Can the Pentagon pay for the war and its new toys?

Can the Pentagon pay for the war and its new toys?

Can the Pentagon pay for the war and its new toys?

Military analysis.
Aug. 16 2006 1:30 PM

The Money Pit

Can the Pentagon pay for the war and its new toys?

Donald Rumsfeld. Click image to expand.
Donald Rumsfeld

If you think the invasion of Iraq was poorly planned, take a look at the Pentagon budget.

The appalling extent of the problem is spelled out in the July 28 edition of a little-known online newsletter called Budget Bulletin, published once a month or so by the Senate Budget Committee's Republican staff.


Drawing on the Defense Department's own data, the GOP staffers conclude that, over the coming decade, the military will fall drastically short of the money it needs to buy, operate, and maintain all the weapons systems churning through the pipeline. And though the newsletter doesn't say so explicitly, the main sources of this crisis are clear: the service chiefs' extravagant taste for more, new, complex weapons; the Pentagon managers' failure to set priorities; and Congress' tendency to pile on even more money than the military requests in order to swell the payrolls of local arms manufacturers.

It comes down to this: Since 2001, the defense budget has been growing by an average of 11.1 percent a year (adjusting for inflation and not including the cost of the wars in Iraq and Afghanistan). This year, owing to fiscal pressures brought on by the skyrocketing deficit, the Pentagon pledged to scale back its growth rate through the end of the decade to 3.4 percent a year.

However, during their flush years, the Army, Navy, and Air Force started up or expanded so many new weapons programs—and so many of these programs have suffered such steep cost overruns—that the Pentagon budget will have to grow at a far higher rate. The GOP Senate staffers calculate that by next decade, the budget, now at around $400 billion (not including the cost of the Iraq and Afghan wars), will have to grow by about one-third, to $530 billion (not including either the wars or the effects of the overall economy's inflation).

Unless, of course, several big-ticket weapons programs are slashed or killed. But this isn't likely to happen for a number of reasons. The service chiefs will fight for the programs in order to retain their share of the budget. Powerful congressional chairmen will fight for them in order to retain constituents' contracts. Finally, there's no great incentive to kill weapons anyway because the short-term savings are so paltry; and, in politics, the short term is all that matters.


The Republican staffers draw particular attention to an annual Defense Department document called Selected Acquisition Report. The SAR, as it's known to insiders, lists all of the Pentagon's R&D programs that cost at least $365 million and all procurement programs that cost at least $2.19 billion. The problem is, this list is swelling.

The SAR of September 2001 included 71 programs that were projected to cost, from start to finish, a total of $790 billion. The SAR of December 2005 (the most recent edition available at the time of the Budget Bulletin's analysis) contained 85 programs with a total projected cost of $1.58 trillion—20 percent more weapons programs costing twice as much money.

Since the Bulletin was published, the Pentagon has released its latest quarterly SAR, which lists the data as of June 30, 2006. The list now contains 87 programs projected to cost $1.61 trillion. In other words, the estimated cost of the Pentagon's big-ticket items has gone up by $30 billion in just the past six months.

And the cost is likely to grow higher still. Of that $1.61 trillion, $909 billion—or 56 percent—has yet to be spent. In other words, a lot of these weapons programs are still in their early stages.


Here's another way to look at the picture. Of those 87 weapons programs, 11 have already exceeded their cost estimates by 30 percent to 50 percent—and 25 have done so by more than 50 percent. This latter group includes some of the most expensive programs—the F-22 Stealth fighter plane, the Army's Future Combat System, and the V-22 vertical-lift aircraft.

In the past, the Pentagon chiefs have offset cost overruns by cutting back on operations, maintenance, and personnel. Not this time, though. There are a couple of wars going on, and it's very expensive to recruit and retain personnel—costlier still to keep a steady line of spare parts, ammo, fuel, and so forth. Military manpower costs have gone up from $84 billion in 2001 to $121 billion in 2005. Operations and maintenance have risen from $127 billion to $179 billion.

Military health care will be consuming vast sums of money for years to come. From 1988 to 2003, the Pentagon cut the size of the active-duty armed forces by 38 percent. Yet the cost of their health care doubled, from $14.6 billion a year to $27.3 billion. And notice, that was in 2003—before the disabilities incurred in Afghanistan and Iraq.

So, the Pentagon and Congress can't cut personnel, operations, and maintenance. They won't cut major weapons systems. Yet a huge budget crunch is looming. That leaves two choices: Elect leaders who aren't afraid of making choices, or plunge the country still deeper into debt.