Several weeks ago I discussed various strategies for cutting $1 trillion from defense spending over ten years. In this post, I want to address the primary obstacle to defense budget cuts: the threat of near-peer adversaries including China and Russia.
Short Version.
To cut the budget you must first create a positive narrative. The military force structure can be preserved or even improved with budget cuts. Two supporting arguments are: first, the status quo has led to unacceptable outcomes; and second, dynamic competition can inject much needed innovation at a lower cost. This, or some other, positive narrative is essential. Any hint that reduced budgets equals reduced security makes the cuts a non-starter. After all, there are legitimate reasons to worry about the fast-paced advance of China and Russia’s military technologies.
The fiscal situation.
The President’s Budget requested $612 billion for defense in FY 18. Congress enacted $670 billion. The request for FY 2019 was $686 billion. Congress enacted $716 billion.
From the FY 18 request to the FY 19 enactment, the budget grew $104 billion (17%). Well, if the FY 18 defense budget was enacted as requested, and future budgets referenced that number, then we would have avoided $1 trillion in spending increases over ten years.
But that genie can’t be put back into the bottle.
The rational for higher budgets.
Much of the increase came from the desire to modernize the force structure with hypersonics, autonomy, sensors, robotics, and so forth. Yet the DOD doesn’t expect to make hard tradeoffs. It doesn’t seem willing to pull funding from approved programs — even those which are not delivering the desired capabilities. To make new investments, the DOD needs a higher top line.
The same thing happened when David Packard wanted to introduce new rapid prototyping efforts. He went to Congress to ask for more money to do projects like UAVs, V/STOL aircraft, lightweight fighters, and stealth. Packard told the Senate on September 9, 1971:
We believe this should be an authorization rather than a reprograming or tradeoff action… If the prototyping can only be supported at the expense of existing programs, I think the emphasis and scope is likely to be reduced.
The same threat was likely underlying the rationale for funding increases in recent years. When the White House directed the DOD to develop a $700 billion budget for FY 2020 (a modest decrease), the DOD basically declined and continued working toward a $733 billion plan. Well, that defiance probably ended up saving effort.
Senator Inhofe and Rep. Thornberry wrote an article for the Wall Street Journal on Nov. 29, 2018, pleading “Don’t cut military spending, Mr. President.” The strategy was effective. Inhofe now predicts a $750 billion defense budget for FY 2020. After all the hullabaloo, defense wasn’t going to take a cut. It’ll likely get more than it wanted.
Here’s Inhofe explaining why the DOD needs a raise:
China and Russia have increased all during the years that we have decreased… And in some cases, they’ve passed us.
You don’t have to look far to find the same conclusions in the news, strategic analyses, industrial base reports, and so forth. We are told that the defense force structure needs to pivot from fighting violent extremism to countering nation-state actors, and invest in next generation technologies.
Of course, most of the defense acquisition budget did not go to fighting terrorism, even if military operations did. Most of the spending on systems went to Cold War era platforms which were precisely designed to counter a peer adversary. So that kind of makes sense why the DOD refuses to make any tradeoffs.
The prevailing calculus.
Inhofe and Thornberry make a good case. Russia and China are catching up. This is incredibly unsettling to many US citizens who envisioned just 30 years ago a world dominated by friendly, democratic countries. Now, they see unfriendly, authoritarian countries on the rise at the same time that the US and Europe are on the decline.
Now, in most peoples’ minds, there is a positive correlation between defense budgets and military strength. More funding = more advanced systems + higher readiness. That’s the only equation that Beltway insiders understand. If you want to cut $1 trillion over ten years, then that’s a huge hit to the force structure. It means we can’t afford hypersonics, or robotics, or any of those other good things. It means fewer aircraft, ships, and surface vehicles. You can’t cut the budget without cutting program requirements. It’s just logically impossible to Beltway insiders that an improved force structure could result from less funding.
And so any kind of budget cuts would have to entail a proposal of what program requirements would be cut. Cutting requirements means that opponents will interpret the effort as saying “we are not that worried about Russia and China, let them surpass our military capabilities for all I care.” And that pushes the narrative to a sort of pessimism; that the US is so weak and inefficient that it cannot afford to stay ahead of authoritarian adversaries (despite outspending both of them).
Any sort of budget cut proposal could be dead on arrival. It is an inherently negative view of the world. I heard something about the “Moral Budget” which would have spending cuts at even greater levels. The thing about it is, such a budget does not sound moral to its opponents.
They would say it’s actually immoral to pillage money from the warfighter putting his or her life on the line. It’s immoral to demolish the force structure in an era of increasing authoritarian threats. It’s immoral to lower aggregate demand and kill thousands of good US jobs. And it’s immoral to put the ideals of democracy at risk when the US is the only Western nation willing to burden the cost of collective defense.
A bit over-the-top? I’m not so sure. People are genuinely worried about accelerating weapons technologies in Russia and China.
OK, so where do we go from here? How might we respond?
First, the status quo isn’t working.
It’s no secret that the Department of Defense has made many poor decisions on weapons. It often chooses the wrong system for orders of magnitude higher costs. What results is extreme cost-disease, with nominal prices going up 9-11% annually in many weapons commodities.
DOD insiders claim that the exponentially increasing system costs are associated with step-factor increases in capability. But the capabilities are oversold, and usually they are neglecting how unreliable the systems are in the field. They rush through testing in order to meet schedules and career expectations; the process avoids learning and iterative feedback through real world experience.
Let’s assume that each of “next gen” systems has static combat advantages over systems that are simple and reliable. Then what we’ve tried to build over the course of the last 50 years is build up a knock out fighter who can’t last into the second round. (See the end note for more on this analogy).
We build a lot of really complex, multi-mission systems to get Congressional approval. The programs are “joint” service with dozens of stakeholders. They assume economies of scale benefits from longer production runs and singular sustainment procedures. They necessitate the highest forms of technology to make it work.
But it is false to think that complex engineering is synonymous with military capability. In most cases, the complex systems underperform compared to the simple systems. Reliability is a function of simplicity of design; and reliability of the force structure is a function of the redundancy or diversity of designs in use.
When you give managers too much money to go accomplish too many missions on a single platform, you get a perfect storm: a smaller force structure; lower reliability; and higher costs.
Second, we need competitive developments.
CNO John Richardson recently described a different method of system development:
There’s this idea of an outcome focused approach. Let’s focus on solving a very specific problem and then deliver the solution to that problem. And the techniques that we learn as we solve that specific problem, then we can apply those horizontally across a number of different problems.
That’s taking an adaptive and experimental approach. Something like component development independent of specific platforms, and then taking these high technology readiness components and looking to rapidly integrate them onto a platform. At the same time, platforms will look to standard interfaces so that they can be upgraded continuously as new technology arrives. It’s just good system design principles.
Problem solving is done best when it is attacking specific problems, and then generalizing from there. It fosters a diversity of alternatives designs, making it far more difficult for the enemy to counter. A single best system can usually be countered cheaply, but a diversity of dedicated systems can only be countered with an equally diverse set of counter-strategies.
When you decrease the scale of each project effort — when you are building a diversity of dedicated systems with open architecture — you can introduce competition. And it is competition between suppliers that drives innovation, holds costs in check, and delivers value. When you have competition, you can filter out the poor performers and encourage the best.
In today’s system, no one can claim the F-35 was a poor program using facts and data because no alternative project was actually pursued. It’s all counterfactual. And by now, no one else in the US has started developing a new fighter in almost 30 years. There was no competition.
The benefit of competition between austere development projects is that you don’t need many layers of bureaucracy and approval. All those justification layers were to “pick the right system” in advance of development because development was also a decades-long commitment to huge dollars in production and sustainment.
But with competition, you can let testing determine which real-life system performs better in the field. And only then commit to production when it is effective and affordable.
That system where pluralistic organizational design creates accountability through competition is far more efficient than the compromised decisions of a colossal bureaucracy. That bureaucratic process towards a consensus often leads to inferior design choices, because only “sensible” designs that conform to the layman’s expectations can be approved. Freedom to experiment and compete can do the impossible: deliver better systems at a lower cost.
The argument that should be made.
Greater military capability is possible at a lower cost. The idea that budget cuts will necessarily lead to compromised security must be surmounted before any progress can be made.
It is by no means a stretch to argue that you can increase capabilities at a lower cost, provided we have a competitive development environment and testing approach. Not only does this create better systems, it is complementary with adaptive military cultures and concepts of operations. High technology is nothing without sound operational concepts, and sound operational concepts cannot be generated without constant experimentation with new and different types of equipment.
It could very well be the case that the Department of Defense will resist change unless its officials are made uncomfortable. Without any internal competition or peer threats, the DOD could have continued putting out paper tigers without adapting to the world. But I bet competition from Russia and China will motivate some better program decisions, if only because they see what else can be done.
Similarly, if you don’t make officials uncomfortable through a big budget squeeze, then they simply will never change. The reluctance to modify any existing programs, and the call for higher funding levels, it proof of this resistance. You got to cut the budget first to get change moving.
In start-ups, it’s a bad idea to throw too much money at a nascent project. They need to struggle and work out the kinks. Ideas and designs can change a great deal over time. Arbitrary cost and schedule constraints produce workable systems and often can motivate innovative solutions. Then, if real potential materializes, the venture capital firm pours on “rocket fuel” to scale the technology.
In program management, the DOD does the equivalent of pouring rocket fuel on the the start-up before it has even demoed a product mock-up. And for that it pays a high price which backfires in Congressional oversight, which then spirals into increasingly rigid processes.
Conclusion.
There is far too much to this story to fit into one post. However, the primary theme I’d like to draw from is The Principle of Optimism: never make negative predictions.
To counter the growing threat from Russia and China, we can’t proceed with business as usual. We can’t proceed with exponentially increasing costs for a diminishing force structure. If we can’t stay ahead with 2x or 3x the budget of Russia and China combined, then what is 4x or 5x going to do?
There first needs to be a positive vision for the future. A vision of the Defense Department at the forefront of the technology curve; that is lean, agile, and innovative; that adapts to change without prejudice and institutional bias. Budget cuts require a vision of downsizing being an integral part of the overall transformation toward improvement.
A reminder: managers will be far more likely to approve budget cuts if they are also provided increased authority to accomplish their task. This requires requires organizational budget ceilings with maximum flexibility to program within that ceiling. And an organization budget requires a certain tolerance, allowing good managers to fail in the process of creating a system that succeeds.
The increased manager responsibility should also be viewed optimistically. Empowering managers to gather skills, try out new ideas, and innovate, is an exciting prospect not only for the managers, but for all the various personnel who look to their managers as leaders. It is optimistic to view defense acquisition — a process now characterized by socialist 5-year plans — to view defense as transformed into a liberal framework based on decision rights, exchange, and competition.
Final thoughts: I personally believe that a better force structure can be bought at a lower cost. However, I think it will take time to purge the old systems from operation and introduce the new systems at a lower cost. It will also take time to build a supporting culture.
I am thus conflicted about any drastic cuts, or whether there should be cuts at all. I view the size of the defense budget at a political question. I don’t think I have any particular insights into what its dollar value should be. One could imagine a world where defense R&D produced so many positive spillovers for the economy that the public favored increased defense spending.
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End note:
On the analogy of the US military as a knock out fighter with no stamina, it still seems there is no available blitzkrieg tactic that will end a war with Russia or China in short order.
Usually I don’t have anything to say on nuclear strategy, but if someone argues that all the US needs is nuclear capabilities to deter adversaries and downsize conventional forces, then the response is that Russia and China could simply start seizing nation by nation on the periphery — the US wouldn’t use nukes to stop Russia from taking Ukraine or China from taking the Philippines. As that process unfolds, the US would find itself in a real predicament.
So limited engagement forces are required. And the better they are, the better we can keep authoritarian influence “in its box.” Yes, that sounds like adventurism, but why else would people be scared of Russia and China? Certainly its absurd to foresee them storming California’s beaches. We are worried because they might strong arm nations until the core of Western democracy is all that remains.
Another problem for the United States is that it has no mobilization plan for a peer war going into the second round. We know China can mobilize resources expeditiously. But the big 5 primes in the US can’t scale up 5x or 10x or 50x. There’s simply no plan to engage the rest of the US economy.
I’m just riffing. My optimistic outlook on the Russia/China challenge is here.
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