Over the past four years, President Ronald Reagan and his national security team have succeeded in rewriting the context of the defense debate. The need for a massive defense buildup has been accepted; the only open question is the future rate of growth. In budgetary terms, the impact of this buildup has been dramatic. Excluding inflation, the 1985 defense budget approved by Congress is 51 percent higher than five years ago, reflecting a remarkable $330 billion in cumulative real growth since 1980. During the same period federal support for domestic programs, excluding interest payments and entitlement programs (retirement, health care, unemployment), declined by over 30 percent. In the recently submitted budget request for 1986, President Reagan has proposed to continue this transfer of funds from domestic programs to defense. His budget accords the Pentagon a further increase of six-percent real growth—while many domestic spending programs have been slated for major cutbacks.

Following the election in November 1980, former Defense Secretary Melvin R. Laird offered the following advice to the incoming Reagan team: "The worst thing that could happen is for the nation to go on a defense spending binge that will create economic havoc at home and confusion abroad, and that cannot be dealt with wisely by the Pentagon." The Reagan Administration chose not to heed Laird’s warning.

Rising defense budgets have been a major factor in the federal deficit crisis, and the defense program, together with its supporting rhetoric, has had some disturbing foreign policy implications. Relations with the Soviet Union in the last several years have deteriorated, and arms control negotiations came to a standstill during the first Reagan term. Relations with our European allies have also been strained. It is the last part of Laird’s warning, however—that our defense establishment could not manage rapid budget increases effectively—which is of concern in this article.

Since 1980 we have heard much discussion of the broad budgetary and foreign policy implications of the Reagan buildup, but too little attention has been paid to the real nuts and bolts of our defense program. Was the buildup militarily necessary or not? Are significant military improvements being attained or is our money being squandered? After $330 billion of real growth in Pentagon spending, these are legitimate questions.

II

The Reagan defense buildup formally began ten days after the inauguration, when Defense Secretary Caspar Weinberger and Budget Director David Stockman acceded to the demands of powerful senators in the new Republican majority and added $32 billion to the outgoing Carter defense budgets for 1981-82 (which had already provided $20 billion in real growth over the two years). There was no justifying analysis or supporting programs; these were to be developed later. It was simply assumed that there was an urgent need and that the money would be efficiently spent on the areas of greatest military requirement.

In vivid contrast to the line-item pruning led by Mr. Stockman across the entire gamut of domestic and foreign aid programs, there was little Office of Management and Budget (OMB) or Defense Department review of the added funds. The task of adding $32 billion was assigned to the three military departments, which had long-standing shopping lists of unfunded programs. There was no time to balance individual department requests; potentially important national needs like sealift and airlift were not high on the Navy and Air Force lists and consequently received short shrift.

In contrast to its usual practice, the Congress proved remarkably amenable to the Reagan Administration’s 1981-82 defense proposals. Despite the large add-ons and the fact that the normal budget review process in the executive branch had been truncated, Congress ultimately removed only one percent from the request (after President Reagan’s downward budget adjustment in September 1981).

This was a halcyon year for defense. Since then, the Congress has returned to its more traditional practice of voting sizable reductions in the defense budget. The Administration, however, has anticipated these cuts and included a large "cut insurance" reserve for each year. The apparently significant reductions of $54 billion between 1983 and 1985 reflect congressional awareness that portions built into the budget could be skimmed off with no repercussions. Even with these cuts, the defense budget approved by the Congress grew by 16 percent, after inflation, in three years.

For instance, in 1983 and 1984, over $17 billion (ten percent) was slashed from the military procurement program alone. Yet the largest defense weapons procurement programs remained virtually unaffected. Of eight major Army programs, six never changed, one received all its funds but encountered cost increases which slowed production, and one slowed production due to technical problems discovered during operational testing. Six of the Navy’s largest shipbuilding programs were unaffected by congressional action in 1983 and 1984, while the Trident submarine production schedule slipped slightly. And all of the Air Force’s top aircraft and missile programs remained essentially untouched. How, then, did Congress cut $17 billion in two years without affecting major programs? The answer is straightforward: the Administration anticipated the congressional reductions and included numerous budget items that could be reduced in price or easily deferred to later years.

The 1985 budget request for the F-16 Air Force fighter shows how this happened. In the 1983 and 1984 budgets, the Air Force was buying F-16s for a unit price of about $16 million each year. In the 1985 budget request, however, the unit price inexplicably jumped to almost $24 million—adding well over one billion dollars to the cost of the program. In response, Congress quickly cut the F-16 unit cost to $20 million and reduced the appropriation by $800 million, but none of the requested F-16s was deleted from the budget. In effect, the "cut insurance" was removed without adversely affecting the F-16 program.

Thus, in the strange game of budgetary politics, all parties come out well. Congress appears to be trimming the defense budget, while the Pentagon ends up each year with robust increases. President Reagan also has been highly successful. His initial budget plan called for 1981-85 defense real growth of 55 percent—Congress has approved 51 percent. This is a remarkably large sustained increase for defense in peacetime—even in the post-Sputnik hysteria of the late 1950s the defense budget grew no more than ten percent over a five-year period.

Is the Reagan defense effort a carefully honed and well-managed response to real and serious threats facing the United States? Or is it, as Laird feared, merely a "defense spending binge?"

III

As a candidate in 1980, Ronald Reagan campaigned hard on the perception of a vastly weakened America. He scored well with blanket assertions of U.S. military inadequacy, caused by conciliatory détente policies and underfunded defense budgets of the 1970s. He portrayed President Carter as "soft on defense," asserting in April 1980 that: "In military strength we are already second to one: namely the Soviet Union."

To Mr. Reagan, the need for a massive increase in defense was not a new idea—he had been preaching it for two decades. What was new was that the nation had begun to agree; public opinion polls showed that the majority of Americans supported an increase in defense spending. The late 1970s had seen a series of events which contributed to the general perception of a decline in U.S. power and will to fight; the Soviet bear had been unleashed in Afghanistan, and even Third World nations like Iran could defy the United States with impunity. At home, a growing conservative voice—centered around the Committee on the Present Danger (CPD)—exerted considerable influence over the national security debate, helping to sidetrack Senate ratification of the Strategic Arms Limitation Talks (SALT II) treaty in 1979.

The dramatic shift in public opinion between 1976 and 1980 had little to do with actual military capabilities. There is no evidence that higher U.S. defense spending would have deterred events in either Afghanistan or Iran (though better intelligence would have helped). The changing context of the debate over the U.S.-Soviet military balance was due far less to changes in military reality than to Soviet misbehavior and the effectiveness of one particular group—the CPD—and one man—Ronald Reagan—in making their messages heard. It was the perception of weakness, much more than any shift in the military balance, which drove the public to support a defense buildup in 1980.

This is not to say that all was well with the American military machine, which faced a number of serious problems in 1980. Among them were the inability of the all-volunteer force to provide the necessary numbers and quality of military personnel, and the low combat readiness of our forces. Only 69 percent of 1980 enlistees had received a high school diploma, a record low. Reenlistments of those already in the force, especially in highly technical areas, were also suffering. These personnel problems, along with spare parts shortages and maintenance backlogs, were contributing to low readiness levels.

In addition, there were growing doubts about the adequacy of U.S. forces to meet our future military needs. Soviet military power continued to expand through the 1970s, more than that of the United States and its allies; the Soviets also greatly increased their land-based intercontinental ballistic missile (ICBM) and sea-based strategic missile capabilities. In conventional forces, the Soviets maintained their numerical edge in ground forces and began to close the technological gap which has favored the United States since the end of World War II.

In seeking to justify a massive military buildup, Mr. Reagan sought to generalize these problems by portraying the U.S. military in a state of crisis, asserting in April 1980 that "we’re in greater danger today than we were the day after Pearl Harbor. Our military is absolutely incapable of defending this country." Yet the shifts in the U.S. military posture and in the U.S.-Soviet balance of power during the 1970s were far less one-sided and more complex than the President has ever acknowledged.

For instance, President Reagan has often categorized the 1970s as a decade of neglect for our armed forces—even going so far as to proclaim in a March 1981 interview "that it is rather foolish to have unilaterally disarmed, you might say, as we did." These statements are quite misleading.

Our defense budgets did indeed decline between 1969 and 1975 under the direction of President Nixon, but these reductions were tied closely to the withdrawal of over 500,000 combat troops from Vietnam and a return to peacetime operating levels. Even during this period of low budget levels, the services achieved modernization of combat equipment far faster than planned—particularly aircraft, helicopters, missiles and ammunition. As older weapons and munitions were lost or used up in Vietnam, they were replaced with the latest production models. When we left Vietnam the production lines were still pouring out new equipment at a high rate.

Since 1975 two of the military services—the Army and Air Force—have actually increased their conventional forces. The Army received approval to expand from 13 to 16 combat divisions, while the Air Force was given permission to expand from 22 to 26 tactical air wings. Only the Navy saw a major force reduction during the 1970s, due almost entirely to its own initiative in retiring several hundred aging World War II vessels. Under President Ford, the funds allocated for defense modernization accelerated after 1975 to provide the added equipment required for the new forces and to speed up the acquisition rate of new equipment. Excluding inflation, annual procurement funding increased 33 percent between 1975 and 1977, then remained at this higher level through 1980.

Funding for strategic forces declined in the 1970s after the unprecedented investments of the 1960s. Sizable increases in force capability were nevertheless achieved. After the heavy construction costs for strategic submarines and ICBM missiles and missile silos in the 1960s, the strategic programs of the 1970s could concentrate on less expensive upgrades using existing launching platforms. For instance, we replaced most of our submarine-launched and land-based ballistic missiles with much improved models. Each new Poseidon missile carried ten warheads compared to the single-target capability of the Polaris missile; each Minuteman III missile carried three warheads, replacing the older single-warhead ICBMs. The B-52 bomber also received substantial improvement to ensure its continued effectiveness—a new supersonic air-to-surface missile was added in the mid-1970s along with a major upgrade of the B-52 electronics systems. In addition, we launched new programs for the air-launched cruise missile, the MX missile, the Trident submarine and the Stealth bomber. In 1970, the United States had 4,000 strategic warheads—when President Carter left office we had over 9,000.

The United States was thus not "unilaterally disarming" over the course of the 1970s, and of course, neither was the Soviet Union. The key question was whether the United States and its allies could still deter or, if necessary, defeat potential military aggression. We will never be certain of Soviet military capabilities or, more important, their strategic intentions. Interpretations of the Soviet threat will be largely shaped by the long-standing mindsets of policymakers and will be colored by the latest displays of Soviet behavior or misbehavior. Nonetheless, a few general observations can be made.

IV

In strategic nuclear forces, the United States has today a decided, although narrowing, edge in deliverable nuclear warheads—reflecting U.S. emphasis on multiple warheads for its missiles since the early 1970s. The Soviets have a clear advantage in the size and the number of missile launchers, reflecting heavy Soviet missile and silo production since the mid-1960s; at the same time the United States ended its construction of new strategic submarines and missile silos. Our land-based missiles (about 25 percent of the U.S. strategic warheads) are growing more vulnerable, but the much more survivable air and sea legs of the strategic triad leave us with a substantial nuclear deterrent. The Soviets, on the other hand, maintain about 75 percent of their strategic power in land-based ICBMs; these missiles are also growing in vulnerability.

The capability of U.S. naval forces, with their massive edge in carrier forces, far exceeds that of the Soviet navy. The United States maintains 13 large deck carriers (65,000 tons or larger) equipped with the most modern aircraft in the world as well as 12 smaller deck carriers (under 40,000 tons). The Soviets, by contrast, maintain only five smaller carriers (under 45,000 tons). Like the smaller U.S. carriers (officially called amphibious assault ships), the Soviet carriers can only accommodate vertical take-off jets and helicopters. Overall, the U.S. surface navy has 206 combatant ships exceeding 2,000 tons—the Soviets have only 141 (a 46-percent U.S. advantage). The Soviets do have a large numerical edge in attack submarines, but their submarines are much louder and more easily detected than U.S. counterparts; U.S. forces also have an overwhelming edge in antisubmarine technology. Soviet submarines, moreover, have limited access to the oceans from their naval bases. The naval balance tilts further in our favor when the allies of the two powers are considered; our European and Asian allies have large naval forces while the Soviet allies have almost none. Our greater naval capability must, however, answer to a larger mission—that of controlling long sea-lanes and projecting power ashore—than the Soviet mission of challenging that control.

The balance of ground forces in Europe favors the Soviets and their Warsaw Pact allies—although the wartime reliability of these East European nations is suspect. The Soviets derive their strongest military advantage from armor and continue to outproduce the West in tanks and other armored equipment. The United States and NATO forces, however, have superior antitank missiles, mines and tactical aircraft for use against Soviet tanks; NATO would also have the advantage of fighting from defensive positions. Predictions about the outcome of a Warsaw Pact conventional assault on Western Europe, of course, vary widely. Most experts agree, however, that the chance of such an attack is remote.

U.S. tactical aircraft remain at least one generation ahead of the Soviet Union in air combat and ground attack capability, but Soviet production of new aircraft in the past decade exceeds that of the United States. The qualitative advantage of U.S. equipment was clearly demonstrated in the 1982 Lebanon war where the Israelis, using American-supplied military equipment, shot down over 80 Syrian MiGs and destroyed 18 missile batteries—without losing a single aircraft themselves. (The skill of Israel’s pilots was also a major factor in this record.) On the other hand, the loss of two U.S. Navy attack aircraft in one day over Lebanon in 1983 suggests a vulnerability problem for U.S. aircraft against surface-to-air defenses. The Warsaw Pact and NATO nations have roughly the same number of available tactical aircraft; NATO pilots receive more extensive training each year than their Soviet counterparts.

Given our inability to define a precise net military balance between the United States and the Soviet Union, an undue amount of attention has been assigned to comparisons of estimated military spending levels. President Reagan has been particularly effective in using this argument to portray an aggressive Soviet military buildup. Spending comparisons contain several serious flaws, however, which tend to be over-looked.

Estimates of Soviet military spending reflect difficult assumptions about the efficiency of Soviet weapons production and the pricing of Soviet military manpower; both of these factors are open to large uncertainties. In recent years, the rate of growth in Soviet defense spending has been a source of serious dispute within the intelligence community. Both CIA and Defense Intelligence Agency analysts now agree that growth in Soviet defense spending has been only two percent annually in 1976-82 (in parallel with an overall Soviet economic slowdown).

In addition, if the impact of defense spending by U.S. and Soviet allies is taken into account, the gap is completely reversed; the United States and its NATO allies have always outspent the Soviets and their Warsaw Pact allies, although the gap did narrow in the late 1970s. Meanwhile 10-15 percent of Soviet spending is directed toward defense of the 3,000-mile border with China. Such factors underline the limited value of simple U.S.-Soviet dollar comparisons—unfortunately they are seldom mentioned in the political rhetoric.

In summary, although the trends in recent years show that the Soviets have improved their military capability relative to the United States and NATO (primarily through higher production rates of new weapons than those of the United States), American military forces, together with those of our allies, continue to provide a powerful capability against our potential adversaries. The dire state of the military balance portrayed by the Reagan Administration was clearly overstated.

V

Over the past four years, President Reagan and members of his Administration have repeatedly tried to convince the American public that there is a coherent military strategy behind the defense buildup, and that significant military improvements are being obtained through our rising defense spending. For instance, in March 1983 the President told a national television audience: "These loud voices that are occasionally heard charging that the government is trying to solve a security problem by throwing money at it are nothing more than noise based on ignorance." Yet there is increasing controversy over the extent to which our real defense capabilities have improved. Many experts, conservatives as well as liberals, have criticized the inefficiency of the recent defense buildup.

When the Reagan Administration took office, U.S. general purpose forces (which consume the lion’s share of defense resources) consisted of 16 Army divisions, three Marine divisions, 26 tactical Air Force wings, and 13 aircraft carrier battle groups. Today, four years into the Reagan defense buildup, our force structure is almost exactly the same.

Moreover, force increases planned for the future—two new aircraft carriers and two new "light divisions" for the Army—are quite small given the expansion in defense spending since 1980. Instead of increasing our force structure, the Reagan Administration made a clear decision to concentrate on modernizing and improving the readiness of existing forces. Yet, even toward these goals, progress has been far from substantial. None of the services has seen a major increase in the rate of procurement—production of Navy combatant ships and Army land weapons systems has increased only slightly since 1980, while tactical aircraft production for the Air Force has actually decreased significantly. Similarly, with the exception of military manpower shortages, long-standing readiness problems have seen little improvement despite substantial added funding for readiness-related areas.

Just where has the $330 billion in real defense budget increases gone? Over half of the total growth ($191 billion) funded modernization, as seen in the budgets for research and development and procurement. Another $113 billion went to areas related to readiness, including military personnel, operations and maintenance, and replenishment of spare parts and ammunition. The remaining growth ($25 billion) went to increases in military retirement and construction costs. Table I summarizes the growth in these three broad categories since 1980.

Excluding inflation, the 1985 funding level for research and development and procurement of new weapons is 90 percent higher than in 1980. The added investments can be grouped into two broad categories—strategic and general purpose forces programs.

Strategic forces have been a major beneficiary of the budget increases. In the 1981-85 period, over one-fourth of the real modernization growth has funded the start of a simultaneous modernization of all portions of our strategic forces. The bulk of the funds go to three programs—the B-1 bomber, the MX missile, and the Trident submarine and missile. In 1985 alone, about $15 billion (five percent of the total defense budget) will be required for these three systems.

TABLE I

REAL GROWTH IN U.S. DEFENSE BUDGET AUTHORITY

(in billions of 1986 dollars)

Cumulative

Base Year Growth

1980 1981 1982 1983 1984 1985 1981-85

Total Defense Budget 196.9 221.8 248.9 267.7 279.5 296.1 —

Investment 64.2 76.3 91.6 109.0 113.3 122.2 191.4

Readiness 110.6 119.5 130.2 132.5 138.4 145.8 113.3

All Other 22.1 26.0 27.2 26.2 27.8 28.1 24.8

Total real growth over

1980 (rounded) — 24.9 52.0 70.8 82.6 99.2 329.5

SOURCE: Budget of the U.S. Government 1986, National Defense Budget Estimates for 1985. Office of the Assistant Secretary of Defense (Comptroller), March 1984.

The United States will vastly increase its arsenal of strategic warheads and delivery vehicles over the next several years (many of these increases had already been planned by the previous Administration), but the essential problems which plagued our strategic posture in 1980 still remain. Despite a $30-billion MX missile program, our land-based ICBM force will remain vulnerable to attack—we still do not have a viable national plan to protect our ICBMs. Despite a planned $30-billion investment for 100 B-1 bombers, advances in Soviet air defense technology are still expected to threaten the ability of our bomber force to penetrate Soviet airspace beyond 1990. Billions more are going to develop the new Stealth bomber. Only the Trident II program, with its promised hard-target capability, represents a major advance in our strategic forces.

The Reagan Administration justified its support for this strategic force modernization as a counter to a declared Soviet superiority in strategic forces. The 1980 campaign and the 1981 defense debate emphasized a "window of vulnerability"—a short period of maximum Soviet strategic force advantage in the mid-1980s caused by the supposed vulnerability of our land-based missiles. Advocates of this theory downplayed the deterrent and possible wartime roles of our sea-based and bomber strategic forces. In 1981, Defense Secretary Caspar Weinberger and National Security Adviser Richard Allen called the mid-1980s our most vulnerable period and claimed the highest priority would be assigned to closing this "window." Yet by 1982 the "window of vulnerability" had disappeared from the Administration’s explanations, and in 1983 the presidentially appointed Scowcroft commission quietly buried the "window of vulnerability" theory; its recommendation to deploy MX missiles in fixed silos refuted the underlying "window" argument that our land-based missiles were so vulnerable that they placed our entire strategic posture at risk.

There is also a clear contradiction between the stated concern over our strategic capabilities in the mid-1980s and the fact that none of the Reagan Administration’s strategic initiatives will reach our operational forces until the late 1980s and early 1990s. The President took no action at all to enhance near-term strategic capabilities—a simple step such as higher alert rates for our current force could have greatly enhanced our force posture overnight. In fact, the Reagan Administration actually reduced our strategic forces during this period by phasing out older Titan II missiles and some B-52 bombers ahead of schedule.

Facing increasing public criticism of his aggressive strategic modernization program, President Reagan proposed a dramatic innovation in March 1983: "a vision of the future which offers hope." This was the Strategic Defense Initiative, the development of defensive weapons capable of intercepting and destroying incoming nuclear missiles. As a political maneuver, this proposal was a great success. No longer did public debate center on the rapidly accelerating arms race and the lack of progress in arms control; instead it centered increasingly on the feasibility of such a strategic defense. As far as the budget was concerned, the President’s strategic package, at the brink of large congressional cutbacks in 1983, escaped virtually intact. And as a potential bargaining chip in the new round of arms control negotiations with the Soviets, the Strategic Defense Initiative has already proved invaluable.

In terms of added military capability, however, the "Star Wars" initiative holds no promise for any real utility in the decade to come; even thereafter, the chances that a foolproof strategic defense network could be built seem slim. An attacker need only get a small percentage of missiles through the network in order to render the defense meaningless. In terms of its military significance, the importance of "Star Wars" has been overblown. The 1986 funding request of $3.7 billion (almost three times the 1985 level) constitutes only a small down payment on a missile defense system estimated to cost anywhere from several hundred billion to a trillion dollars. Where these funds might come from, while we retain our current conventional and nuclear forces, is a question that has yet to be addressed.

General Purpose Force Programs. The remaining three-fourths of the 1981-85 real growth in investment has been allotted for general purpose forces (which include communications, intelligence and logistics). Although justified to narrow the gap between U.S. and Soviet weapons production, the changes in production rates of major weapons systems have been surprisingly small (with the exception of long-planned production increases for new Army equipment). Overall, the military force capability improvements derived from these added funds are limited.

As the Reagan Administration took office, the Army was beginning a near-simultaneous replacement of all its major weapons systems—a program long scheduled to reach maximum production rates in the early 1980s. Yet several of the new weapons were highly controversial. A new sophisticated air defense system, the Patriot, would cost $10-$20 billion, yet it consistently encountered performance difficulties and production delays. A new tank-mounted, computer-guided antiaircraft cannon—the DIVAD—lacked the capability to hit maneuvering aircraft, its primary mission; its unit cost soared to seven million dollars, making it the most expensive weapon on the battlefield. A new armored personnel carrier, the Bradley, cost over a million dollars—five times more than the M-113 troop carrier it was to replace—amid evidence that its aluminum armor was extremely vulnerable to common antitank weapons.

Yet Defense Secretary Weinberger opted not to delay or to cancel any of these troubled Army systems. Meanwhile, 11 other new Army systems—all of which relied heavily on new technologies and were several times more costly than their predecessors—also went forward, each receiving a major funding increase. Since 1981, only one major Army program has been cut back: the DIVAD, which had its production suspended for one year in 1985, after a major test failure. All of the other systems continue in production. Thus, while Army procurement funding has doubled since 1980, even beyond inflation, production rates of major weapons such as tanks and armored personnel carriers have increased at a far slower rate. Even with our buildup, the Soviets still produce three times as many tanks and seven times as many armored fighting vehicles as the United States each year.

The Navy procurement account also grew during the first Reagan term—again with a limited return on its added investment. Completing the shipbuilding plan laid out by the Carter Administration, the Navy purchased 12 major combatant ships in 1981 for a total of $6.2 billion. During the Reagan Administration, the Navy has never exceeded this 12-ship total (even including the reactivation of World War II battleships)—yet prices have soared. From 1982 to 1985 the Navy has been building 11-12 combatant ships per year at an average annual cost of $10 billion. At the same time, unit prices in several programs have risen dramatically. The Navy’s new attack submarine, the SSN-668, has seen its cost rise from $450-500 million per submarine in 1981-82 to $650-700 million in 1983-85. The Trident submarine also saw a 30-50 percent price hike in the last few years.

Almost all the ships purchased by the Navy are of the extremely large, complex, and expensive variety—for instance, the two $3.5-billion nuclear aircraft carriers purchased in 1983. Navy Secretary John Lehman has justified these purchases with the Navy’s traditional argument that our ships need the flexibility to perform all potential missions—including, he suggests, an attack on the home ports of the Soviet Union. But given the massive firepower advantage the Soviets would have in such an attack from their land-based missiles and aircraft, our carrier task forces—each a $15-18 billion investment—would be placed in grave risk. Meanwhile, less demanding but more realistic naval missions—peacetime presence as an extension of U.S. diplomacy, control of shipping lanes in war, and force projection against more lightly defended areas—could all be better served through the purchase of greater numbers of smaller, less expensive ships equipped with offensive missiles, and improved antisubmarine warfare capabilities.

Air Force tactical aircraft purchases have fared worst of all. In President Carter’s last three defense budgets, the Air Force purchased an average of 227 fighter planes per year—figures which the 1980 Reagan campaign condemned as dangerously low. Yet, in the first four Reagan defense budgets (1982-85), Air Force purchases of fighter aircraft averaged only 172 per year, a drop of 24 percent. Meanwhile unit costs of the F-15 and F-16 Air Force fighters jumped 50 percent beyond inflation in just four years—generating almost two billion dollars in added costs for these aircraft in 1985 alone. A substantial portion of the lower aircraft production reflects an Air Force decision that it needs no more A-10 attack aircraft in support of the Army. In fact, production of attack planes has been reduced from an average of 116 per year in the last three Carter budgets to ten per year during the Reagan Administration. As a result, total production of Air Force tactical combat aircraft is down 47 percent below the Carter levels.

The last aspect of general purpose forces is lift. As the 1980s began, the United States had only a limited capability to transport our forces to a distant trouble spot on short notice—the need for sealift was particularly severe, since 90-95 percent of all military cargo would be moved by sea in time of war. Following the Soviet invasion of Afghanistan, however, the Carter Administration launched a major initiative to redress this lift shortfall, announcing programs for enhanced sealift and airlift, as well as a new proposal to pre-position marine equipment on cargo ships in the Indian Ocean.

Since assuming office, the Reagan Administration has maintained the commitment to enhanced lift, but the funds have been misallocated. Billions of dollars are being spent each year to purchase C-5B transport planes—despite their limited capabilities—while the Navy has not acquired any modern sealift vessels beyond the eight ships initially ordered by President Carter in 1980. Thus, over the course of the 1980s we will spend over $15 billion to enhance our lift capabilities (almost all for airlift) and still we will not meet our overall needs. The purchase of an additional 12-20 fast sealift ships—at a cost of only one to two billion dollars—would have allowed us to meet or exceed our rapid deployment goals.

VI

Readiness is an often misunderstood term. Almost impossible to quantify, it ultimately comes down to the personal judgment of a military commander about whether his unit is ready to fight. In the late 1970s, many field officers complained loudly that their units were not receiving adequate funds to maintain combat readiness. The incoming Reagan Administration quickly sought to improve the situation by directing a substantial infusion of funds to each of the readiness areas. Since 1980, 35 percent of the real growth spending in defense has been allocated to readiness-related areas.

Military manpower is probably the single most important factor in combat readiness. Administration officials rightly point to manpower as an area of great improvement since 1980—both the quantity and quality of new recruits is up, and critical shortages in several high-skill areas have been alleviated. Was this improvement achieved at the lowest possible cost?

Excluding retirement, military personnel costs increased from $31 billion in 1980 to about $51 billion in 1985. Only two billion dollars of this increase supports higher troop levels—the rest has gone to across-the-board pay increases, leaving the average soldier’s pay 55 percent greater than in 1980 (an increase far greater than inflation over this period). For some enlisted personnel, especially skilled technicians who could receive high wages in the private sector, a large pay increase was probably needed in 1980. But the pay hikes have been extended to all military personnel, including the officer corps which had no trouble attracting or retaining good people in 1980 (other than in a few specialties such as submarine nuclear engineering officers and, more recently, navy pilots). Fully one-fourth of the pay increases over the past four years has gone to officers, raising their average pay and allowances to over $38,000 in 1985, not including a large tax advantage on housing and food allowances, medical and dental care, commissaries, and an extremely generous military retirement system. The use of across-the-board pay increases to solve selective enlisted personnel and officer problems is costing billions more annually than was necessary to address the shortages noted in 1980. Selective raises and judiciously applied bonuses could have solved these problems at a far lower cost.

Spare parts inventories were identified as a major impediment to combat readiness in 1980. Distributional shortages existed throughout the military logistical system. Aircraft spare parts quickly became the focal point. The Reagan Administration has almost tripled the annual budget for replenishment spares since 1980 (from $2.2 billion to $6.4 billion) to alleviate the identified shortages, but even allowing for inflation the cost has definitely been excessive. Many of the shortages were one-time in nature (to replenish pipelines and restore inventory levels), but spare parts budgets show no sign of declining. The management of this spare parts buildup has been poor, with numerous instances of routine items—hammers, light bulbs and such—priced at astronomical figures.

Operations and Maintenance (O&M) funds support combat forces as well as U.S. bases and facilities around the world. While much of the O&M funds go directly to combat readiness, large portions (up to half the O&M total) go to the general upkeep of worldwide bases, support and administrative facilities, and other noncombat-related areas. In constant dollars, O&M spending has risen from some $58 billion in 1980 to $79 billion five years later—an increase of 37 percent. As a result, O&M is now at a higher funding level (in constant dollars) than it was in 1968 at the peak of the Vietnam War, when our combat forces were one-quarter larger and operating at high-intensity wartime rates. Thus, when measured in terms of support per combat unit under peacetime conditions, the 1985 O&M level is impressive even when the added complexity of new weapons is factored in.

Much of the added O&M money is directed to non-readiness areas (known in the military as "quality of life" improvements). Spending for the care of domestic military bases is up sharply as are a multitude of other non-readiness improvements, including recreational facilities and military bands. Meanwhile, despite the infusion of funding, combat readiness indicators such as operational training time and equipment readiness have been—according to the Pentagon’s May 1984 readiness report—only "steady or improving slightly."

The last input to readiness is combat sustainability, measured in terms of the stockpiles of munitions and related equipment the forces have on hand at the outbreak of any hostilities. Traditionally these war reserves receive low priority in defense spending, leaving the services with only a fraction of their self-determined "needs." (We do, however, maintain a greater stock of war reserves than our NATO allies who would be fighting alongside our forces in a European war.) Since 1980, spending for munitions has more than doubled beyond increases for inflation, reflecting ten billion dollars of cumulative real growth in munitions purchases over the five years. Even with these increases, however, sustainability problems remain. Only the Army will have more than half of its war reserve requirements by 1986, while the Navy has a serious inventory deficiency of Phoenix missiles for the F-14 fighter (considered vital to protect our carriers from enemy air attacks).

A number of defense critics have argued that readiness needs have been underfunded in the Reagan defense buildup; this contention is not valid. In 1985, the Pentagon has $141 billion for military manpower and other readiness-related spending, a real increase of 32 percent above 1980. The tragedy is that these funds have not been spent more efficiently in improving combat readiness.

In summary, while there have been improvements in our defense capability since 1980, a wide gap exists between the $330-billion cumulative real growth in defense funding in 1981-85 and the benefits achieved or planned for our forces. The defense budget for 1985 is 50 percent greater, after inflation, than in 1980, yet our military force structure is not even close to 50 percent greater—in fact, it is almost identical to 1980. Nor are we producing anywhere near 50 percent more weapons than in 1980. Nor do we appear to be 50 percent more combat-ready. Yet the Pentagon asserts: "The defense portion of the President’s [1986] budget reflects a continuation of the improvements made over the last four years. . . . The foundation of this Administration’s defense program is in place." Thus, American taxpayers are being asked to fund more of the same.

VII

Why is our defense effort so inefficient? Some reasons are quite familiar to many Americans—cost overruns, political interference, counterproductive military service rivalries, and "gold-plated" weapons have received wide attention. Other causes are more obscure. In general, the problems can be placed in two categories: management and leadership.

The weapons acquisition process is the area of defense spending where management problems are most widely recognized. A brief look into the acquisition process reveals deep-rooted and serious problems which help generate the cost overruns and below-par quality control which have been routine for many years.

Once a military service decides on the requirements for a new weapon, the next step involves the selection of a contractor team to do the work. A formal competition usually ensues among a few major defense firms for a development contract, with each proposal officially judged on its technical design and cost estimates.

Several problems, however, interfere with this orderly process. Technical merits of weapons proposals are extremely hard to judge since the technologies are often highly uncertain; the edge in technical designs often goes to the firm which—through better relations with government engineers—has had a greater hand in developing the "requirements" for the new system. Cost estimates are equally problematic. Since only the development and initial production are usually included in the proposal, the cost estimates exclude much of the ultimate anticipated costs, including the bulk of production as well as modifications and spare parts. Contractors often submit unrealistically low bids to enhance their chances of winning the competition, with high confidence that they will be able to recover their costs later. Finally, political and economic factors can play an important role in source selection, directing contract awards to powerful congressional districts or ailing defense firms.

Once a defense firm wins a development competition, it can usually count on being the monopoly supplier of the weapon—plus its modifications and spare parts—for 20 years or more. During this time, most systems encounter cost, performance and schedule problems. Contractors are able to deal with these setbacks by charging them off to the U.S. government through a variety of means: changes in weapon system design provide numerous opportunities to recover losses, and reallocation of corporate overhead (to increase the government’s share) is also common. "Excessive inflation" is a third claim used by contractors to recover their costs. There is little chance that a large firm will lose money on its production contracts; thus the incentives to minimize costs are not strong. Follow-on contracts for spare parts and systems modifications then provide a steady flow of business in a sole-source environment. In some cases contractors are actually rewarded for poor performance, as they are awarded large contracts for additional spare parts and modifications to make up for the shortcomings in their initially produced hardware.

The problem with the weapons acquisition system is basically one of incentives. To industry, "low-ball" contract bids, poor performance, and large cost overruns have become common because the system rarely penalizes such practices. To government officials, the incentives are equally poor. Congressional representatives are rewarded for providing jobs and dollars in their districts, regardless of efficiency. Within the military, the emphasis is clearly on fielding weapons quickly, with financial control a lesser concern. Individual program managers, who preside over weapons programs for only a short time (one to three years) before moving on to a new assignment, clearly are motivated to keep their programs funded and on schedule, not to challenge the status quo or allow negative publicity.

The weapons acquisition business is only one area of the defense budget where money is poorly managed. Of the over $185 billion in the 1985 defense budget for purchasing equipment and services from the private sector, only one-fourth goes for major weapons. The remainder—over $140 billion—funds a variety of smaller procurements, research and development programs, and purchases for current operations. These non-major weapons purchases—along with the $100 billion paid annually to military and civilian Defense Department employees—comprise the "soft underbelly" of defense which affords numerous opportunities for savings.

The Pentagon buys more than half of the typewriters, calculators, paper products, pencils and other office equipment used by the federal government, yet an OMB study several years ago found that only one-third of these items—purchased government-wide by the General Services Administration—was acquired through competition. The result is premium prices for commonplace items.

Contracts for spare parts and follow-on modifications are another largely noncompetitive aspect of defense purchases. Most often these awards are simply negotiated with the firm which produced the weapon originally—allowing them to overcharge substantially for this work. Overall, spare parts and modifications represent about $15 billion of the defense budget this year—almost all of which is negotiated without the benefit of competition.

Serious flaws also exist in the military compensation system. For active duty military personnel, the numerous forms of compensation received are so varied and confusing that the current assistant defense secretary, Lawrence Korb, once concluded: "Most members of the armed forces are unaware of how well paid they are." Moreover, because the military is paid by rank and not by job, shortages within one rank are often created in some skilled positions where comparable civilian pay is high, while in other areas of lesser skills at the same rank many soldiers are considerably overpaid.

The retirement system is another area of great concern. Tens of thousands of career officers and enlisted men leave the military each year after 20 years of service, receiving a minimum of half their basic pay—for life—while denying the military experienced employees at the height of their productivity. Moreover, retirement benefits are fully indexed to keep pace with inflation.

The typical officer retiring today after 20 years is only 43 years old. He will draw an annual annuity of $20,500 and can anticipate receiving $1.7 million over the next 34 years. The typical 20-year enlisted retiree is only 39 years old; he can anticipate immediate benefits of $9,600 per year and total retirement payments of almost $900,000 over 35 years. Today, the total unfunded liability for military retirees already on the rolls, plus those active military personnel planning to retire, is a staggering $532 billion. The Grace commission reported that the military retirement system is eight times the cost of comparable private sector retirement plans.

VIII

There is often a wide disparity between national defense strategies and the specific programs implemented by the military departments. Strategy is dictated "top down" from the White House and the National Security Council, whereas specific programs tend to "bottom up" from the individual military services. The parochial interests of the military services and pork-barrel politics in Congress often become the dominant factors in the defense decision-making processes.

Within the U.S. military, an aversion to change has been evident for decades. Even such obviously beneficial weapons as the airplane, the armored tank, the aircraft carrier and the nuclear submarine all faced stern opposition from the services when first introduced because they challenged existing doctrines and weapons preferences. Today, each of the services relies basically upon the same weapons and doctrines which won World War II—the fighter plane and the penetrating strategic bomber for the Air Force, the tank for the Army, and the aircraft carrier for the Navy. Both the Navy’s carriers and the Air Force’s bombers have grown increasingly vulnerable to modern weapons. A number of critics argue persuasively that these weapons, if not obsolete today, soon will be. Similarly, the Army’s continued reliance on heavy, armored divisions to defend Europe and other regions has also come under criticism from those who believe that lighter, more transportable, maneuverable and sustainable forces are necessary to meet future threats.

The Pentagon has also been highly criticized in recent years for its approach toward technology, advocating ever-increasing technological complexity in its weapons—so long as the weapons serve to justify entrenched military doctrine and strategy. Thus, for example, the Navy relies on the ultra-complex Aegis air defense cruisers and F-14 fighter planes equipped with long-range, precision-guided missiles to defend its carriers, and the Air Force has invested billions in "stealth" technologies and penetration aids to enable its strategic bombers to penetrate Soviet airspace.

The military services justify advanced technology weapons to offset the Soviet numerical edge in troops and weapons. U.S. weapons are generally superior technologically to Soviet equivalents. Yet, while our military continues to buy the most sophisticated and theoretically capable systems possible, the key question, too often ignored, is whether these new weapons are worth the added cost and the risk of low reliability when simpler, less expensive weapons could be purchased with only marginal decreases in performance. Many defense experts argue that, instead of concentrating on "drawing-board" capabilities, the emphasis should be on the real battlefield utility of weapons, meaning the ability to adapt to hectic wartime conditions without excessive maintenance and support.

Rivalry among the military services is another factor which limits the overall effectiveness of our military. Combat mission responsibilities often cross services lines, but the compartmentalized decision-making processes of each military service inhibit real cooperation. The three military branches—Air Force, Army and Navy (which includes the Marine Corps)—tend to be strongly independent fiefdoms, each dedicated to attaining the complete capability needed for the accomplishment of its assigned missions.

The reason that the services choose to fund redundant programs instead of relying on their sister services is clear—they all have a poor record in providing for each others’ needs. For instance, when the separate Air Force was created in 1947, it was assigned the mission of providing air support to the Army; indeed, the Army was precluded from buying its own fixed-wing attack aircraft. Over the years, however, the Air Force gave this mission low priority—preferring to concentrate on strategic bombing and air superiority "dog-fighting." As a result, the Army has built its own fleet of expensive yet vulnerable attack helicopters to provide its own air support.

IX

Critics of wasteful defense spending practices were encouraged in 1981 when Caspar Weinberger was appointed secretary of defense. Weinberger had a reputation as a tough manager and budget trimmer. Thus, improving the Pentagon’s management process seemed a major part of the incoming Reagan Administration’s defense program.

After four years, the Administration’s record in improving planning and management in the Pentagon has been poor. The current leadership has been hesitant to interfere with or override the budget decisions of the military services. In April 1981, Deputy Defense Secretary Frank Carlucci issued a set of 31 initiatives to reform the weapons acquisition process. As a political device, the initiatives were successful in aiding the 1981-82 budget increases as they sailed through Congress. In their stated goal of improving the acquisition process, however, the initiatives have been unsuccessful.

When it comes to dealing with the larger issues of Pentagon management, Secretary Weinberger’s laissez-faire leadership style has allowed major problems to go unchecked. Weinberger has declined to require or motivate the services to redress the problems of antiquated doctrines, overreliance on high technology weapons or interservice rivalries. Instead, the services have largely been given a free hand in their rapidly increasing budgets; much of the money has gone toward buying marginal programs, which were not approved in days of tighter fiscal discipline, and to higher prices for the items being purchased.

The Reagan Administration has emphasized dollars as the medium for countering a perceived Soviet military advantage. Yet, if there was a window of vulnerability in 1980, it had little to do with ICBMs and nuclear blackmail; instead it lay in our disturbing inability to compete with the productivity of the Soviet defense effort. While the United States and its NATO allies continue to outspend the Soviet bloc, the Soviets and their Warsaw Pact allies have clearly outperformed the United States and NATO in weapons produced over the last decade. While perceptions in the United States have been of an aggressive Soviet military buildup, the real source of danger—the real window—has been the serious internal managerial, leadership and political problems which continually sap our military strength, leaving us spending an ever-increasing portion of our budget on defense with far too few defense posture improvements from the effort. These problems have received little attention in the Reagan defense program.

Fortunately, concern about the effectiveness of U.S. defense spending has been growing among prominent defense experts outside the Reagan Administration. Many congressional representatives and defense analysts, as well as a growing number of former secretaries of defense and military service chiefs, have begun to argue in recent years that spending alone cannot cure the military problems we face.

A number of proposals have emerged in the current defense debate, including:

—reform of the Joint Chiefs of Staff, to increase interservice cooperation and to improve the quality of military advice provided to civilian leaders.

—reform of the defense budget process, with increased cooperation between Congress and the executive branch in the early stages of the budget process. As a first step, the president and the Congress should agree to shift the defense budget cycle from an annual to a biannual process.

—measurement of the budgetary trade-offs within the varied programs affecting national security; additional increments for budgetary programs such as intelligence or economic assistance might be more effective than added military spending in reducing tensions or preventing future crises.

—reexamination of the fighting doctrines of the military services; the future roles of aircraft carriers, strategic penetration bombers and any heavy, versus light, divisions all need to be thoroughly reviewed.

—increasing competition in defense purchases; no more than one-third of defense contracts is awarded in a truly competitive manner. The techniques are clear: more prototype competitions for new weapons, buying a single weapon from two separate contractors, and forcing recompetition in follow-on contracts for spare parts and modifications.

—reexamination of manpower requirements, the military pay and retirement systems, the unneeded domestic bases and the vast array of small procurement programs, which all offer a multitude of opportunities for savings with no adverse impact on U.S. military capabilities.

Inevitably such proposals challenge powerful and entrenched interests in the military services, the Congress, the civilian Defense Department bureaucracy and the defense industries. Positive changes are difficult to implement—but certainly not impossible. The answer lies in strong leadership.

While the Pentagon’s internal problems did not begin with the Reagan Administration, the current team has largely failed in its efforts to address them—mainly through a lack of effort. The President and Secretary Weinberger have chosen to give first priority to increasing the Pentagon’s budget—with resource allocation decisions and management responsibilities delegated to the services. In choosing this direction, they have badly misread the problem. The Soviet threat, while serious, was nowhere near grave enough to warrant the furious budget buildup the nation saw in 1981-85, and by ignoring internal management issues in this era of rapidly rising defense budgets, they have allowed fiscal discipline in the Pentagon to erode. The result has been that Americans are paying far too much for defense and receiving far too little security in return.

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  • Richard Stubbing is Assistant Provost and Professor of Practical Public Policy at Duke University. From 1962-81 he worked in the Office of Management and Budget on the defense budget; from 1974-81 he was Deputy Chief of OMB’s National Security division. He was assisted in preparing this article by Richard Mendel.
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