The former would be enough only to reach Alaska, the latter would be enough to reach the US West Coast.


The DOD’s spokesman, George Little, later denied that North Korea has learned how to miniaturize nuclear warheads or mate them to missiles. However, his claims are belied by the above-mentioned DIA assessment and satellite launches.


It appears the Obama Administration, including the DOD, has now adopted the same policy towards North Korea as that which the US has used for many years towards Russia and China: appease them, downplay the threat they pose, and cut America’s defenses unilaterally.


For many years, successive administrations, intelligence bureaucracies, politicians, and leftist think-tanks have dramatically understated the Russian and Chinese military threat, thus providing a false justification for America’s unilateral disarmament and for the appeasement of Moscow and Beijing, a policy supported by both parties and the entire federal bureaucracy, as well as the think-tanks and most senior leaders of the US military (i.e. businessmen wearing uniforms). This policy has allowed Russia and China to build up their militaries and threaten US interests while being unchallenged and ensuring that the US will, one day, have to play catch-up.


It now appears the US has adopted the same policy towards North Korea.


Navy on track to shrink to 220 ships


A recent testimony by Ronald Reagan’s Secretary of the Navy, John Lehman, before the HASC warned that the Navy will eventually shrink to 220 ships if more vessels are not built.


Mr Lehman blamed that only partly on inadequate shipbuilding budgets, and partly on bloated DOD bureaucracies, but mostly on the DOD’s inefficient acquisition process.


The process, Mr Lehman reminded, is what causes weapons to be developed in decades, not years or months, while technology progresses quickly, and what causes large cost overruns. Mr Lehman launched a full-scale assault on that system and on the Goldwater-Nichols Act of 1986, which largely created that system.


Mr Lehman stated that unless many more ships are built every year – compared to just 8 ships per year being built these days – the Navy will shrink to just 220 ships, a woefully inadequate number to meet its missions. (Already, the Navy can meet only 59% of Combatant Commanders’ requests for ships and only 61% of their needs for submarines.) He said that the Navy needs 346 ships, and to have them, it must build 15 ships annually.


Having a 313- or 300-ship Navy would require building 12 vessels every year.


Mr Lehman also fully endorsed the personnel (including healthcare and benefits) program reforms proposed by the DOD, noting that the last comprehensive reform of these occurred in the 1970s as the US was just beginning to create an All-Volunteer Force.


He also criticized the Littoral Combat Ship, which the DOD’s own testing and evaluation czar rates as not being survivable and lacking serious firepower.


Mr Lehman’s full testimony is available here.

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