February 2, 2015

The 2016 Defense Budget in Context



Over the past several years, the Department of Defense has been forced to deal with the ramifications of budget sequestration. Some claim that the cuts are courting disaster; others argue that such cuts are minor when compared to the size of the overall defense budget. Though the consequences of sequestration are much-debated, there is often a shared sense that the entire idea of sequestration is a symbol of the current dysfunction in Washington, D.C. Many seem to think that only in today’s environment of broken politics are such significant budget cuts possible.

Neither the DoD nor anyone else should be surprised at the ongoing cuts in defense spending and other defense priorities. When Congress and the President hail from different parties, there is usually a decrease in real defense spending. History shows us that the Pentagon should be prepared for such changes on a routine basis.

Most of the time, the political branches of government in Washington are divided between the two major parties, and in the majority of the years where this is the case, the defense budget decreases. According to historical statistics provided by the Office of Management and Budget, the mean year-over-year change in defense spending during a divided government between 1950 and 2014 was a cut of $7.6 billion (in 2005 dollars). In fact, in the budgets where the government cut defense spending, the average cut was a big one – almost $26-billion-a-year big. These reductions represent an average cut of almost six percent over the previous year’s spending.

The effect of divided government on defense spending is underscored by the shift in spending when one party is in control. In the 27 years when Congress and the President hailed from the same party, the defense budget increased, on average, by almost $25 billion. In fact, the defense spending increased dramatically in 20 of those 27 years – an average of $37.8 billion. As a percent of the previous year’s budget, the Pentagon budget grew more than eight percent on average in years of party unity.

What lessons does this data hold for policy makers and advocates on either end of the political spectrum? First, the spending trend holds true when either party controls the executive and the legislative branches at the same time. Even seasoned Washingtonians often buy the old trope that “Republicans want a large military, and to keep it at home; Democrats want a small military, and to send it everywhere.” It turns out that the Pentagon budget is far more sensitive to the setup of the government as a whole than to a particular partisan ideology.

DoD’s budget – and mission – depend on politics at both ends of Pennsylvania Avenue, so these swings in defense spending should not be a new concept for the Pentagon. Unified governments not only increase the budget, on average, but they are also more likely to go to war.

Second, Pentagon planners need to be prepared for the eventuality that the budget will be cut routinely in real terms, and sometimes it will be a large cut. While there is some indication that the DoD is indeed aware of this trend, its reaction thus far has been to try to squeeze in as much spending as possible during the boom times. This tactic is unhelpful over the long-term, since it necessitates even bigger cuts during the lean years, which usually affect more painful portions of the budget that are harder to cut, like personnel salaries and health care. These kinds of cuts can have a disastrous effect on unit morale.

There is a political boom-bust cycle for the Pentagon budget, and in an era of a polarized politics and close elections, the likelihood of divided governments going forward is high. Long-term fiscal outlooks at DoD need to incorporate more effectively these periodic shifts between feast and famine, and not sacrifice unit morale in the lean years for acquisitions in the years of largesse.

America’s long-term position in the world has survived previous cuts over the past 65 years, oftentimes in periods of greater international peril and even larger budget cuts than the country faces today. The lesson here is not simply for planners within the Pentagon but for the entire policy community: Any grand strategy that depends on constantly-growing defense budgets is working under a faulty assumption. All good American grand strategies in the past have succeeded by recognizing the fundamental reality of fiscal variation over time, and the structure of the political branches of government gives us a clue as to when to plan for feast and when to plan for famine in the defense budget.