Will a Trillion Dollars Per Year Buy America a Better Defense?

By James Durso

The Pentagon had a very merry Christmas but all the American taxpayers got was a lump of coal.

The U.S. Congress passed an omnibus spending bill that awarded the Pentagon $45 billion more than originally requested – a record $816.7 billion dollars – out of $858 billion for the national defense establishment. The Veteran’s Administration, which is really just deferred defense spending, requested $301.4 billion, and the Intelligence Community budget request includes $26.6 billion for the Military Intelligence Program. There’s also probably something squirreled away at the Department of Homeland Security, but you get the picture.

And don’t forget the interest on the money the U.S. borrows, much of it from foreigners, to pay for national defense.

And that’s not enough for some.

H.R. McMaster, the former White House national security adviser, and other defense hawks, advocate the defense budget be increased to 4.5% of GDP or $1.2 trillion. McMaster justifies the budget increase because American “restraint” is to blame for aggressive moves by Russia and China, which will be news to citizens of the Middle East and Afghanistan who were on the sharp end of U.S. restraint.

And lately, McMaster claimed the U.S. is “underinvested in defense” and is unable to deter China, and positively noted Japan’s intent to double its defense budget. The Chairman of the Joint Chiefs of Staff, General Mark Milley, advocates a 3%-5% real increase to the budget each year for “preparing the military to meet the threats of the future while fighting the battles of today.”

Analyst Stephen Semler observes that “In just two years, Biden has signed off on over $1.72 trillion in military spending — $737 billion more than what the infrastructure bill and Inflation Reduction Act provide over *ten* years” and that about $240 billion of the omnibus bill spending for “nonmilitary programs” is for “military- and law enforcement–related activities.”

And, in 2022, the U.S. spent almost a defense budget’s worth of money – $724 billion – on interest on the public debt.

But, despite the record-breaking payday, the military is setting itself up for future disappointment.

Maj. Gen. John Ferrari, US Army (ret.) has pointed out that the Pentagon’s unrealistic, that is, too low, inflation assumptions are hiding a future potential $75 billion shortfall, a future “hollow force” that will be harder to overcome that in the 1980s. And the National Defense Industrial Association says the Pentagon will need an extra $42 billion next year to make up for inflation losses, and that from 2021 to 2023 the total loss of the Pentagon’s buying power will exceed $110 billion.

And even if inflation moderates in line with the administration’s hopes, the military will still be in trouble as defense sector inflation is typically 20 basis points higher than the Consumer Price Index, and, according to McKinsey: “DoD could lose over $100 billion in purchasing power within five years if the economy reenters a period of high inflation and low nominal topline increases in the defense budget, similar to what happened in the 1970s.”

In other words, there will be a lot of yelping for more money.

But what if the military gets less money?

House Speaker Kevin McCarthy agreed to the Freedom Caucus demand to freeze federal spending at 2022 levels, which could cut defense by $75 to $100 billion.

The hawks reacted as expected, but analyst William Hartung argues that a near-trillion-dollar defense budget hasn’t deterred guys like Putin and Xi, but it has enriched the five biggest defense contractors  that swallow between $150 and $200 billion of the defense budget, and deliver most major weapons behind schedule and over budget. He suggests heeding the 2021

The Congressional Budget Office study “that outlined three options for saving over $1 trillion in Pentagon spending over the next ten years without damaging our defense capabilities.”

But just when the military wants an unprecedented haul of cash, its reputation taking a beating.

The Ronald Reagan Institute’s November 2022 national defense survey found that only 48 percent of those polled report “a great deal of trust and confidence in the military” – up three points from 2021, but still down 22 points from 2018. The survey also found a continued decline from 2021 in confidence in the military’s ability to keep the country safe (50% down from 57%) and act in professional and nonpolitical manner (35% down from 40%).

And the feelings about the military’s politicization are shared by the left and right, though for different reasons, the right opposed to “woke” programs and the left concerned about far-right extremists in the ranks.

And while large majorities favor increased spending on defense and border security, there is also an interest in a more engaged foreign policy, and an increase in foreign aid. And a recent Rasmussen poll found that half of likely voters disagreed with the $1.7 trillion, 4,155-page omnibus bill, thinking it was a “disaster” for the U.S., meaning the public may be receptive to a way to stay engaged in the world at a lower cost than the $8 trillion the U.S. blew through after 9-11.

The military isn’t the only public institution suffering a bad reputation, but it is used to basking in public esteem so it may not know how to recover.

The slide in the survey may have been exacerbated by the actions of military leaders in the wake of the violent demonstration at the Capitol on January 6th. And the chaotic retreat from Kabul in August 2021 – the first time the American people witnessed a defeat in real-time – also probably pushed the poll numbers lower.

A defeat in Afghanistan, what the Pentagon called a “mission transition,” commanders prioritizing social programs over battle skills, an epidemic of sexual assault, an all-time high suicide rate, the inability to pass a “clean audit,” and self-dealing by senior officers…no wonder the services are missing their recruiting targets, which will further weaken support for big defense budgets as a family with someone in uniform is more likely to support the Pentagon’s requests.

America’s military leaders may be unreconciled by the ending of the Cold War with the Soviet Union, which wasn’t marked by a victory parade through Red Square, but by Soviet citizens angry because the planned economy couldn’t deliver decent household appliances. The brass missed the Big Game and they and their confederates in the policy community may think that a splendid little proxy war with Russia will make the taxpayers forget the defeat in Afghanistan and all those wasted lives and dollars.

Unique in the world’s militaries, the Pentagon doesn’t think it is responsible for defending its country’s borders.

Instead of defending America, it defends American interests, which are often the mutable interests of the political class, and are not viewed overseas as positively as they are in Washington, D.C. green rooms and think tanks, many staffed by people whose children aren’t in uniform.

The military is an economic enterprise. It relies on a generous budget to not just pay itself, but also the captive defense contractors that build weapons and provide services – and hire former servicemembers. It’s not “Military, Inc.”  like in Pakistan or Egypt but the military’s economic interests are often opposed to those  of the American people, calling to mind Eric Hoffer: “What starts out here [the U.S.] as a mass movement ends up as a racket, a cult, or a corporation.”

U.S. President Joe Biden and NATO Secretary General have been calling for sacrifice in order to defeat Russia and usher Ukraine into NATO and the European Union (EU).  Stoltenberg admits “it could take years…even if the costs are high, not only for military support, also because of rising energy and food prices.”

In 2022, the U.S. Congress giddily gifted $113 billion in war aid and economic support to Kyiv, but no one has publicly discussed the cost to replace military equipment shipped to Ukraine, but the U.S. Secretary of the Navy admits the aid has depleted the stocks the U.S. needs for its own defense.

And much of the weaponry shipped to Ukraine is at risk of diversion, according to the Organized Crime Index which reports “Ukraine is believed to have one of the largest arms trafficking markets in Europe. While it has long been a key link in the global arms trade, its role has only intensified since the beginning of the conflict in eastern Ukraine.”

In other words, just because it is fighting Russia, Ukraine hasn’t become more virtuous.

And right on time we learned some weapons bound for Ukraine wound up in the hands of criminal gangs in Finland, Sweden, Denmark and the Netherlands, and Boko Haram and ISIS in Africa.

A rapid conclusion of the Russia-Ukraine war will do the American taxpayers a favor, so the U.S. can hand NATO to the Europeans and focus on Asia. (And France can finally get its European Union army.)

The Russian army has proved less fearsome that NATO imagined (an analytic shortfall that should publicly be addressed by Congress), so Europe should be able to defend itself. NATO was never a real coalition, anyway; it was just about America defending Europe, while the generous U.S. budget allowed Europe to spend its money on social welfare schemes and industrial protection.

The Freedom Caucus budget cut may get the attention of the E-Ring and motivate some reforms, though Congress can’t put all the blame on the Pentagon as it legislated many of the military’s inefficiencies into existence.

Congress should consider multi-year defense budgets to relieve contractors’ planning uncertainty and reduce the cost of weapons systems; giving DoD authority to spend Operations and Maintenance funds across several fiscal years to reduce budget turbulence and the “use it or lose it” mentality; another round of military base closings to drive infrastructure savings; reviewing domestic content legislation (the “Buy America Act”), and reexamining big-ticket programs like the $1.7 trillion dollar F-35 combat aircraft that has been plagued by delays, cost overruns, and technical faults, such as structural weaknesses, software glitches, faulty ejection seats, and a modernization program that is four years behind.

The Reagan Institute poll survey reported Americans still want to engage with the world and they recognize that China is the biggest threat to the U.S. On the other hand, only 40% think the U.S. should be “More engaged and take the lead” (down from 51% in February 2021) which may offer less leeway for military adventures, and a larger role for diplomacy. Worrying for Pentagon bosses, only 25% of those polled regard “Military leadership, such as officers and generals” as the best in the world (down 8 points from 2021).

Engagement with the world can be improved if the Congress rebalances funding for diplomacy and the military and security services that was deformed by the wars in Iraq and Afghanistan, and the response to 9-11.

More “resources,” that is, money, for the State Department, Commerce Department, and U.S. Trade Representative, with clear orders from the White House that they are the sales team, will help de-securitize relations with the rest of the world by emphasizing free and fair trade, as foreign policy without economic benefits for the U.S. is just a hobby for bureaucrats.

And as support for indefinite involvement in Ukraine is slipping, now may be the time to push  Ukraine, America’s proxy, to restart negotiations with Russia, especially as the Republican Congress is dubious about sending even more aid to Ukraine.

Another to-do item is to examine the effects America’s sanctions policy has on trade and finance, as seen in the distortion of world supply chains – and the attendant shortages and price jumps that damage U.S. military readiness – caused by U.S. sanctions on Russia, and whoever else is the villain du jour.

Washington’s eagerness to sanction anyone and everyone is partly  responsible for the BRICS effort to create a new reserve currency and rumblings about OPEC selling oil to China in exchange for Yuan, which, if successful, will permanently weaken the dollar and the United States.

Instead of parroting the Pentagon’s wish for budget increase of 3%-5% above inflation to fund another round of “great power competition,” the Republicans should hold hearings on how the nation’s financial challenges will affect its strategic choices, and discuss the opportunity costs of the proposed unprecedented defense spending levels that are crowding out other important discretionary spending, taking the opportunity to remind the military of Bernard Brodie’s maxim, “Strategy wears a dollar sign.”

Congress recently announced that a congressional bipartisan commission “will examine President Joe Biden’s 2022 National Defense Strategy and craft recommendations for its implementation.” The commission is attacked with familiar names but not, unfortunately, any economists who could examine the true, long-term cost of the defense strategy and then educate the public on the debt the Pentagon expects them to assume.

General Omar Bradley, the famed World War 2 commander observed, “Amateurs talk strategy. Professionals talk logistics.” At a time when the U.S. no longer commands the world’s economy as it did in 1945, America’s commanders must also talk economics so they will understand an enemy that can bring a government to heel, the “bond market vigilantes.”

In future wars, the Pentagon will have to understand war’s impact on the global supply chain before the commanders make their recommendations to the President, who will also have to consider the supply chain effects on the U.S. and world economy.

The need to minimize shocks to the global economy may shape how the war is fought, which will go against the grain of the military establishment which typically forgets that “the economy” pays for its cool gear and great benefits program.

Pentagon leaders should focus on rebuilding the military’s reputation with the public by:

  1. Starting a conversation about how the military can help defend the country’s borders. In the U.S., this is regarded as a civilian, law enforcement function, but it’s time the taxpayers get something back for the money they grant the Pentagon every year, despite the aversion of the brass to this mission.
  2. Ending the military’s epidemic of sexual assault and suicide, which are probably motivating responsible parents to keep their children away from military service.
  3. Enforcing standards of behavior for senior officers. The Fat Leonard bribery scandal and current investigation of retired General John Allen for improperly lobbing for foreign interests are a signal to military leaders to stop talking about morality and ethics to the troops and start practicing what they preach. Also, a lifetime ban on retired senior officers working for foreign interests will underline to them where their loyalties lie.
  4. Being upfront with the public about the true cost of the Pentagon’s future strategy, which is a greater threat to the public fiscal health than anything Putin or Xi can dream up.

If the Pentagon was a publicly-traded company, the board of directors would have fired the managers and would themselves be the target of a shareholders’ lawsuit. American taxpayers may not be ready to “pay any price, bear any burden” for an expensive military whose record since 1945 can charitably be described as “mixed” and is failing to deter America’s enemies.

James Durso (@james_durso) is a regular commentator on foreign policy and national security matters. Mr. Durso served in the U.S. Navy for 20 years and has worked in Kuwait, Saudi Arabia, and Iraq.