(Bloomberg ) The Obama administration foresees 21st century wars fought with fewer boots on the ground and more drones in the air, while the Pentagon continues buying weapons from the last century.
In his Feb. 12 State of the Union address, President Barack Obama said America no longer needs to deploy tens of thousands of troops to occupy nations or meet the evolving threat from new extremist groups. Cyber-attacks are the "rapidly growing threat," he said.
Nevertheless, the defense budget contains hundreds of billions of dollars for new generations of aircraft carriers and stealth fighters, tanks that even the Army says it doesn't need and combat vehicles too heavy to maneuver in desert sands or cross most bridges in Asia, Africa or the Middle East.
GRAPHIC: Defense Budget at Center of Spending War
"There's a fundamental need to have a conversation about what kind of military we need to have and what we should expect it to do," Andrew Bacevich, a West Point graduate and former Army colonel who now teaches at Boston University, said in an interview.
In the absence of such a conversation, the Pentagon faces the prospect of $500 billion in automatic cuts over the next decade, beginning March 1, with no consensus on what to trim. Instead, the budget is driven largely by champions of existing programs in Congress, the defense industry and the uniformed services. As a result, predicts Bacevich: "The behemoth of an entity called the Pentagon is not going to shrink."
Uncertainty has proven painful for defense contractors, especially smaller companies that don't have deals locked in for months or years to come. Pentagon contracts plunged to $12.1 billion in January, a 67 percent decrease from December, according to data compiled by Bloomberg, as the military reined in spending in anticipation of the cuts that may be coming.
The Standard & Poor's Aerospace and Defense Index gained 7.5 percent in the past 12 months, trailing the 13 percent gain for the broader Standard & Poor's 500 Index.
Pentagon spending cuts, should they remain in force over a decade, would mean "changes in the portfolios of Lockheed, Northrop Grumman, General Dynamics and Boeing," the biggest U.S. defense contractors, Byron Callan, a defense analyst in Washington at Capital Alpha Partners LLC, said in an interview. "Five years from now they'll look different."
Information technology units may be spun off and then consolidated, while slow-growing operations such as shipbuilding and armored-vehicle manufacturing may end up in the hands of private equity investors, Callan said.
The U.S. spent $689 billion on defense in 2011, more than 40 percent of all such spending globally in 2011, according to data compiled by the Stockholm International Peace Research Institute. According to the U.S. Government Accountability Office, the Pentagon had $1.58 trillion of major weapons projects on its books. Those include the F-35 jet fighter, which is seven years behind schedule and costing 70 percent more than planned; the Navy's Littoral Combat Ship, plagued by cracks, flaws and a price that's doubled to $440 million each; and M1 tanks the Army doesn't want.
Even if the budget cuts happen, U.S. defense spending is projected to grow about 2.4 percent annually through 2021, according to the Congressional Budget Office.
The military, the defense industry and their allies in Congress have gone to war over the automatic cuts, called sequestration, with Defense Secretary Leon Panetta, Army General Martin Dempsey, the chairman of the Joint Chiefs, and other leaders saying they would devastate the military.
If their budgets are cut, they argue, ship deployments will be canceled, training will be curtailed, maintenance will be delayed, weapons contracts will be withheld and the military will be unable to respond to contingencies.
"We've gone past cutting the meat -- we're into the bone," Representative Howard "Buck" McKeon, the California Republican who heads the House Armed Services Committee, told a Feb. 6 news conference. He's proposed reducing the number of federal employees and freezing congressional pay to preserve military spending.
Lost in the political melee over defense spending, said Bacevich, is the need for a 21st Century military strategy to keep pace with the changing nature of warfare and guide the drawdown of military forces and spending after more than a decade of wars in Iraq and Afghanistan.
A year ago, Obama and the Defense Department issued a blueprint for a "smaller and leaner" military that would be "agile, flexible, and ready for the full range of contingencies."
Instead, the military's effort to prepare for every possibility has encouraged the Pentagon and defense contractors such as the three largest -- Lockheed Martin Corp., Chicago- based Boeing Co., and Northrop Grumman Corp. based in Falls Church, Virginia -- to keep developing ever more complex and costly weapons.
While the increased military spending of the last decade helped the Pentagon advance several battlefield capabilities, the Defense Department still has "too many programs that are not appropriate and do not provide the next-generation capabilities" needed, said Barry Blechman, co-founder of the Stimson Center, a Washington policy research institute.
Blechman cited the F-35 Joint Strike Fighter as an example of a weapons program that "provides some marginal improvement over existing F-16s, but nothing compared with the amount the Pentagon is planning to invest in it." The program, which includes variants for the Air Force, Navy and Marine Corps, could be cut or scaled back, Blechman said.
The Pentagon estimates the cost for development and production of 2,443 F-35s at $395.7 billion, a 70 percent increase since the initial contract with Bethesda, Maryland- based Lockheed Martin was signed in 2001. The jet is designed to replace the F-16 fighter, the A-10 "Warthog" ground attack plane, F-18C/D Hornet fighter and the Marine Corps' AV-8B Harrier jump-jet.
Although the Army's strength is set to decline by 72,000 by 2017, General Raymond Odierno, the Army Chief of Staff, has said the service must be able to send units large or small to any part of the globe. While the service should reorient itself toward engaging with allies and partners to prevent conflicts, it should be ready to "win wars on land," Odierno wrote Feb. 4 in Foreign Policy magazine.
Nevertheless, the Army's plan to spend as much as $32 billion to buy 1,904 new Ground Combat Vehicles, tank-like replacements for its Bradley Fighting Vehicle, "would be a mistake," Blechman said. Instead, the Army needs improved capabilities for small forces that can move quickly to trouble spots, Blechman said. "I don't know that the slightly improved version of the current ground vehicles is necessary."
Vehicle's 70 Tons
The new 70-ton vehicle may not be easily transportable by air or sea, and is likely to raise questions about "how quickly it could be deployed in the event of a conflict," according to a January report by the Congressional Research Service.
While even the Army brass have said they don't need an an updated version of the M1, the combat vehicle that was developed to go track-to-track with the Soviet Union's tanks on the North German Plain, Congress wants to keep paying Falls Church, Virginia-based General Dynamics Corp. to gut and rebuild older tanks.
The Navy is building two versions of the Littoral Combat Ship instead of one as it had planned. Once billed as a low- cost, versatile ship for coastal patrols, the LCS's price has doubled to $440 million a ship, and Pentagon testers have found that the ship's guns are ineffective and the vessels may not survive combat.
One attraction of the LCS is that buying it will help the Navy reach its target of 300 ships, making it easier to fulfill the Pentagon's plan to position 60 percent of its ships in the Pacific by 2020, an increase from the current equal division between the Pacific and Atlantic fleets.
That increased focus on Asia needs to be better spelled out, according to former Director of National Intelligence Dennis Blair, a retired Navy admiral who also once headed the U.S. Pacific Command, based in Honolulu.
"There's no there there beyond a general appreciation of East Asia's importance," Blair said of the Obama administration's emphasis on Asia. "It's not a basis for how we solve a very difficult problem of ensuring we have a hedge against Chinese military aggression without launching ourselves into a spiraling arms race based on mutual suspicion and worst- case analysis."
While they warn that further budget cuts would cripple the military, Panetta and Dempsey, as well as former Defense Secretary Robert Gates, have said the Pentagon can cut costs by eliminating jobs and waste.
"Not every defense dollar is sacrosanct," Gates said in September at an event organized by the Center for Strategic and International Studies in Washington. "One need only spend 10 minutes walking around the Pentagon or any major military headquarters to see excess and redundancy."
As defense chief in 2009, Gates managed to cull 20 weapons systems he considered unnecessary or that had become too expensive. He stopped production of the F-22 fighter, canceled the VH-1 presidential helicopter and reduced the scope of Boeing's Future Combat Systems.
Weapons aren't the only part of the Pentagon budget that has proven difficult to rein in. Rising operations and maintenance costs as well as "significant increases" in the military's health-care system, which has been politically sacrosanct in the past, will be the primary causes of defense budget growth through 2030, the Congressional Budget Office said in a July report.
Promised savings mostly have eluded presidents and defense secretaries going back to the 1980s, said retired Marine Corps Major General Arnold Punaro, who's been advising former Nebraska Republican senator Chuck Hagel, Obama's nominee to succeed the retiring Panetta.
While military officials protest cuts to their forces, operations, maintenance and training, they've allowed their own staffs to grow, said Punaro, who's now a consultant and last year headed a Defense Business Board panel to identify such excess.
The size of the Joint Chiefs of Staff office has more than tripled to 4,244 in 2012 from 1,313 in 2010, according to the Pentagon's annual manpower report.
"The Pentagon's leadership should set an example" by reducing their staffs, Punaro said in an interview. "If senior people in the Pentagon can't cut the size of the staff and the size of office of the secretary of defense, then how can they expect the rest of the department to tighten its belt?"
The increase stemmed mostly from the joint staff absorbing many employees of the Joint Forces Command in Norfolk, Virginia, which was shuttered by Gates in 2011, Dempsey said in an e-mail. The additions were necessary because the joint staff "assumed responsibility for core missions" previously done by the Joint Forces Command, which was created in 1999 to lead the post-Cold War transformation of the U.S. military, Dempsey said.
Still, while the Pentagon is cutting combat forces, "We are not cutting the overhead proportionately," Punaro said. "People have been trying to get at this issue in the Pentagon for 50 years. And frankly we haven't really put a dent in the overhead costs. It's not for the lack of trying."