February 7, 2000

MEMORANDUM TO: OPINION LEADERS

FROM: Thomas Donnelly, Deputy Director

SUBJECT: Defense

After 15 years of decline, President Clinton's new budget asks for an increase in defense spending. Yet the administration is merely tinkering at the margins: even with the slight increase being proposed, defense spending will remain at less than 3 percent of gross domestic product.

As with many Clinton Administration claims, the defense budget request for Fiscal Year 2001 requires careful comparison of rhetoric and reality. For example, in his statement announcing the defense request, Defense Secretary William Cohen asserted that the budget "includes $60 billion for procurement in FY 2001, fulfilling a major Clinton Administration and Quadrennial Defense Review goal." However, when one parses the details of this claim, it proves to be less impressive. First, the goal was originally set in 1995, measured in 1996 constant dollars and to be met by 1998; the Pentagon is at least three years late and, when inflation is factored in, still short of its own goal. Moreover, the new procurement request is actually $1.5 billion below what was projected in last year’s budget for this year. And even to meet this reduced figure, the administration has changed its accounting rules, with more than $1 billion in Navy nuclear submarine refueling and other repairs, which used to be counted as operations and maintenance spending, now classified as procurement.

Much of this modest increase will be spent to fill empty spare parts bins, rather than buying new weapons or improved combat training. Thus, an "increased" defense budget is not enough to prevent significant cuts in important programs like the C-17 airlifter, which played a key role in operations during the war over Kosovo, and the Theater High-Altitude Area Defense
(THAAD) missile defense system. And the continuing slide in spending on defense research belies Cohen's claim that the administration is transforming the Pentagon to exploit the revolution in military affairs.

Likewise, a substantial slice of the request will go to cover operations in Bosnia and Kosovo, and the full cost of the defense health program -- items which have in previous years been paid for by emergency congressional appropriations. In all, there is about $3 billion in the president's request that reflects improved accounting but not an increase in defense capabilities.

When combined with adjustments for inflation and increases in military pay, the president’s budget would increase spending on actual defense capabilities by less than half of 1 percent over last year, at best.
The Clinton Administration's increases are even more meager when measured against the overall readiness and modernization needs of the armed services. Required peacekeeping missions continue to limit the combat readiness of Army forces in particular; deployment to the Balkans reduced two divisions to the lowest readiness rating and none of the Army's 10 divisions merits fully-combat-ready status. The $60 billion procurement target is far below what is actually needed to modernize current U.S. forces; estimates of required procurement budgets by defense analysts outside the Pentagon range from $80 billion to $160 billion per year. And none of these estimates accounts for the cost of deploying an effective missile defense system capable of protecting the United States homeland, its forces and its allies.

It is equally important to note that a marginal increase does not make up for the cumulative cuts of the Clinton years. Compared to the final Bush administration defense plan, Pentagon budgets were reduced by $162 billion through 1999, and the total amount of deferred procurement spending is nearing $1 trillion. While deploying American forces at a dizzying pace, the Clinton Administration has been content to live off the defense investments made by previous presidents.

While many Americans are enjoying unprecedented prosperity, Pentagon budgets remain at Depression-era levels. Compared to the administration's total projected federal surplus of $184 billion, the defense increase represents roughly 2 percent. This is far short of the amount needed to "provide men and women in uniform the resources they need to remain the world's preeminent military force," as Secretary Cohen claims. It will require more than a one-year, one-percent defense spending increase to reverse a decade-long erosion of American military power.