Panetta to Offer Strategy for Cutting Military Budget

Washington – Defense Secretary Leon E. Panetta is set this week to reveal his strategy that will guide the Pentagon in cutting hundreds of billions of dollars from its budget, and with it the Obama administration’s vision of the military that the United States needs to meet 21st-century threats, according to senior officials.

In a shift of doctrine driven by fiscal reality and a deal last summer that kept the United States from defaulting on its debts, Mr. Panetta is expected to outline plans for carefully shrinking the military — and in so doing make it clear that the Pentagon will not maintain the ability to fight two sustained ground wars at once.

Instead, he will say that the military will be large enough to fight and win one major conflict, while also being able to “spoil” a second adversary’s ambitions in another part of the world while conducting a number of other smaller operations, like providing disaster relief or enforcing a no-flight zone.

Pentagon officials, in the meantime, are in final deliberations about potential cuts to virtually every important area of military spending: the nuclear arsenal, warships, combat aircraft, salaries, and retirement and health benefits. With the war in Iraq over and the one in Afghanistan winding down, Mr. Panetta is weighing how significantly to shrink America’s ground forces.

There is broad agreement on the left, right and center that $450 billion in cuts over a decade — the amount that the White House and Pentagon agreed to last summer — is acceptable. That is about 8 percent of the Pentagon’s base budget. But there is intense debate about an additional $500 billion in cuts that may have to be made if Congress follows through with deeper reductions.

Mr. Panetta and defense hawks say a reduction of $1 trillion, about 17 percent of the Pentagon’s base budget, would be ruinous to national security. Democrats and a few Republicans say that it would be painful but manageable; they add that there were steeper military cuts after the Cold War and the wars in Korea and Vietnam.

“Even at a trillion dollars, this is a shallower build-down than any of the last three we’ve done,” said Gordon Adams, who oversaw military budgets in the Clinton White House and is now a fellow at the Stimson Center, a nonprofit research group in Washington. “It would still be the world’s most dominant military. We would be in an arms race with ourselves.”

Many who are more worried about cuts, including Mr. Panetta, acknowledge that Pentagon personnel costs are unsustainable and that generous retirement benefits may have to be scaled back to save crucial weapons programs.

“If we allow the current trend to continue,” said Arnold L. Punaro, a consultant on a Pentagon advisory group, theDefense Business Board, who has pushed for changes in the military retirement system, “we’re going to turn the Department of Defense into a benefits company that occasionally kills a terrorist.”

Mr. Panetta will outline the strategy guiding his spending plans at a news conference this week, and the specific cuts — for now, the Pentagon has prepared about $260 billion in cuts for the next five years — will be detailed in the president’s annual budget submission to Congress, where they will be debated and almost certainly amended before approval. Although the proposals look to budget cuts over a decade, any future president can decide to propose an alternative spending plan to Congress.

The looming cuts inevitably force decisions on the scope and future of the American military. If, say, the Pentagon saves $7 billion over a decade by reducing the number of aircraft carriers to 10 from 11, would there be sufficient forces in the Pacific to counter an increasingly bold China? If the Pentagon saves nearly $150 billion in the next 10 years by shrinking the Army to, say, 483,000 troops from 570,000, would America be prepared for a grinding, lengthy ground war in Asia?

What about saving more than $100 billion in health care cutbacks for working-age military retirees? Would that break a promise to those who risked their lives for the country?

The calculations exclude the costs of the wars in Iraq and Afghanistan, which will go down over the next decade. Even after the winding down of the wars and the potential $1 trillion in cuts over the next decade, the Pentagon’s annual budget, now $530 billion, would shrink to $472 billion in 2013, or about the size of the budget in 2007.

It is also important to remember that Mr. Panetta, a former White House budget chief, understands budget politics like few other defense secretaries. When he sent a dire letter to Capitol Hill late last year that held out the prospect of huge reductions in some of Congress’s favorite weapons programs, analysts saw it as a classic tactic to rouse the Hill to his side.

They noted that Mr. Panetta did not cite the $100 billion that the previous defense secretary, Robert M. Gates, said could be saved by reducing the number of contractors, cutting overhead, consolidating technology and limiting spending in the executive offices of the Pentagon.

“Talking about business practices doesn’t sound the alarm bells,” said Travis Sharp, a defense budget specialist at the Center for a New American Security, a defense policy research institution.

Here is a look at other areas for reductions:

Military benefits and salaries, although politically difficult to cut, are first in the line of sight of many defense budget analysts. Scaling back the Pentagon’s health care and retirement systems and capping raises would yield hundreds of billions of dollars in projected savings over the next decade.

As it stands now, the Pentagon spends $181 billion each year, nearly a third of its base budget, on military personnel costs: $107 billion for salaries and allowances, $50 billion for health care and $24 billion in retirement pay.

One independent analyst, Todd Harrison of the Center for Strategic and Budgetary Assessments, a nonpartisan policy and research group in Washington, has calculated that if military personnel costs continue rising at the rate they have over the past decade, and overall Pentagon spending does not increase, by 2039 the entire defense budget would be consumed by personnel costs.

Most of Washington’s “cut lists” recommend increases in fees for beneficiaries in the Pentagon’s health insurance, Tricare. But the higher fees would affect only working-age retirees and not active-duty personnel, who do not pay for health care.

Other proposals call for capping increases in military salaries, which have had double-digit increases since the Sept. 11 attacks, often because Congress gave the troops raises beyond those requested by the Pentagon.

The chief target for weapons cuts is the F-35 Joint Strike Fighter, one of the most expensive weapons program in history. The Pentagon has plans to spend nearly $400 billion to buy 2,500 of the stealth jets through 2035, but reductions are expected.

The debate centers on how necessary the advanced stealth fighter really is and whether missions could be carried out with the less expensive F-16s. The main advantage of the F-35 is its ability to evade radar systems, making it difficult to shoot down — an attribute that is important only if the United States anticipates a war with another technologically advanced military.

“It would matter some with Iran, it would matter a lot with China,” said Michael E. O’Hanlon, a defense analyst at the Brookings Institution and the author of a recent book, “The Wounded Giant: America’s Armed Forces in an Age of Austerity.”

Nowhere is balancing budget and strategy more challenging than in deciding how large a ground combat force the nation needs and can afford. The Army chief of staff, Gen. Ray Odierno, the former commander in Iraq, points out that the Army had 480,000 people in uniform before the Sept. 11 attacks, and at that number was supposed to be able to fight two wars at once.

But the Army proved to be too small to sustain the wars in Afghanistan and Iraq and was increased to its current size of 570,000. The Army is now set to drop to 520,000 soldiers, beginning in 2015, although few expect that to be the floor. The reality is that the United States may not be able to afford waging two wars at once.

“That said, there are certain risks with falling off the two-war posture,” said Andrew F. Krepinevich Jr., a military expert at the Center for Strategic and Budgetary Assessments. “You may risk losing the confidence of some allies, and you may risk emboldening your adversaries. But at the end of the day, a strategy of bluffing, or asserting that you have a capability that you don’t, is probably the worst posture of all.”

Studies by the Center for a New American Security, the Sustainable Defense Task Force and the Cato Institute, which represent a spectrum of views on defense spending, estimate that the savings from cutting the ground force could range from $41 billion by reducing the Army to 482,400 and the Marine Corps to 175,000 (from its present size of 202,000) all the way up to $387 billion if the Army drops to 360,000 and the Marines to 145,000. The final numbers will make it clear that the United States could not carry out lengthy stability and nation-building efforts, like those ordered for Afghanistan and Iraq, without a huge mobilization of the National Guard and the Reserves.

The size of the military is determined not only to win wars, but also to deter adversaries from starting hostilities. That underpins the American rationale for maintaining a combat presence at overseas bases and for conducting regular air and sea patrols around the globe. With austerity looming, those, too, might be curtailed to save money.

Senator Tom Coburn, Republican of Oklahoma, advocates saving $69.5 billion over 10 years by reducing by one-third the number of American military personnel stationed in Europe and Asia

“This option would leave plenty of military capability by maintaining strategic air bases and naval ports to provide logistics links,” Mr. Coburn wrote in a report on his budget proposals. Many Congressional budget experts also see ways to save billions of dollars by consolidating Defense Department facilities, schools and installations.

One of the largest expenses the Pentagon faces is to replace its aging strategic nuclear forces. While America’s nuclear warheads are relatively inexpensive to maintain on a day-to-day basis, all three legs of the nuclear triad that deliver the punch — submarines, bombers and ground-based missiles — are reaching the end of their service life at just about the same time.

“The world has changed,” said Stephen W. Young, a senior analyst with the Union of Concerned Scientists, a nuclear watchdog group. “The United States can be more than secure with a far smaller arsenal than what we currently have.”

This article, “Panetta to Offer Strategy for Cutting Military Budget,” originally appeared in The New York Times.