In This Review

Of Men and Materiel: The Crisis in Military Resources.
Of Men and Materiel: The Crisis in Military Resources.
Edited by Gary J. Schmitt and Thomas Donnelly
AEI Press, 2007, 180 pp.
The Price of Liberty: Paying for America's Wars.
The Price of Liberty: Paying for America's Wars.
By Robert D. Hormats
Times Books, 2007, 368 pp.

History may not repeat itself, but, as the saying goes, it does sometimes rhyme. In January 2009, as in January 1953, a newly elected president will inherit a costly and controversial foreign conflict, one that a majority of Americans have concluded cannot be won and should never have been fought. As was true half a century ago, the United States now finds itself both in the midst of a "hot war" and in the early stages of a protracted global struggle against an implacable, ideologically committed foe. Now, as then, the American people have not fully come to grips with the frightening and unfamiliar threats to their security that this enemy poses. Nor are they sure precisely how high a price in lives, liberties, and dollars they will ultimately have to pay in order to defeat it.

In 2009, as in 1953, newly chosen leaders will find themselves confronted by the conflicting demands of national security and fiscal responsibility. On the one hand, they will hear powerful arguments that despite recent increases, the nation is not yet spending enough on defense and homeland security. On the other hand, they will inherit massive budget deficits and a ballooning national debt. Bringing ends and means into alignment -- and doing so in a way that can be maintained for years, if not decades -- will not be an easy task. At the beginning of the Cold War, Dwight Eisenhower described the job as devising a national strategy for "the long haul." Whoever is elected president in 2008 will face a very similar challenge.

The books reviewed here frame the problem precisely: Gary Schmitt and Thomas Donnelly's argues for increased defense spending; Robert Hormats' makes the case for restoring balance and restraint to the nation's finances.


As they looked out beyond the Korean War, Eisenhower and his generals believed they had little choice but to focus on one big and potentially imminent threat: the danger of an all-out conflict with the Soviet Union. Today's strategic environment is less immediately menacing but more varied and uncertain. In addition to waging irregular warfare against insurgents and terrorists, the United States must prepare to deal with several midsize states that possess substantial conventional forces and will likely soon have small nuclear arsenals. Looking further ahead, China's rapid economic growth and technological progress could eventually transform the country into a genuine peer competitor, able to challenge U.S. military predominance in Asia, if not beyond.

Are present and planned budgets and U.S. force levels sufficient to meet these three distinct challenges? Schmitt and Donnelly, both fellows at the American Enterprise Institute, believe the answer is a resounding no. Schmitt, Donnelly, and the contributors to their edited volume, Of Men and Materiel, are especially worried when it comes to smaller and medium-sized future threats: wars against irregular opponents or an enemy such as Iran. Since 9/11, defense spending has grown considerably, but much of the money has gone to cover the extraordinary costs of operations in Afghanistan and Iraq. Meanwhile, the Pentagon has continued to pursue the broad priorities imposed by former Defense Secretary Donald Rumsfeld. Driven by his vision of future warfare, Rumsfeld downplayed ground forces in favor of those designed to maintain command of the air, the sea, and space. Intent on building truly "revolutionary" weapons, Rumsfeld and his inner circle of "transformationists" cut back procurement for some of the armed services' pet projects, such as the air force's F-22 fighter and the army's massive Crusader artillery system, preferring to spend more on research and development for "generation-after-next" systems. Although some of these cuts may have had merit, the end result of Rumsfeld's transformation program, claim the authors, is a U.S. military establishment that is simply too small and too focused on the distant future to meet the challenges it confronts today and will likely face tomorrow.

Schmitt, Donnelly, and their co-authors are especially troubled by what they see as the Pentagon's excessive focus on long-term, high-level threats at the expense of dangers they regard as more pressing and plausible. In chapters on the future of the U.S. Army and the Marine Corps, Frederick Kagan, a resident scholar at the American Enterprise Institute, and Francis Hoffman, of the Marine Corps' Center for Emerging Threats and Opportunities, both make the case that even after the war in Iraq, the United States will need to maintain larger ground forces equipped and trained to defeat irregular opponents in protracted conflicts. In a chapter on the U.S. Air Force, Loren Thompson, of the Lexington Institute, argues that Rumsfeld's push to develop new unmanned aerial vehicles and space-based surveillance systems came at the expense of other important projects. As a result, the Defense Department bought too few high-performance, next-generation fighter jets (such as the F-22) and unwisely eliminated funding for its proposed electronic surveillance aircraft (the E-10). In the comparatively near term, Thompson warns, these cuts could seriously erode the United States' ability to achieve and maintain command of the air over distant battlefields.

Robert Work, a senior defense analyst at the Center for Strategic and Budgetary Assessments, is more sanguine when it comes to the prospects for continued supremacy at sea. In his chapter on the U.S. Navy, Work does not advocate increasing the navy's size but instead proposes shifting its priorities to meet immediate strategic needs more effectively. He recommends deploying a mixture of various aircraft carriers, including some smaller vessels that are better suited to counterterrorism operations. In addition, Work calls for the navy to expand its light, fast coastal combat fleet while cutting procurement of its most advanced destroyers.


The authors' shared concern that the Pentagon is not adequately preparing for more immediate midrange threats is valid. But some of their recommendations are a good deal stronger than others. Kagan's arguments for maintaining a larger standing army are persuasive and, indeed, seem already to have been accepted by the new post-Rumsfeld leadership at the Pentagon. It is not at all obvious, however, that the United States really needs a Marine Corps that is still capable of conducting forced-entry amphibious landings, as Hoffman argues. The U.S. Marines are far more likely to be called on to fight brutal, street-by-street battles of the sort they have been waging in Iraq than to be asked to storm ashore as they did over half a century ago at Inch'on and Iwo Jima. The idea of spending huge sums on yet more medium-range fighter bombers, instead of giving top priority to developing new global strike systems, also seems dubious. Finally, Work's assumption that the size and budget of the U.S. Navy will remain essentially constant may be overly conservative given the expansion in China's fleet and its ongoing development of air, sea, and submarine capabilities that are designed to target U.S. naval forces off its coasts.

By identifying an array of shortcomings in current programs and laying out some specific, plausible alternatives, Of Men and Materiel performs a vital service. Still, in their eagerness to correct what they regard as Rumsfeld's excessive focus on high-tech future warfare, the book's authors may tilt too far in the opposite direction. There is a danger that their proposals could leave the United States well prepared to win the last war (against Islamist irregulars), only slightly more capable of fighting the next one (against a nuclear-armed Iran, for example), and less well positioned to deter the one after that (perhaps against a fully modernized Chinese military). Instead of sacrificing investments in long-term transformation in order to spend more on current capabilities, the nation will have to find ways to do both.


There is no doubt that the United States can afford to spend much more on defense if and when it needs to. The obstacles to doing so are more political than economic. The Congressional Budget Office now projects that after having reached a post-9/11 peak of four percent of GDP last year, defense spending is set to gradually descend back toward a post-Cold War average of around three percent, which it is expected to reach by early in the next decade. Taking into account the various shortfalls they identify, Schmitt and Donnelly propose that defense spending should instead be raised to five percent of GDP and held there indefinitely. Such a figure, they rightly note, would still be low by Cold War standards, and it is well within the nation's ability to afford. The problem, of course, is that shifting even one or two percentage points of GDP from one category of activity to another is no simple matter; it involves large, consequential choices about taxing, spending, and borrowing that are invariably painful to certain constituencies and hence politically controversial.

According to the economist and former National Security Council (NSC) official Robert Hormats, these choices will be even more difficult to make today than in the past. Hormats' comprehensive and valuable new book, The Price of Liberty, examines how the nation has financed its wars from the founding of the republic to the present day. For the first 150 years of its history, the United States generally maintained only a small navy and a minuscule army; the primary challenge was raising vast sums quickly to cover the temporary costs of an emergency. This was done through both increased borrowing (from domestic and foreign lenders) and temporary tax increases (on imports and domestic transactions and, later, on personal incomes and corporate profits). As Hormats makes clear, political struggles between different interest groups and regions, rather than pure economic or strategic rationales, determined how much money came from each source.

From their experiences in wartime finance, the nation's early leaders drew two basic lessons. First, and perhaps most important, they understood that a shared sense of sacrifice was essential to maintaining social cohesion and political support during times of war. Second, although it was acceptable to accumulate debt in an emergency, paying it off promptly was crucial to preserving the nation's creditworthiness and hence its ability to borrow in future crises.

In general, as the U.S. economy grew during the nineteenth and twentieth centuries, policymakers were able to rely on domestic rather than foreign borrowing and on direct personal and corporate income taxes instead of indirect levies such as tariffs. By the end of World War II, the federal government had developed extractive mechanisms, such as automatic withholding of income tax from worker payrolls, that permitted it to tap vast, steady streams of revenue without generating strong political opposition. These sources of financing, plus a booming economy, made it comparatively easy for the United States to maintain the large standing military it needed to deter and contain the Soviet Union.

During the Cold War, mobilizing resources for rapid peacetime buildups or the occasional "hot war" posed a different kind of challenge. With taxes already high, defense budgets large, and new forms of nondefense spending on the rise, policymakers faced tight constraints. As the Korean War approached its peak, for example, Congress' resistance to further taxes forced the Truman administration to scale back its plans for a bigger defense buildup. Fifteen years later, with the conflict in Vietnam escalating, President Lyndon Johnson's reluctance to cut back on his newly launched Great Society initiative and the refusal of fiscal barons in Congress to raise taxes without some scaling back of social programs produced ballooning deficits and soaring inflation. During the early 1980s, Ronald Reagan's desire to slash taxes and boost defense budgets, coupled with his inability to offset these expenses by making sufficient cuts in nondefense spending, led to even greater deficits and a major increase in the federal debt. Much of the necessary funding was supplied by foreign lenders, most of them in Western Europe or Japan.

The past six years have seen major budget increases for the armed forces and the intelligence services, as well as for homeland defense, an entirely new category of expenditure. After 9/11, the Bush administration, taking a page from the Reagan playbook, combined bigger defense budgets with sizable tax cuts. Reagan, however, was compelled to accept so-called revenue enhancements that kept deficits smaller than they might otherwise have been. Moreover, he was somewhat successful in holding down the growth of nondefense expenditures. By contrast, the Bush White House has resisted pressures to raise (or even restore) tax rates while permitting nondefense spending to skyrocket. The result, not surprisingly, has been a yawning deficit and deepening debt.


Viewed against the backdrop of Cold War history, the sudden, large spending increases and budgetary imbalances of the last several years are not quite as novel or shocking as they sometimes seem. In the 1980s, some observers spoke of "imperial overstretch" and cautioned that the United States would face dire economic consequences if it did not cut back its overseas commitments. This did not happen, of course, but there are several reasons why today's situation is more worrisome than the one that prevailed 20 years ago.

First, there is no prospect that a sudden improvement in world affairs will yield a "peace dividend" of the sort the nation enjoyed after the fall of the Berlin Wall. To the contrary, once the extraordinary costs of Afghanistan and Iraq are factored out of the equation, the nation will still need to spend more on its defense. Shortfalls in budgets for public diplomacy, development assistance, and democracy promotion make the overall security spending gap even greater. Second, the baby boomers are now set to retire, and nondefense spending will therefore rise even more rapidly than in the past. Finally, whereas 20 years ago the United States financed its budget deficits by borrowing heavily from the other advanced industrial democracies, now an increasing share of its debt is held by China, a potential rival. Unlike before, when the United States owed money to nations that depended on Washington for their own security, the current fiscal imbalances carry an added measure of strategic risk.

Today, there seems to be little chance that the United States can simply grow its way out of deficits, as it did in the 1990s. Something is going to have to give. Hormats worries that the next administration will spend less than it should on homeland security rather than face the enormous political costs of raising taxes or cutting nondefense programs. Alternatively, and especially if Iraq ends badly, fiscal factors could add to pressure for the United States to "come home," reduce its military presence overseas, and build barriers to protect itself from terrorists and, perhaps, in a new mood of isolationism, from immigrants and imports as well.


The start of a new presidency provides an opportunity to reexamine all aspects of U.S. security policy. Unfortunately, the first few months of a new administration are often the only time when any serious effort is devoted to taking a comprehensive and long-range view of these issues. As a new administration settles in, events and bureaucratic divisions typically create overwhelming pressures for short-term thinking and piecemeal policymaking. Overcoming these tendencies requires a deliberate exertion of political will.

Dwight Eisenhower recognized these dangers when he was elected in 1952. He knew that the major government agencies would soon be preoccupied with parochial concerns and caught up in the day-to-day drama of executing policy. He wanted to create venues in which high-ranking officials would have the opportunity, and the obligation, to take a broader, longer-range view of U.S. geopolitical strategy.

Eisenhower undertook two initiatives that the next president would do well to emulate. Even before he was sworn in, Eisenhower had laid the groundwork for a large-scale planning exercise in which officials and outside experts would formulate broad alternative approaches to conducting the Cold War. The top-secret "Project Solarium" was carried out during the spring and summer of 1953. Eisenhower was especially interested in hearing which fiscal and economic policies the experts deemed necessary to sustaining the strategies they proposed over "the long haul."

Less well known than Solarium, but ultimately as important, was the National Security Council Planning Board. Organized according to Eisenhower's precise specifications and staffed by the top planners from all the relevant agencies (including the Departments of State, Defense, and the Treasury), the Planning Board's purpose was to institutionalize Solarium-style thinking. Its members were responsible for debating alternative strategies, assessing their costs, and advising those at the apex of the decision-making pyramid.

The Planning Board ceased to function in the early 1960s as part of the Kennedy administration's effort to transform the NSC into a more flexible and effective tool for implementing presidential policy. With the board gone, and the NSC increasingly preoccupied with current operations, there was no longer any institution responsible for serious, sustained interagency strategic planning.

Despite occasional talk of reform, this gap has never been filled. As is so often the case in Washington, key players protect their turf. Strong national security advisers have jealously guarded their role as the president's chief strategist. Weak ones have failed to compel cooperation from other agencies determined to go it alone. Most important, the disappearance of the Planning Board has meant that there is no longer any place in the government where the conflicting demands of finance and strategy can be systematically weighed and brought into balance. With the United States facing yet another "long haul," the next president would be well advised to fill this vacuum.

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  • Aaron L. Friedberg is Professor of Politics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University. From 2003 to 2005, he served as Deputy Assistant for National Security Affairs in the Office of the Vice President.
  • More By Aaron L. Friedberg