The Best Defense

Thanks, NSA! I guess the U.S. economy didn't need that $22 billion in business

The latest estimate I've seen of the cost of the NSA surveillance program in terms of lost business to U.S. companies is at least $22 billion. "The economic consequences of national security decisions should be part of the debate, and this cannot happen until more details about PRISM have been revealed," the study notes.

This is what happens when secret policemen make far-reaching decisions in secret and then say the justifications for their acts must remain secret. And yes, I blame Congress too.

JOEL SAGET/AFP/Getty Images

The Best Defense

Desch and Ricks are too optimistic about the effects of budget cuts on the military

By Lindsay P. Cohn
Best Defense guest respondent

Michael Desch makes a number of good points in his recent CNN opinion piece arguing that "Cutting the Army will Make it Stronger." His main point is that cutting the military's size and budget is both necessary and good. In many ways, I agree with his broad claim. I have to point out, however, that cutting alone does not magically produce either efficiency or innovation. How we cut is just as important ... and the bad news is that how we are cutting is not ideal.

Desch argues that "bold budget cuts constitute opportunities to subject old and obsolete ways of doing business to ... 'creative destruction'." This is similar to an argument Tom Ricks made in December in the Washington Post, titled "To Improve the US Military, Shrink It." Michael Horowitz wrote an excellent response which points out that, "for smaller to lead to 'smarter,' the Department of Defense will have to respond to budgetary pressure by allocating more resources to innovative experimentation." As Horowitz notes, the Pentagon is unlikely to do this: "new technologies and operational concepts, lacking built-in constituencies and powerful institutional support, can often end up as the first on the chopping block, rather than as a focal point for the future." Desch and Ricks are right that a period of shrinking and budget cutting presents an opportunity to engage in re-imagining the military organization, but opportunities do not execute themselves.

Horowitz has made a compelling case that cuts do not lead automatically to innovation; I am making the case that cuts do not lead automatically to efficiency. Desch rightly points out that personnel costs are a significant chunk of military spending, and will need to undergo significant cuts. Todd Harrison of the Center for Strategic and Budgetary Assessments (CSBA) has noted, with respect to the growing costs per servicemember, that "if we continued allowing our personnel costs to grow at [the same rate as the past decade], by the year 2039, those personnel costs would consume the entire defense budget." All analysts agree that costs per servicemember are too high and growing too fast to be sustainable. A few attempts at containing these costs have already been made, as in the Ryan-Murray budget measure to cut by 1 percent the rate at which military cost of living adjustments grew for retirees under 62, or the discussion about reducing commissary benefits. Both of these energized vocal protest from the military and veteran communities, and both of them have been essentially killed in Congress. Politically speaking, it is currently impossible to cut personnel costs in any way other than cutting personnel.

Cutting personnel is actually appropriate, as Desch points out. Unfortunately, the reality of congressional politics and of the budgeting enforced by the Budget Control Act/sequestration is that the Pentagon will have to cut what it's possible to cut, not what it makes most sense to cut.

It is a mistake to believe that reducing numbers automatically introduces efficiency. In a normal American firm, cutting personnel is an efficient means of reducing costs because a firm can choose whom it wants to fire and can engage in lateral hiring when its need for personnel increases again. In the military, however, one cannot simply fire the lowest-performing people and replace them with new hires, nor can one engage in lateral hiring for certain specialties when a sudden need arises (e.g. combat medics, artillerymen, military lawyers). While it is possible to pass over low-performing officers and deny re-enlistment requests from below-average enlisted personnel, the military has little control over the timing of such actions, and may face budgetary time limits that force out higher performers. In general, the forces will achieve personnel cuts by reducing recruiting and relying on voluntary attrition. This is an inefficient means of managing personnel. Significant cuts to recruiting will create a sort of demographic trough on the heels of the Iraq-Afghanistan bulge, and relying on voluntary attrition is likely to drive the best people out of the force as they realize that they have attractive options outside the military.

For these reasons, it is vital to shape the force rather than simply cutting it. The Army Reserve and National Guard forces should be re-structured to ensure that they maintain adequate numbers of those occupational specialties that cannot be hired quickly on contract. Bonuses should be carefully targeted. The Budget Control Act should be revised to provide the services more flexibility in how much they cut from which parts of their budgets. As it stands, they are being forced to cut both high and low-performing programs and people, which is the opposite of what Ricks and Desch hope would happen under the pressure of a budget squeeze.

Give the services more flexibility and they will have both the opportunity and the incentive to cut what doesn't work and focus on what does.

Lindsay P. Cohn is an assistant professor of political science at the University of Northern Iowa. She is spending the 2013-14 year as a Council on Foreign Relations international affairs fellow, working for the deputy assistant secretary of defense for special operations and combatting terrorism. The opinions expressed here are her own and do not reflect those of the U.S. government or Department of Defense.

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