There has been one constant in the defense budget ever since the mid-1960s: the money has been divided almost exactly evenly —never varying by more than a couple of percentage points—among the Army, Navy, and Air Force. For all of Gates' apparent rationality, the same is true in this budget: 32 percent goes to the Army, 35 percent goes to the Navy, 33 percent goes to the Air Force. (For more on this, click
In other words, the Defense Department is a monstrous bureaucracy, and its budget is a political document—a set of weights and balances to keep the natural tensions from erupting out of control. (In the 1950s, when budgets were very tight, and before this tacit pie-splitting deal was worked out, the service chiefs saw one another as, quite literally, enemies. For an example, click
Gates is slashing, trimming, and rejiggering along the margins—more so than any defense secretary since Robert McNamara (and taking a lot more care than McNamara ever did to bring the service chiefs along). Yet there may be only so much he can do.
If he can't cut much more, though, Obama's nascent cost-cutting efforts may be in trouble. And in this regard, the White House budgeteers—the number-crunchers in the Office of Management and Budget—are misleading him a bit.
In the OMB's voluminous documents, there's one set of tables projecting each federal department's budget—including the Defense Department's—across the next 10 years, from FY 2011 to FY 2020. This projection feeds into estimates of future expenditures and, thus, deficits. According to this projection (which has little to do with the Pentagon's own estimates, and even less to do with reality), the DoD budget goes down from $708 billion in FY 2011 to $616.4 billion in FY 2012.
Now the $708 billion includes $159.3 billion in war costs, while the $616.4 billion … well, it includes some war costs, namely an arbitrary $50 billion "placeholder" for "out-year overseas contingency operations."
But unless Obama decides to declare victory and pull out of Afghanistan in 2012, actual war costs are going to be substantially more than $50 billion. That means the DoD budget for that year will be substantially larger than $616.4 billion—and the deficit will be larger than whatever the OMB officials are projecting it will be.
Looking at how the OMB breaks down that $616.4 billion, we can infer that the real defense budget will be a lot bigger. For instance, the projection assumes that costs for operations and maintenance will go down from $317.1 billion in FY 2011 to $212.2 billion in FY 2012. That's impossible, even if the war did wind down considerably. It assumes that military personnel costs will decline from $153.8 billion in FY11 to $142 billion in FY12, even though the Army is scheduled to grow and pay is scheduled to go up by another 3 percent. And it assumes that procurement of weapons systems will go down from $137.5 billion to $120.3 billion, even though in fact the cost of weapons will go slightly up.
Again, Gates has nothing to do with any of this sleight of hand. In fact, according to one senior Pentagon official, the White House has promised the Defense Department an increase of $100 billion over the next five years—and that's just in the baseline budget, not including extra money for fighting wars.
So, one of two things is likely to happen in the next couple years. Either the budget—the overall federal budget—and the deficit will zoom higher than the White House is projecting. Or Obama will order his budgeteers to stop playing with numbers and give Gates the authority to bulldoze through a few more bureaucratic barriers in the Pentagon.
Either way, there will be some ugly fights.