The financial uncertainty unleashed by the COVID-19 pandemic, already weighing on many U.S. households, is beginning to haunt the Pentagon.
The defense industrial base is in reasonable shape amid the pandemic, according to military leaders, in part because of government assistance. However, the more than $2 trillion rescue package that eased the short-term financial worries of the public may leave military strategists with a long-term budget headache.
“The fiscal situation caused by additional deficit spending because of the COVID-19 situation will certainly pose future budgetary pressures on the department of defense,” Timothy Walton, a defense analyst at the Hudson Institute, told The Epoch Times. “The Department of Defense, historically, has been viewed as a relatively easy target to raid for discretionary spending cuts. It doesn’t mean it’s the most strategically sound approach, but it is a concern moving forward.”
Defense spending is currently on a flatline budget of around $740 billion after a three-year ramp-up under the Trump administration, which is fueling a modernization and readiness push to counter Russia and China.
Out With the Old
Defense Secretary Mark Esper last week acknowledged for the first time that the deficit from the pandemic stimulus package could affect that push.
“I am concerned of course that the massive infusion of dollars into the economy by Congress and the executive branch, nearly $3 trillion, may throw us off that course, if you will, because we all recognize the United States has an enormous debt and we have to deal with that too,” Esper said during an event at the Brookings Institute on May 4.
“So there is a concern there that may lead to smaller defense budgets in the future at the critical time we need to continue making this adjustment, where we look at China, then Russia, as our long-term strategic competitors.”
Esper has been stripping out legacy systems that don’t fit the priorities of the 2018 National Defense Strategy, which marked a clear pivot from counter-insurgency to face “great power competition” with Russia, and increasingly with China. The Pentagon has also been toying with more radical and controversial strategic ideas, such as reducing aircraft carrier numbers, mosaic warfare, and relying on more numerous unmanned systems.
Talking to reporters on May 5, Esper indicated that he would prefer to push forward with modernization at the potential risk of pulling out legacy programs faster than envisaged.
“Frankly, my inclination is not to risk any in the modernization programs; it’s to go back and pull out more of the legacy programs,” Esper said. “We need to move away from legacy [programs], and we need to invest those dollars into the future. We have a lot of legacy programs out there right now. I could pick dozens out from all branches of the services. So that is where I would start,” he said.
“What that would mean is probably accepting some near-term risk, but I think that is something [that has to happen], given the trajectory that we see China is on, and we know where Russia may be going in the coming years.”
But Frederico Bartels, a senior defense budget analyst at the Heritage Foundation, says that forecasts of a lowered budget are in danger of being “almost like a self-fulfilling prophecy.”
“You don’t see anyone in Congress right now talking about reducing defense spending,” Bartels told The Epoch Times. “You see [Chair of the House Armed Services Committee] Adam Smith talking about how there shouldn’t be any increases, but even he himself is not talking about any decreases.”
Smith (D-Wash.) suggested the entire federal budget will need to be reexamined.
“The economics of this get much more complicated than they were before this, and it’s logical to assume that we are going to have to reevaluate our entire budget, both revenue and expenditures,” Smith said on a teleconference, The Hill reported. “Beyond that, it would be pure speculation as to what’s gonna happen.”
Like other analysts, Bartels notes that any impact is unlikely to be felt for the next two years or so—long after the November election.
“A lot of this hinges on what are the budgetary themes that come up in the election, how are candidates talking about it.”
Bartels says that there were already a lot of unknowns for the fiscal year 2022 budget because that’s when a 2011 cap on discretionary spending expires.
“You are going to have already very different budgetary dynamics in Congress. You throw the pandemic on top of that, there is no way for you to know that necessarily there will be a constituency to drive down the defense budget, or even a constituency to drive up entitlements.”
But other analysts say there is a historic pattern.
“What has historically happened is, when Congress and fiscal conservatives come out and get serious about reducing the debt and reducing spending, defense is almost always part of what they come up with for a solution,” Todd Harrison, director of defense budget analysis at the Center for Strategic and International Studies, said in a webinar.
Harrison believes that the current budget already falls short of what is needed to carry out the goals of the national defense strategy.
Walton says that if the budget does drop, the national defense strategy might need an overhaul.
“The national defense strategy explicitly assumes budgetary levels consistent with more or less what’s been funded throughout the first years of the Trump administration,” he says. “If budgets drop below those levels in the future, I think it would either require a reexamination and a creation of a new national defense strategy.”
That could mean changes to plans for force composition, or changing strategic priorities.
“I think it’s going to push some major strategic choices to be made,” he says.
Cutting readiness in certain theaters of the world is one option. “We’ve been talking about that for 15 years,” Walton says. “We’re still not there.”
Austerity Breeds Innovation?
Military spending (and cuts) can be seen in three categories: readiness (the number of troops and equipment ready to fight), capability (modernization, research and development, and training), and capacity.
Walton thinks that if the administration follows its prior form, cuts would likely come in capacity, “reducing the rate at which new things are bought.”
That will limit the fruits of current modernization plans. For example, he says, the Army has invested heavily in a long-range hypersonic missile that should be ready in three years’ time.
“But they’ll be very expensive, both to stand up the units and to buy those actual missiles for them. If we are in a situation where there are reduced budgets, they’ll likely need to cut infantry to buy missiles.”
The Army has run an efficiency process they called “night court” for the past couple of years.
“They’ve come to the point where they’ve already made all the tough cuts,” says Walton. “They’ve cut lots of things.” If the budget drops further, he says, the next choice will likely be between its key modernization programs and cuts to brigade teams.
“Some analysts contend that fiscal austerity breeds innovation,” he says. The example that is often given, he says, are the military innovations spawned during the austerity of the interwar years, including the invention of the aircraft carrier.
“I don’t buy into that necessarily. I think it sometimes forces choices—but less money tends to mean less money to be able to do things.”