No Guts, No Glory

The Real Challenges Facing the Next Secretary of Defense

FRANKLIN C. SPINNEY,
This essay appeared in Counterpunch (31 Dec 2012) and Time's Battleland (3 Jan 2013)

One of the most pressing problems facing the incoming Secretary of Defense is posed by our denouement in Afghanistan.  For reasons explained by Paul Sperry in an excellent 30 December op-ed in the New York Post, extricating ourselves from this quagmire is now taking on dangerous overtones, and the need to leave may be approaching at warp speed.  The implications for the nature of the American withdrawal may be ominous, but they should not be unexpected.  It is now virtually certain that managing a coherent withdrawal will present a major challenge for the incoming defense secretary.

President Obama’s 2009 surge strategy for what he and Democrats liked to portray as the “good war” in Afghanistan was premised upon the assumption that the US could quickly build up and train large Afghan National Security Forces (ANSF), including army and police forces.  Obama and the Pentagon sold this counterinsurgency strategy to the American people by promising a surge in American forces would quickly weaken the Taliban.  The emasculation of the Taliban would permit a rapid expansion of the Afghan security zones controlled by the Kabul government, while the rapid build up of the ANSF would stabilize and grow these zones even further, and thereby set the stage for a quick exit of US combat forces beginning eighteen months from the date of the surge.

Despite its central premise of quickly building up an effective ANSF, the surge-based counterinsurgency plan produced by the Afghan theater commander General Stanley McChrystal did not provide a realistic analysis of the strengths and weaknesses of the existing Afghan army and police forces.  Yet these forces were the foundation for the both the expansion and the promised sequence of developments that would enable our quick withdrawal.

McChrystal’s grotesque oversight became obvious well before the plan’s approval, when his plan was leaked in the early fall of 2009 (as I explained here).    The limitations of this plan were again brought dramatically to the President’s attention by Ambassador Eikenberry in cables that were leaked immediately before the plan’s approval in January 2010 (summarized here).  Nevertheless, the President pressed on and approved the fatally flawed plan after an agonizing public debate during the fall and winter of 2009-10.

General McChrystal’s omission was both logically and empirically unforgivable, especially given (1) the contemporaneously emerging awareness of the counterproductive strategic effects of President Bush’s surge in Iraq, (2) the Soviet’s clear failure to build up an effective Afghan army in the 1980s as part of its exit strategy and (3) our own spectacular failure to build up an effective South Vietnamese army (i.e., Vietnamization), which was a central premise of President Nixon’s Vietnam exit strategy.

While hardly unique in its content, Sperry’s op-ed piece provides an excellent summary of how the easily foreseeable consequences of McChrystal’s oversight are now rapidly coming to a head. The problem is not just a strategic one of extracting our forces with dignity; nor is it a political one of fingering who is to blame, although there is plenty of blame to go around. It stems from deep institutional roots that reveal a need for reform in our military bureaucracies and particularly our leadership selection policies.

That is because the next Secretary of Defense must deal with the consequences of a strategic oversight that was made by and approved at the highest professional levels of the American military establishment — a plan which it then imposed on its weak and insecure political leaders.  This suggests a question: Will the new defense secretary succumb to business as usual by sweeping the dysfunctional institutional causes of the Afghan debacle under the rug or have the courage and wisdom to use this sorry affair as a reason to clean out the Pentagon’s Augean Stables?

If past is prologue, the former is far more probable than the latter.  The Vietnam catastrophe resulted cosmetic reforms, the most lasting of which dealt with improving the military’s capacity to manipulate press coverage to preserve its institutional prerogatives — a capability that became apparent in the First Iraq War, Kosovo, the Second Iraq War, and initially in Afghanistan, and the press’s fawning coverage of these wars.

But managing the Afghan denouement  is not even the largest challenge facing the new defense secretary.

A far more significant challenge will be posed by the need to sort out the programmatic chaos in the Pentagon’s hugely bloated defense budget, which, while not unrelated to the Afghan debacle, is caused primarily by out-of-control institutional prerogatives and bureaucratic game playing.  Notwithstanding its bloat, the current defense budget plan cannot modernize the  military’s weapons inventories on a timely basis; nor can it insure our shrinking, aging equipment will be maintained in a state of combat readiness, while providing sufficient funds for training troops.  Most importantly, the Pentagon’s accounting systems are a shambles.  The Pentagon’s budget and program planning books can not even pass the most basic constitutional requirements for accountability, much less provide the management information needed to fix the aforementioned modernization, force structure, and readiness problems.

As I explained here and here, these dysfunctional problems are connected and have deep behavioral roots.  Fixing these problems will require harmonizing and reining in the disparate factions making up the dysfunctional political-economy of the Military – Industrial – Congressional Complex — a heretofore intractable problem President Eisenhower first warned America about in his farewell address in January 1961 (note: the reference to Congress was included in the first draft of his speech but subsequently dropped).

What I find depressing is that not one of these pressing issues has been the subject of speculations about the choice of a new defense secretary.  Au contraire, the press has been obsessed with the lobbying concerns of the discredited neocons on the right who helped to create Afghan and Iraqi messes, proponents of continuing American empire in the middle (who are now promoting our intervention in Syria and the budget busting pivot to the Pacific), and gender balancers on the left.

Perhaps such divagations of the public mind are a necessary diversion. After all, reining in the out of control defense program has been declared a non problem by placing it off limits in the hypocritical fiscal cliff negotiations, where the President has chosen put social security payments on the block, even though social security is fully funded by its own earmarked payroll deduction tax (President Obama proposed cutting payments by adopting the chained consumer price index to lower the future inflation adjustments to these payments).

The bottom line, Mr./Ms. Incoming Secretary: SNAFU in Versailles on the Potomac raises the question: Do you want to be part of the problem … or part of a solution?

Business As Usual Inside Obama’s Pentagon

MILITARY SPENDING

Business As Usual Inside Obama’s Pentagon

By Chuck Spinney, Time.com, Dec. 06, 2012

http://nation.time.com/2012/12/06/business-as-usual-inside-obamas-pentagon/

Winslow Wheeler’s three-part series on the Navy that wrapped up on Battleland Wednesday shows that the sea service is up to its old tricks.

To wit, it is impregnating President Obama’s five-year defense program by front-loading today’s budget in a way that creates irresistible pressure to grow its future budgets –even if it takes a marginal reduction in the near term.

Think of this as an emerging right to programmatic life issue, because, for reasons explained by Wheeler, abortion is out of the question, even though a programmatic miscarriage is inevitable.

Any one who doubts this, or thinks this future pathway is unlikely or accidental, need only recall the braggadocio of Ronald Reagan’s chief navy stud, Navy Secretary John Lehman, when he told a seminar in January 1983 at the Brookings Institution, that it was “too late” to stop the buildup to a 600-ship navy.

“We’ve already accomplished it,” he continued, “because we front-loaded (emphasis added) the budget.”

Predictably, Lehman’ 600-ship navy miscarried a few years later in the late 1980s in terms of fleet size, if not money.

Lehman used the Pentagon‘s term of art — front loading — to describe the ubiquitous practice of downplaying the future consequences of a current programmatic decision in order to gain approval to proceed on a given course of action.

The most familiar example is low-balling a cost estimate for a new weapon, but it front loading can take many sophisticated forms as I explained in my 1990 pamphlet Defense Power Games, where Lehman’s 1983 caper is described on pgs. 18-19. Examples of front-loading are everywhere in the U.S. political system, which is one reason why it has run aground: check out the low-balling of the cost of the second Iraq War in 2003 (Bush II), for example, low-balling the future consequences of tax cuts on future deficits in 1981 (Reagan) and 2001 (Bush II), and Medicare Part D (Bush II)).

Like a strutting peacock showing feathers in a sexual game to attract a mate, Lehman’s front-loaded 600 ship Navy and Mitt Romney’s now forgotten 350-ship Navy (Guess what? Lehman was a senior defense advisor to Romney), were simply fluff to hype the Navy’s courtship with Congress, the media, and the taxpayers. The courtship aimed at ejaculating the flow of money into the womb of the Navy faction of the military-industrial-congressional complex via a front-loading penetration that would then be locked open by political engineers trained in the seductive arts of quickly spreading dollars, jobs, and profits to as many congressional districts as possible.

They built a social safety net of political and economic dependency to reduce the probability of a program’s termination. To temporarily switch metaphors, front loaders can be likened to the infiltration troops that soften up the front for a penetration while the political engineers are the Panzers storming through the hole to demolish any resistance, in effect locking the door open (our political paralysis in dealing with the massive overruns and delays in the F-35 Joint Strike Fighter being the most stunning current example of the effectiveness of these two power games).

This kind of intercourse guarantees a pregnancy that freezes up a political-decision-making system and allows unit costs to always grow faster than budgets, or equivalently a programmatic pregnancy wherein some cells of the fetus (new program) grow faster than the body, even when the budget (the body) grows rapidly, as happened in the 1980s and after 1997.

The economic relationship of cost growth eclipsing budget growth guarantees that combat forces shrink in size and weapons gets older (resulting in the budget plan’s inevitable miscarriage, as I explained here, and here). As Wheeler writes, the impregnation is well under way again, even as America approaches the fiscal cliff.

Anyone who thinks the Navy’s (really the Pentagon’s) game ended when Romney predictably lost to Mr. Obama is whistling Dixie.

Mr. “Change You Can Believe In” has signaled the defense budget is now off the butcher’s block in the emerging grand bargain on taxes and social spending that will heave what is left of the shrinking middle class off the fiscal cliff, sequester or no sequester.

That is because we must protect the Defense budget, Mr. Obama’s Pentagon says, to counter the rising threat posed by China.  This requires us to pivot strategically (and expensively) toward the Pacific and East Asia. Think of the China threat inflation as another display of “peacock feathers” in a courtship strategy aimed at impregnating the political system with a flood of money. The pivot really means the Pentagon’s big scoop shovel is being moved into position to dump money on the Navy and the Air Force, once again at the expense of the poor old Army.

If there is one thing we now know about Mr. Obama when it comes to the Pentagon, it is that he does what he is told to do by his defense advisers, who are card-carrying members of the military-industrial-congressional complex, and that means lower cost options will remain off the Pentagon’s decision making table.  Which brings us the to the writing of Andrew Cockburn, who wonders in the Los Angeles Times, if the perks and peccadilloes of our generals will continue to keep “we the people” distracted from the real game?

Such is the enduring nature of budget combat in Versailles on the Potomac, which always stays the same, even after the superpower threat of Soviet Union evaporated or after we liquidated Osama bin Laden.

Will Military-Industrial-Congressional Complex Heave the Middle Class Off the Fiscal Cliff?

America’s Defense Dependency

by FRANKLIN C. SPINNEY, COUNTERPUNCH, WEEKEND EDITION NOVEMBER 16-18, 2012

http://www.counterpunch.org/2012/11/16/americas-defense-dependency/

[note: a shorter version of this posting appeared on 13 Nov 12 at this link]

The essay — America the Third World Nation in Just 4 Easy Steps, (Truthout, 10 Nov 2012) — describes how our political addiction to the free-trade ideology of neoliberal economics has helped to de-industrialize America and thereby impoverish much of the American middle class. My 24 Sept essay in Counterpunch describing decline of manufacturing employment gives you a sense of the mind-boggling magnitude of what has happened. While “4 Easy Steps” makes passing references to the increasing dependence of the manufacturing sector on military spending, as well as the financialization of economy (but not the latter’s siamese-twin ‘managerialism’), the authors did not develop these points. Without implying any criticism of their excellent essay, my aim today is to tweak your interest in these omissions, particularly America’s defense dependency.

The late Professor Seymour Melman (Columbia Univ.) wrote a prescient book, Profits Without Production (Knopf, 1983) that explained how the militarization and managerialization of our economy were becoming the central causes of the decline in America’s manufacturing competitiveness.  This decline started in  the 1970s, but Melman showed how it grew out of seeds planted by the permanent military mobilization of a huge defense industry in the 1950s.

The permanent war economy was born on 30 September 1950.  On that day, President Truman officially signed NSC-68, a document that became the blueprint for the containment strategy for waging the Cold War.  Central to this strategy was the  establishment of a large, permanently mobilized defense manufacturing sector. The authors of NSC-68 justified the permanent mobilization, in part, with an economic rationalization reflecting their contention that the WWII production miracle proved the multiplier effects of Military Keynesianism.  They suggested these benefits were likely to repeat themselves.  In their words: “the economic effects of the [NSC-68] program might be to increase the gross national product by more than the amount being absorbed for additional military and foreign assistance purposes.”

The post WWII economic boom in the US (note: our competitive performance was aided in part by the lingering effects of the WWII  damage to the US’s other major industrial competitors) hid the adverse economic effects of the economic diversion attending to the permanent war economy unleashed by NSC-68.  Nevertheless, by early 1961, the accumulating economic and political damage caused by the diversion concerned some insiders: President Eisenhower famously warned the nation about the rise of misplaced power posed by the rise of a large permanent standing arms industry, which he said pointedly was new in our national experience.

The accumulating damage wrought by the permanent war economy  started to accelerate in the 1970s, and by 1980, the cancer metastasized: militarization and managerialization began to openly thrive and grow at the expense of the traditional high-wage manufacturing sector, in effect, siphoning off money flows via a combination of government handouts and favorable tax treatment that in effect rewarded both the looting of the tax base and the draining of competitiveness and ingenuity from the civilian manufacturing sector (via the increased defense subsidy, leveraged buyouts, offshoring of jobs, emphasizing short-term focus to pump stock prices, etc.) The combined results of the growing defense dependency, managerialization, and financialization was a decreasing international competitiveness in the manufacturing sector. At the same time, our global competitors were increasing their competitiveness.  The net effect can be seen in the US merchandize trade deficit; it went into free fall after 1980.

Those who believe that subsidized defense technologies spill over into the commercial sector to improve international competitiveness might want to consider the obvious fact that the huge increases in the defense spending between 1977 and 1987 and 1998 and 2012 clearly did nothing to ameliorate the free fall.

In America, this political-economic evolution has created a weird political situation where a peculiar political darwinism (taking the form of a corporatist alliance of big business and the federal government) co-exists with the neo-liberal ideology of social darwinism. The former stresses mutual dependency and government subsidies for survival while the latter stresses individuality and survival of the fittest in a Hobbesian Universe.  Yet the contradiction between the two modes of belief does not impede the ideologues from promoting both simultaneously, and in so doing, continue the looting and draining operations.

That cognitive dissonance  is now poised to grow much worse in the next few months, if as is likely, the threat of a budget sequester induces the government to impose neoliberal austerity economics on the middle class, while government becomes more imbedded with and protects the banksters, the defense contractors, and its other corporatist allies.  That is because the only way to practice America’s peculiar mix of social and political darwinism at the same time is to fling what is left of the middle class off the fiscal cliff by defunding social security, medicare, infrastructure modernization, education, etc.

Much has been written on the economic distortions created by the financialization of the economy, but aside from Melman’s pioneering work, little has been written on economic distortions created by the increasing dependency of the manufacturing sector on military spending — which is really a huge government subsidy – and the rise of managerialism, financialization’s deadly siamese twin.  Both sets of distortions  exist side by side with, but in sharp contrast to, the ideological neoliberal fantasies of a free market.

The attached graphic provides a hint — but only a hint — of how the hidden distortions that have been insensibly creeping into the economy: the graphic illustrates how rates of growth in the industrial shipments of military durable goods increased at a much faster rate than shipments of nonmilitary durable goods  since 2000.

This difference in growth rates reflects the accumulating effects of the huge increases in the defense budget that began in 1998.  These differences have worked to increase the disproportionate large share of the de-industrializing manufacturing economy that has been soaked up by the defense industry over time.  For example, defense spending (base budget + war costs) in 2011-12 amounted to about 4.4% of the GDP.  About one-quarter of this spending was applied to the salaries of military and civil servants.  That implies the other three-quarters or about 3.3 percent of GDP was spent on defense goods and services in the private sector.  Yet this 3.3 percent of GDP spent on defense goods and services soaked up 11 to 12 percent of America’s total capital goods shipments over the last two years.

There are other indicators of the economic distortion caused by the defense dependency: For example, fifty-five percent of the federal R&D budget is now allocated to defense-related activities. In the early to mid 1990s, nationwide employment of scientists and engineers in the defense sector soaked up about 30 percent of the total scientific and engineering talent (public and private sectors).  Given the rapid growth in the defense budget and the decline in the manufacturing share of GDP since then, the ratio is likely to be even higher today.  Unfortunately, there is little current academic research aimed at understanding the size and meaning of these hugely important preemptions of resources, production capabilities, and human skills.

Indeed, most contemporary economists, like the authors of NSC-68, still think of military spending in Keynesian terms as being a general economic stimulus and job creator.  But Military Keynesianism, if it ever worked, is certainly not working in the 21st Century.

To wit: the largest sustained increases in the defense budget since the end of WWII began in 1998, but this spending binge was accompanied by (1) a sluggish recovery from the March-November 2001 recession to the onset of the Great Recession that began in late 2008 and its even more sluggish recovery; (2) an acceleration in the rate of decline of employment in the manufacturing sector after 1998 (see Figure 2 here); and (3) the unprecedented plummeting of the merchandise trade balance (discussed earlier). There is also academic research suggesting defense spending is one of the least effective way to create jobs via the ‘Keynesian multipliers’ flowing out of government expenditures (see this Univ. Mass study, for example).

Nevertheless, lest you think the NSC-68′s faith in Military Keynesianism is forgotten ancient history, President Bush was still spouting its soothing nostrums as recently as February 2008,  when he told NBC’s Ann Curry, “I think actually, the spending on the war might help with jobs. … because we’re buying equipment, and people are working. I think this economy is down because we built too many houses.”

Defense companies now make up a very substantial part of America’s much diminished industrial base — and these giant defense companies are hooked on the narcotic of defense spending.

That is to say, defense manufacturers cannot survive without the defense subsidy.  Since the end of the Viet Nam War, many have tried to convert some of their efforts to competitive production of non-defense goods, and most have failed. One of the most spectacular flops being Grumman’s attempted diversification into hi-tech flexible buses for New York City’s Metropolitan Transportation Authority. The buses had to be withdrawn from service after only three years, because they broke down repeatedly.  As Melman explained in the early 1980s, defense companies simply do not have the marketing, managing, engineering, and manufacturing skills to compete successfully in global commercial markets; and when their business practices spill over into the private sector, they often hurt competitiveness and productivity.*

By 1990, even the industrial leaders in the Military-Industrial-Congressional Complex (MICC) fully understood Melman’s point.  No less an authority than William Anders, CEO of General Dynamics publicly admitted to the truth of Melman’s argument in 1991, when he explained the reasons for the high failure rate in excursions into competitive commercial markets.  Anders said (pg. 13),

“This isn’t surprising. Defense industry management teams generally have little commercial experience and market savvy. Most have been ‘cost plus’ and ‘mil spec’ trained. In short, most don’t bring a competitive advantage to non-defense businesses. Frankly, sword makers don’t make good and affordable plowshares.”

That, in a nutshell, is why Grumman could not make reliable and affordable buses.  That is why the private sector made the internet affordable, reliable, and easy to use, not the DoD which invented it.  For interested reader, the essay Why Boeing is Imploding provides a stunning example of how the defense-related engineering and production practices (in this case, political engineering or the  practice spreading subcontracts around to build political support for a program) have spilled over to infect Boeing’s civilian production practices.

One thing Anders did not mention is that the defense industry is very skilled in lobbying the federal government to increase the public subsidy for making its increasingly unaffordable weapons.  Nor did he mention that you buy what you subsidize.  In a ‘cost-plus,’ ‘mil-spec’ed,’ single-buyer economy, you subsidize cost growth, so you ‘buy’ costs — the cost overruns in the hugely expensive F-35 Joint Strike Fighter being an outstanding current example (here is just one example in the F-35’s ever growing shop of horrors).

Anders made his amazing admission in the 1991 keynote address to the twelfth annual conference sponsored by Defense Week, then a very influential newsletter in the MICC.  His intent was to explain why, at the end of the Cold War, General Dynamics had chosen not to diversify its business into the non-defense sector — i.e., why GD was not interested in converting swords into plowshares.  Instead, Anders proposed to undertake a takeover strategy to increase its market share in a (temporarily, as it turned out) shrinking defense market.

Anders was not alone in thinking along these lines. In fact, his speech was a precursor to the industry-wide, government-subsidized “Pac-Man” consolidation strategy. This strategy was promoted by President Bill Clinton’s then deputy secretary of defense, William Perry, at a 1993 meeting with the defense titans, a meeting dubbed the “Last Supper.”  Perry’s strategy led to a rash of industry-wide mergers beginning in the mid-1990s.

Significantly, when the defense budget began to grow rapidly after 1998, there has been no undoing of the consolidations, even though rising defense budgets eventually grew to levels exceeding the highest budgets of the Cold War, even after removing the effects of inflation.

Today, the defense industry is dominated by three giant all-purpose weapons manufacturers—two of which now have their headquarters in the Washington, DC, area, and the third (Boeing) with a major government relations office in the DC area as well—to more closely supervise their most important corporate activity: the lobbying efforts that influence the money flow out of the Pentagon, Congress, and the White House.

Together with the banksters, these immensely powerful companies, their smaller brethren, and the huge supporting cast of gucci-shoed K Street lobbyists, pro-defense think tanks, and the defense trade press are poised to pounce on President Obama and Congress to protect their fiscal honey pot, while the rest of country is heaved over the fiscal cliff.

If you want to learn more about the important but little examined subject of the economic distortions caused by the defense dependency, and by extension, learn more about why America is becoming a third world nation, the best introduction is still Melman’s** elegantly argued eleven-page prologue to Profits Without Production, aptly titled  ”How the Yankees Lost Their Know-how.”

If that essay does not peak your interest in this hugely important subject, nothing will.  Unfortunately, you will have to go a used bookseller to find it.

Franklin “Chuck” Spinney is a former military analyst for the Pentagon and a contributor to Hopeless: Barack Obama and the Politics of Illusion, published by AK Press. He be reached at chuck_spinney@mac.com

* At this point, I should note that Melman believed it was possible to convert defense manufacturers to civilian production on a large scale, but such a massive conversion program would require large scale government sponsored industrial planning.  This kind of planning is a highly toxic subject to believers in free-market capitalism.  So, it should not be surprising that military conversion — i.e. turning swords into plowshares — is not only an exceedingly complex but also a highly controversial subject. The possibility or impossibility of conversion is not at issue in this essay.  My focus is on the short term response of any grand bargain to dodge the effects of the looming budget sequester: namely how in the next few months the defense dependency may induce the politicians, who have been captured by it, to fling the middle class off the fiscal cliff (i.e., by cutting back expenditures for Social Security, Medicare, Medicade, infrastructure modernization, education, etc.)

** Caveat emptor: Melman was my friend and I made some minuscule contributions to the research in this book.

An Obscene Value System

Hardware Over People at the Pentagon (Again)

by FRANKLIN C. SPINNEY, Counterpunch APRIL 19, 2012

http://www.counterpunch.org/2012/04/19/hardware-over-people-at-the-pentagon-again/

For a good example of the Military-Industrial-Congressional Complex’s (MICC’s) value system — which is hardware before ideas and people — read this New York Times column by Nicholas Kristof.

Note his opening paragraph:

Here’s a window into a tragedy within the American military: For every soldier killed on the battlefield this year, about 25 veterans are dying by their own hands.

And here is Kristof’s penultimate paragraph:

We refurbish tanks after time in combat, but don’t much help men and women exorcise the demons of war. Presidents commit troops to distant battlefields, but don’t commit enough dollars to veterans’ services afterward. We enlist soldiers to protect us, but when they come home we don’t protect them.

In between, Kristof supports these statements with horrific detail.

Kristof’s op-ed is symptomatic of a deeper problem — one that evolved in the MICC’s cultural DNA during the give and take of budget battles fought over 40 years of Cold War and the subsequent 20 years of warmongering since 1991. This DNA shapes the MICCs behaviour, as I explained in The Domestic Roots of Perpetual War, in Challenge: The Magazine of Economic Affairs (January-February 2011).

The proper order of priority in any military force should always be People – Ideas – Hardware, in that order — the opposite of that implied in Kristof’s penultimate paragraph

But you won’t won’t see P-I-H value system reflected in the actual decisions made in the Pentagon, the defense companies, or on Capitol Hill, or the mass of the juiciest stories in the defense media (like Aviation Week, Armed Forces Journal, Inside The Pentagon, etc. (or much of the mainstream media, to boot). By far, most of the energy, money, words, and time is spent debating the merits of the individual weapon systems, like the problem plagued, $500 billion F-35 Joint Strike Fighter.

During my 33 years in Department of Defense, this warping of values became steadily worse over time, notwithstanding the empty flag-waving rhetoric of supporting our troops. At the same time the nation has become ever more dependent on an the higher personnel costs needed to support an all volunteer force — a standing permanent military, something the Framers of the Constitution would have abhorred.

The growing costs of the all-volunteer force eat into the budget and displace money needed for new weapons. So, there is constant pressure to reduce the size of the force and training tempos, and reallocate the money to higher priority items, like the ever-more-expensive Joint Strike Fighter.

In the 1997 and 1998, the insensitivity of these priorities became transparently obvious. Secretary of Defense William Cohen, in one of stupidest faux pas I have ever witnessed — and I have seen many — approved a poster celebrating Armed Forces Day that inadvertently became a metaphor for the MICC’s deeply entrenched, perverted value system.

What is missing?

People!!!!

Think of it. A day set aside to acknowledge the valor and sacrifices of our servicemen was announced by an official Defense Department poster that celebrated Hardware and ignored people.

If you think this mentality was an artifact of the Clinton Administration or the Democrats, think again. It was and remains bi-partisan. Ironically, Cohen was formerly a pro-defense Republican Senator from Maine (read shovel money to the warship builders at Bath Iron Works). After leaving the Spendagon, he flew through the revolving door and today, he is a high-powered consultant and ‘senior stateman’ making money by helping to lubricate the flow of funds through the halls of Versailles on the Potomac.  He was and remains an advocate of monstrous defense budgets.

When he took the job in 1997, Cohen promised to oppose President Clinton, if Cohen felt the Defense Department was being short shrifted. Moreover, in the 1980s, as a Republican senator, Cohen claimed to be a a member of the bi-partisan Military Reform Caucus. Of course, like most Senators, he never attended its meetings, because if he had, he might have realized the motto of the Reform Caucus was People – Ideas – Hardware — in that order!

But Cohen was not alone in poster obscenity. Significantly, at the time, no general or admiral in any military service objected publicly to this slanderous poster. In fact, it was not even noticed by anyone in the Pentagon, on Capitol Hill, or in the press, for a very simple reason:  The poster accurately accurately reflected the business-as-usual, core values of the MICC. After the second poster came out in 1998, Colonel GI Wilson, then an active duty Marine and close friend, and I went ballistic. We raised holy hell in emails, on the Internet, in meetings, in the halls, with news reporters, and any one who would listen.

We both can say with satisfaction that the poster outrage ended up in the dustbin of history, and by 1999, we had a poster with people on it.  When you consider the fact that we are proud of the fact that helped to people back on the Armed Forces Day poster, you get an idea of how deep the rot is.

If you think this is ancient history, read Kristof’s article carefully, in its entirety, and you will see that the value system that produced the obscene 1998 Armed Forces Day poster remains in place.   Then go on the Internet and google articles describing the current round of service downsizing plans (which means pushing people out the door) to make room for high cost cold-war inspired turkeys like the Joint Strike Fighter, nuclear submarines, ballistic missile defense systems, etc., simply because the rate of growth in the defense budget is being cut back.

And the next time you hear someone in the MICC waving the flag and saying the MICC’s top priority is supporting the grunts, slugging it out in mud and dust of war, remember the poster — and follow the money.

So I ask you, can there be any wonder why we neglect our veterans trying to cope with PTSD in the manner that Kristoff described or the ominous problems of moral hazard described by Major Tyler Boudreau in this paper?

Franklin “Chuck” Spinney is a former military analyst for the Pentagon and a contributor to Hopeless: Barack Obama and the Politics of Illusion, published by AK Press. He be reached at chuck_spinney@mac.com

Eisenhower's Nightmare

Reprinted with permission of Counterpunch editors

March 3, 2010

The MICC Moves to Hose the Taxpayer One More Time

Eisenhower's Nightmare Arrives

By FRANKLIN C. SPINNEY

Counterpunch

http://www.counterpunch.org/spinney03032010.html

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

Dwight D. Eisenhower,
President of the United States
Farewell Address, 17 January 1961

As I indicated in CounterPunch on 3 February 2010, the Quadrennial Defense Review (QDR) just released by the Obama Pentagon is a bad joke. That bad joke is about to be given the good housekeeping seal of approval by a special panel appointed jointly by the Secretary of Defense and the defense barons of the Armed Services committees in Congress. When this happens, rest assured, any desire to get control of the out-of-control defense budget will plunge far below its already low level. Chalk up another victory in the Military - Industrial - Congressional Complex’s (MICC’s) war on the Constitution, the American taxpayer, and programs like Social Security and Medicare, which are hallmarks of civilized society.

To understand why this QDR review panel is gearing up to paint lipstick on the QDR pig, it is first necessary to describe what the QDR did not do.

Today, the Pentagon is now spending more in inflation-adjusted dollars than at any time since the end of WWII to support a military force structure that is much smaller and older than at any time since the end of World War II. But the QDR did not even acknowledge the three mutually reinforcing problems that are now combining to produce a catastrophic meltdown of the Pentagon’s budget plans, let alone the cynical modes of conduct that virtually guarantee even more force structure reductions, even if defense budgets will continue to increase:

First, with a few exceptions, the Obama QDR approved a defense budget and a long range program plan that will not buy enough new weapons to replace the weapons in the inventories of the military forces in a timely manner. Consequently, the average age of these weapons, already at a post WWII high, will continue to get older at an accelerating rate. Given this situation, the only way to reduce the growth in average age will be to retire the oldest weapons without replacement, thereby shrinking the size of the forces yet again, in effect continuing a devolution that began as early as 1957 (see Defense Death Spiral, especially pps. 21-25).

The economic roots of the force structure meltdown lie in the MICC’s obsession with modernizing with ever more costly and technically complex weapons. This obsession creates a political economy wherein unit costs (i.e., the cost of the “parts”) always rise faster than budgets (i.e., the cost of the “whole”). This creates a situation a little like cancer cells metastasizing in a body; something has to give.

The asymmetric economics of defense lead to the declining production rates and age growth described above which, in turn, create extortionary political pressure (caricatured by vacuous slogans such as the “hollow military” in the late 1970s or the so-called “procurement holiday” in the mid 1990s) to justify increases in the total defense budget. But increasing the budget, as we did after 1976 and after 1994, actually accelerates the rate of cost growth and thus restores the cancerous asymmetry between cost and budget growth, albeit at a higher budget level. This sets the stage for yet more political pressure to increase the defense budget even further, as the extortionary loop folds back on itself to amplify itself -- over and over. Over time, cynical gaming strategies, evolved though trial and error, create and/or exploit this pattern of economic behavior that benefits the “parts” at the expense of the “whole.” Whether these strategies, now known as front loading and political engineering, are the “chicken” or the “egg” is now immaterial, because today, they are ubiquitous and lie at the center of an organic, self-regulating devolution.

So, the asymmetric economics of cost growth greater than budget growth create continual political pressure to bail out a collapsing modernization program. There are essentially two short-term ways for responding to this pressure: (1) decision makers can reduce current readiness for combat in order to transfer money out of, or by slowing the future rate of money growth into, the operating budget (by reducing training tempos, purchases of spare parts, etc.) and then pump the “savings” into the modernization budget, or (2) they could simply increase the total defense budget. Generally, decision makers opt for a combination of both in the short term, but over the long term, the only option is to change their obsessions, which is unthinkable, or to increase the budget, which is the real name of the game.

Second, the Obama QDR also failed to address how the modernization problems described above (i.e., increasing technical complexity + increasing age of weapons) mutually reinforce each other to compound the DoD’s economic problems by creating a phenomenon known as the rising cost of low readiness. This makes it ever more difficult to rob the readiness budget to pump up the modernization budget. The subtle cause and effect relationships underpinning the rising cost of low readiness are explained in the Defense Death Spiral, especially pps. 24-45. For our purposes, it is sufficient to say that the net result is that unit operating costs (i.e., the cost of operating the “parts”) also grow faster than defense budgets (i.e., the cost of the “whole”) and the economic effect becomes a variation on the cancerous theme described above.

Third, and perhaps most importantly, the Obama QDR failed to even acknowledge, let alone address, the related problems posed by unauditable, corrupt, financial management systems -- by this I mean both the historical accounting systems and the program planning systems of the Planning, Programming, and Budgeting System or PPBS.

As I explained in both the Defense Death Spiral and my last statement to Congress, not to mention in a public hearing over nineteen years earlier, in March 1983, before the Armed Services and Budget committees of of the Senate -- a hearing that resulted in a cover story for Time Magazine (7 Mar 83 issue), cynical bureaucratic gaming strategies systematically corrupt the information flowing though the Pentagon’s central management information system (i.e., the PPBS), which in any event is logically flawed (see, for example, my statement to Congress, beginning on page 15). This makes it impossible to assemble the information needed to sort out the first two problems and to devise appropriate recovery strategies that are based on an understanding of those problems. In this sense, the corruption of the Pentagon’s PPBS can be thought of as bureaucratic grease lubricating the political-economic engine that is protecting the status quo. So, it should not be surprising that our political system is unable to shape rational defense policies and strategies in response to changing conditions, such as adapting our forces while providing a peace dividend to reflect the changes brought about by the end of the Cold War.

Put bluntly, the Pentagon’s corrupt bookkeeping system is the turd in the national security punchbowl. All the players in Versailles on the Potomac have known about it for years, but no one wants to do anything about it, because flushing it out would end their party.

It is not fair to blame President Obama’s political appointees in the Pentagon for this state of affairs, because as I have endeavored to show, it has very deep roots. On the other hand, it is eminently fair to blame Obama’s inept Office of the Secretary of Defense, particularly the spectacularly incompetent Office of the Under Secretary of Defense for Policy, for not even acknowledging these problems in a QDR it spent almost a year putting together.

It would be absurd for the Obama Pentagon to plead ignorance for its obscene omission.

After all, Obama’s QDR is only the most recent variation of a bad joke begun in the Clinton Administration with its publication of the fatally- flawed first QDR on 19 May 1997. Of course, the Clinton Administration was merely continuing the pathological planning practices of the Reagan Administration, which I described in excruciating detail during the March 1983 congressional hearing. And bear in mind, the Reagan Pentagon was merely continuing the bureaucratic pathologies the military reformers began to document in the 1970s -- behavioral pathologies that we now know reached back at least to the inception of the Planning, Programming, and Budgeting System by Defense Secretary Robert McNamara in 1961 and probably earlier.

Given the staying power of the defense power games, no one should be surprised that the end of the Cold War resulted only in temporary marginal reductions in the defense budget; nor should we be surprised that twenty years later, the United States is spending more on defense than it did at the height of the Cold War, when we stood toe to toe with the Soviet nuclear-armed superpower, yet had enough extra resources to fight very hot wars in Korea and Vietnam; nor should we be surprised that today we are spending as much on defense as the rest of the world combined. Bear in mind, as I showed in my 2002 statement to Congress, the so-called global war on terror has very little to do with this current budgetary state of affairs. It should be clear, therefore, that the Pentagon has deep systemic problems, and that the most recent QDR, like its predecessors, papered them over, to put it charitably.

Now, with this background in mind, let’s turn our attention to the QDR review panel that is about to “fix” this disastrous state of affairs. Congress created a special review board in 2006 to analyze the 2010 QDR in order -- don’t laugh -- to provide the Congress with what it called an independent alternative view of the QDR. The 20 members of this review board were to be appointed by the Defense Secretary (12) and the senior Republicans and Democrats of the Senate and House Armed Services committee’s (8).

On 1 March 2010, Ray Locker and Ken Dilanian of USA Today authored a front page report that described and analyzed the makeup of the 20 members of the QDR review committee. Locker and Dilanian showed that “eleven out of twenty members “work for defense contractors as employees, consultants or board directors,” raising obvious questions of conflict of interests. Foremost among these is the panel chairman, William Perry, a long time Democratic defense operative who served in the Carter and Clinton administrations and made a fortune in the defense industry when he moved back and forth through the revolving door. Perry has been one of the most vocal and slickest salesmen of high tech defense systems, especially robots. While Secretary of Defense, Perry did nothing to correct the three problems described above, and in fact, he made them far worse by promoting new cold-war inspired high complexity, high-cost weapons just as the Cold War was ending -- most significantly, the problem-plagued Joint Strike Fighter, which is on track to be the most expensive program in the Pentagon’s history. Today, the Obama administration’s Pentagon is well populated with Perry’s proteges.

Locker and Dilanian did an adequate job of identifying contractor connections for the eleven members of the panel; that is bad enough, but their report dropped the ball on highlighting the likely biases of the other members.

In addition to the eleven members who are affiliated with the defense industry, at least six other members work or have worked as defense “intellaaaaactuals” for pro-defense not-so-thinking thinktanks:

* Center for New American Security (CNAS): John Nagl, president. Nagl has been closely tied to the Obama administration’s advocacy of the AFPAK war and his organization serves as a mouthpiece for the Pentagon's war policies. There is no indication Nagl knows anything about the decision making pathologies discussed above. But his predecessor as president of CNAS, Michelle Flournoy, is now the Under Secretary for Policy in the Pentagon and can be regarded as the key architect of the QDR.

* The Center for American Progress (CAP): Senior vice president, Rudy De Leon, is a former Deputy Secretary of Defense in in Clinton Administration. De Leon did nothing to clean up the Pentagon’s bookkeeping mess as DEPSECDEF, even though he was well aware of these bookkeeping problems from the mid-1980s forward, when he worked for Congressman Nick Mavroules (who ended up in the slammer for racketeering).

* Center for Strategic and Budgetary Assessments (CSBA): Eric Edelman was the Under Secretary of Defense for Policy between 2005 and early 2009. In this role, he was responsible for the vapid, unmemorable 2006 QDR, which is perhaps why Congress demanded the establishment of an independent review panel to “analyze” subsequent QDRs. Now he serves as Distinguished Fellow at CSBA, an organization long associated with promoting the Pentagon’s equally flawed theory of a high-tech, high-cost Revolution in Military Affairs (RMA), whose contemporary incarnation in using robotic drones in a collateral-damage-prone strategy to assassinate Taliban and al Qaeda leaders is creating enemies faster than we can kill them.

* Heritage Foundation: James Talent, the former Senator from Missouri and long time porker for McDonnel-Douglas-Boeing (St Louis), one of our largest defense contractors. The Heritage Foundation has ceaselessly flogged the “benefits” of ever growing defense budgets, since it produced its only critical report, “Ending Defense Stagnation” in 1982. Since then, to the best of my knowledge, it has not produced a study that questioned the Pentagon’s inability to pass financial audits in accordance with the requirements of the Chief Financial Officers Act of 1990, not to mention the Constitution -- apparently setting aside the supposed conservative predilection of preserving the original intent of the Framers of the Constitution.

* Institute for Defense Analysis (IDA): General Larry Welch, former Chief of Staff of the AF, did nothing to fix the Air Force’s airplane aging problem when he had a chance to shape the Air Force’s future. As President of IDA, he headed up a not for profit organization whose main customer was the Office of the Secretary of Defense in the Pentagon. During his tenure, the IDA economic analysis office produced no recommendations that would have made the Pentagon’s books more auditable or dealt constructively with the power games causing the meltdown, particularly the cynical use of “learning curves” to support the Pentagon’s front loading operations.

* Center For Naval Analysis (CNA): A not for profit thinktank that is effectively a wholly-owned subsidiary of the US Navy.

So, there we have it: 17 out of 20 members of the QDR review panel have close ties to the status quo Military - Industrial - Congressional Complex. None of them, to the best of my knowledge, has ever discussed, much less analyzed, the three interconnected problems that have produced the Defense Death Spiral or the stunningly flawed QDRs. None of these people have ever tried to step up to the hard decisions needed to fix these problems. Of the remaining three members of the panel, the only one I have any familiarity with is Lt General Paul Van Riper, a former reformer and I believe a truth teller (even reformers occasionally make general). But even if he tries to fix things and the other two members side with him, my guess is that the three of them will be voices in the wilderness and have little or no impact on the outcome -- too much money is at stake, and the 17 other members of the panel are card carrying protectors of the status quo.

A QDR review panel where at least 17 out of 20 members have a vested interest in protecting the status quo certainly will not ask the question: Is there an alternative to protecting the status quo?

For what it is worth, here is my answer.

Probably the only way to incentivize the Pentagon to really clean up its act will be to take the money away and force it to think.

Setting aside the question of ending our misbegotten wars (an issue I have discussed in several Counterpunch articles), we should freeze the core, i.e., the non-war related, defense budget in current dollars, or better, reduce that level by two percent a year. Keep this policy in place at least until the Pentagon can pass an audit in compliance with the Chief Financial Officers Act of 1990 and the Constitution. (This is only a starter; we could do much more: Readers interested in one way the Pentagon could go about producing the information needed to fix the mess can read the last section of my statement to Congress at the aforementioned link. No doubt, there are other ways.)

Some naysayers might argue that we can not freeze the defense budget, because we are at war, and we must support the troops. This is an emotional red herring. It is a suicidal logic that implies we should continue a dysfunctional status quo that will make us ever weaker, because we are at war. If deemed necessary, we could always continue a variation of Mad King George’s practice of paying for these wars on a pay as you go basis through supplemental appropriations (which in contrast to my proposal, he used to protect the self-destructive status quo by pumping up the core budget).

Other naysayers might argue that reducing the budget by two percent per year will gut the Pentagon, because the Pentagon is not required to pass an audit until 2018, and the compound effect of -2% per a year for eight years would be devastating. This kind of claptrap is precisely the kind of non-thinking that works to perpetuate the status quo.

With deadlines like 2018, the Pentagon has no incentive to clean up its act.

Moreover, the MICC has a habit of pushing inconvenient deadlines ever further into the future. Consider the track record of how the Pentagon routinely “bow waved” its auditing problems into the future: John Hamre was Chief Financial Officer (i.e. Comptroller) of the Pentagon in the early 1990s during the Clinton Administration; in that capacity, he promised Congress he would fix the books by 1997, a promise that was conveniently forgotten when 1997 arrived. When Dov Zakheim became the first DoD Chief Financial Officer in Bush administration in 2001, he promised to fix the books by 2007. Zakheim’s successor in the Bush Administration, the inept and eminently forgettable Tina Jonas, extended Zakheim’s promise to fix the books by 2016. Congress has now told Obama’s Comptroller, Robert Hale, to fix the books by 2018.

So, given the Pentagon’s behavior and the makeup of the panel, how much do you want to bet that the QDR review panel even mentions, let alone tackles a bookkeeping issue that is widely acknowledged but has been treated with contempt by decision makers in the Pentagon and Congress for at least fifteen years? This behavior is nothing less than a systematic assault on the Appropriations and Accountability Clauses of the Constitution (see Article I, Section 9, Clause 7), which each member of the Defense Department has taken a sacred oath to defend and uphold.

That is why the MICC’s desire to feed its voracious appetite by continuing its assault on the Constitution reflects exactly the kind of misplaced power that President Eisenhower warned America about in his farewell address.

Franklin “Chuck” Spinney is a former military analyst for the Pentagon. He currently lives on a sailboat in the Mediterranean and can be reached at chuck_spinney@mac.com

Counterpunch: Mark to Market Pentagon Style

Reprinted with permission of editors of Counterpunch

February 8, 2010

Buy-to-Budget and the F-35 Joint Strike Fighter

Mark-to-Market Pentagon Style

By FRANKLIN C. SPINNEY

Counterpunch

http://www.counterpunch.org/spinney02082010.html

"Mark to Market" is (or was?) an accounting standard that required financial institutions to value their assets at their current market value. Thus a stock portfolio would be valued at an amount determined by the stock market, if the stock holder sold all his assets in that market. Last Spring, when the government was contemplating its plan to rescue the big banks, it settled on the idea of using taxpayer money to purchase or guarantee the so-called toxic assets of the large "investment" banks and their insurers (e.g., collateralized debt obligations and credit default swaps). The banks lobbied furiously against the mark to market rule, because the toxic assets could not be sold in a market that was frozen, and under the rule, they would be valued a fraction (somewhere between 0% and 60%) of their original purchase prices. Under mark to market, the banks would take a bath or even become insolvent. So, they concocted a new concept of "fair value," which came close to reimbursing them at cost, thus implying the capitalist market was inherently unfair. The Federal Government ended up guaranteeing the debt at taxpayer expense, thus securing an American economic system that guarantees private profits at the expense of public losses for the privileged entities on Wall Street.

But don't blame the banks for this kind of system. They are only doing what is natural when one is working with the best government money can buy. In fact, the American political economy has many ways of guaranteeing private profits with public subsidies of what should be private losses.

For example, the latest scam in the Military - Industrial - Congressional Complex (MICC) is the so-called "Buy to Budget" formula for the hugely expensive and deeply troubled F-35 Joint Strike Fighter.

This formula was just gleefully endorsed in an email recently sent to the F-35's Stakeholders. The author, Charles T. Burbage, is the executive vice president of Lockheed Martin Aeronautics Company and general manager of the F-35 Joint Strike Fighter (JSF) Program Integration. Burbage is responsible for ensuring that all of the F-35's requirements are fulfilled for both the program’s U.S. and its international customers, as well as its industrial partners around the world. And the email makes clear Burbage is licking his chops at the MICC's latest coup.

It is pretty easy to understand why Burbage is so gleeful. Defense contractors operate in a "cost-plus" economy, where profits are a negotiated percentage of costs. If costs rise, profits rise. The Pentagon just approved another higher cost estimate for the F-35 and a reduced production quantity. That is clearly good, but Burbage is confident the future looks even rosier. The reasons for his confidence in Lockheed's rosy scenario becomes clear when "Buy to Budget" is viewed in this context of the MICC's political economy.

"Buy to Budget" increases the incentive to grow costs even faster and thereby increase profits even more over the long term. The rosy scenario results when costs continue to grow, and smaller numbers of F-35s will be purchased each future year, all financed within a given budget level. The lower F-35 production rates will exacerbate the aging crisis of the F-16s, A-10s, F-18s, and AV-8s that the F-35 is supposed to replace. But the average age of these airplanes is already far greater that they were designed for, so the political/bureaucratic pressure to increase the production rate of the F-35 will be enormous. Moreover, Burbage knows the Pentagon does not want any alternatives to the F-35. This rising political/bureaucratic pressure caused by the aging inventories will therefore lead to loud calls for higher F-35 budgets, and larger budgets will provide a larger space in which to "Buy to Budget" by jacking up costs further. Thus, the deadly cycle of cost growth, decreasing production rates, aging inventories, and higher profitability will reinforce itself again, in what is the political-economic equivalent of a perpetual motion machine.

At a program acquisition cost already exceeding $300 billion, and a total life cycle cost approaching one trillion dollars (which no doubt will include lots of follow-on maintenance contracts for Lockheed), the F-35 is solidly on track to be the all time record breaker in high cost programs, in which continual production cutbacks will finance a never ending honey pot for Lockheed. Moreover, the Pentagon just signaled its increased commitment to the importance of the program by elevating its government program manager (Burbage's uniformed equivalent) to a two star to a three star general officer, in this case a vice admiral in the Navy -- which means more high level meetings in bigger offices, more cocktail parties, and more of the pomp and circumstance that are the perks of working in the MICC, not to mention even greater high-powered efforts in the Pentagon to save face by continuing business as usual. That the F-35's foreign partners like Great Britain and the Netherlands will help to foot the ever increasing bill is merely icing on the cake.

In the context of MICCs long-term survival, Burbage's gleeful endorsement of "Buy to Budget" reaches back to the end of the Cold War confirms the farsighted wisdom displayed William Anders, former CEO of General Dynamics (note: GD at that time owned the Fort Worth factory where Burbage now works and the F-35 is produced). "Buy to Budget" is validation of the MICC business strategy that Anders spelled out in 1991. Anders decided that General Dynamics (and by extension the Fort Worth factory, which he subsequently sold to Lockheed) was not going to diversify business operations into the non-defense commercial manufacturing sector, even though the Cold War had just ended. Anders said his decision was to increase his concentration in defense activities (a view widely shared and resulted in increased oligopolization of the industry, in an orgy of Pac Man gobbling up of defense companies by other defense companies during the early 1990s. He said this decision to increase concentration was "not surprising," because 80% of defense acquisitions in the non-defense sector failed. He then explained succinctly why these acquisitions are always so unsuccessful: "Defense industry management teams generally have little commercial experience and market savvy," and "Most have been cost-plus and mil spec trained." He concluded by saying, "In short, most don't bring a competitive advantage to non-defense business," and "Frankly, sword makers don't make good and affordable plowshares."[1]

Of course, what Anders did not say is that sword makers also do not make good affordable swords. But who cares when you live in a posh, post-cold-war marketplace like Burbage's, where ever rising costs and profits are fueled by a user friendly Pentagon policy of "Buy to Budgets."

Franklin “Chuck” Spinney is a former military analyst for the Pentagon. He currently lives on a sailboat in the Mediterranean and can be reached at chuck_spinney@mac.com

Notes.

[1] "Rationalizing America's Defense Industry: Renewing Investor Support for the Defense Industrial Base and Safeguarding National Security," Keynote Address, Defense Week 12th Annual Congress, 30 October 1991, page 13.

Counterpunch: The Pentagon Goes Intellectually AWOL

Reprinted with permission of editors of Counterpunch

February 3, 2010

The New QDR

The Pentagon Goes Intellectually AWOL

By FRANKLIN C. SPINNEY

Counterpunch

http://www.counterpunch.org/spinney02032010.html

Monday, February 1, 2010, was a day that should live in budgetary infamy. The Defense Department released its Quadrennial Defense Review (QDR) and its accompanying Fiscal Year 2011 budget request, which is the first year of the Fiscal Year 2011-2015 five year plan (2011-2015 FYDP). These documents are available on the internet and can be downloaded in PDF format here: QDR and the FY 2011 budget.

Even by the dismal intellectual standards of Pentagon bureaucracy, the QDR and the FY 2011 budget, taken together, establish a new standard of analytical vacuity, psychological denial, and just plane meaningless drivel. I will keep this short by using just one important case to prove my allegation. Judge for yourself if it is necessary and sufficient to make the point.

First, I must bore you with a little background: The Pentagon has been producing FYDPs since 1962. But these FYDPs have been repeatedly criticized for producing defense budgets that were disconnected from the national military strategy -- and because the dollar allocations made in any budget determine what any government's policy really is, the critique was logically equivalent to saying there was no strategy. The congressional legislation in the mid 1990s that established the QDR was only the most recent attempt to deal with this long standing criticism. The aim of that legislation was to require the Pentagon to lay out an intellectual framework for matching its military strategy and ambitions to the resource constraints shaping those ambitions, especially budgetary constraints, but also constraints relating to people, the limitations imposed by available technologies, etc.

The new FY 2011 budget and its accompanying FYDP, therefore, are supposed to attach budgetary and programmatic meat to the strategic skeleton that is the QDR, both of which were completed at the same time and made public on 1 February -- itself a somewhat illogical sequence, given that one is supposed to precede the other. In theory, these documents should permit an analysis of the strengths and weaknesses implicit in the matchup between resources and strategy. Therefore, these documents should enable the Secretary of Defense to send the President and the Congress a comprehensive set of priorities, opportunity costs, and risks associated with his strategic plan. This information would then become the grist for a rational national debate by linking strategic considerations to the inevitable compromises made in the sausage making factory that is Congress. Moreover, as this is President Obama's first budget, and because it represents $700+ billion that Mr. Obama just put off limits in the coming national debate over whether or how to shrink the federal deficit, it was crucially important for the Pentagon to get the QDR and the accompanying FY 2011-2015 FYDP right in a logically consistent and transparent manner.

If we apply this standard to the Pentagon's recently completed handiwork, only one conclusion is possible: the Pentagon flunked the test by being intellectually absent without leave.

One example is sufficient to prove this point. For the past 20 years or so, mainstream and defense related press outlets have inundated the American public with horror stories about the Pentagon's aging force structure and with stories about the Pentagon's unauditable budget shambles -- the two are intertwined. And over the last 10 years or so the public has been inundated by stories describing how that force structure is being being worn out by the high operating tempos of our never ending wars and interventions, yet another dimension of the same problem. In fact, I first started documenting this aging trend in the early 1980s in a series of analytical studies, some classified, but most unclassified, and it has gotten worse and more intractable each year.

There is simply no question that the weapons in our force structure inventories have been getting older on average at an alarming rate. The fundamental reason for the aging trend is that the unit costs of buying and operating new weapons grow faster than defense budgets grow, even when budgets grow at unprecedented rates, as they have since the mid-1990s, and consequently, as weapons grow older over time, they become more expensive to operate, which exacerbates the growth in operating costs even further, and the rising costs eventually forces decision makers to retire the oldest weapons without replacement, thereby shrinking the size of the force structure. It is beyond dispute that today the Pentagon is fielding the smallest and, on average, the oldest force structure since the end of WWII, yet it is paying more for that force structure, even after adjusting for the effects of inflation, than at any time since the end of WWII.

Central to this pathological death spiral is the unquestionable fact that the Pentagon's financial management system can not keep track of its actual expenditures or how the predicted expenditures in its FYDP will unfold over over time. The chaos in the accounting system provides the intellectual "grease" to lubricate the engine driving narrow bureaucratic agendas that are causing the force structure meltdown. Senior decision makers can not possibly understand the trade offs they are really making when they put together a budget, assuming they wanted to, which is also in doubt. The accounting problem has been identified in tens, if not hundreds, of reports produced by the General Accounting Office (the auditing arm of Congress) and the Defense Department's own Inspector General. I described how the budget shambles impacted the strategic decision making problem in my last testimony to Congress in June 2002.

The problem of unilateral disarmament at ever higher cost (i.e., the interaction of weapons cost growth greater than budget growth, aging and shrinking forces, and corrupt accounting system that makes it impossible to sort our corrective strategies) is well established, and thanks to the largess of Mad King George, should now be beyond dispute.

So, I have a test for you, dear reader: Download the QDR and the FY2011 budget from the links in the first paragraph. The are formated in searchable PDF file format. Do word and phrase searches on words like aging, age, "weapons aging," accounting, audit, bookkeeping, or anything else you can think of that might related to the problems described above, and determine for yourself the extent to which these problems are addressed. (eg., a search in the budget of "audit" will take you to page 7-34, among others, where you will find that DoD set a goal of reaching 100% auditability for its assets and liabilities in the year 2017, but the last column shows that the indicator of progress made toward that goal in FY 2010 was deleted at the request of the Comptroller, who happens to be the chief financial officer of DoD!)

Alternatively, you could make the same kind of determination by reading the entire text of each, but before you do so, I recommend you buy a couple of boxes of No Doz, so you can keep awake. Either way, you will end up with the same self evident conclusion.

Some farm defenders might say, we must go forward with this protected monstrosity, because we are at war.

That is a false choice -- President Obama could freeze the core budget at this year's level, just like he is doing for the rest of the government. He could tell the Pentagon to go back to the drawing board and come up with something more reasonable. If he chooses to do this, he should task the Pentagon with a massive crash program to clean up the bookkeeping shambles as job 1, rather than waiting until 2017. At the same time, Obama could then ask Congress to pay for his wars on a "pay as you go" basis, which Congress and the Pentagon have been doing for years, in any case, via supplemental appropriations.

Readers interested in a more details on one way we might go about cleaning out the Pentagon's Augean Stables can read my statement to Congress from the aforementioned link.

Franklin “Chuck” Spinney is a former military analyst for the Pentagon. He currently lives on a sailboat in the Mediterranean and can be reached at chuck_spinney@mac.com