America's Military Has a Big Problem: It's Dead Broke

B1-B Lancer. Flickr/U.S. Air Force

The Pentagon has made big plans for which it lacks the money.

Former Secretary of the Army John McHugh famously commented that he always wanted to “live in an out-year.” In Pentagonese, “out-years” fall outside the rigid five-year planning window; they are, consequently, years in which unrealistic procurement plans magically come to fruition and normal budget rules don’t apply.

DoD is notorious for planning to acquire major systems such as planes, submarines and ships in quantities that are patently unaffordable in the next five years, but will be brought on-board when the money somehow materializes in an “out-year.”

This Pentagon has double-downed on that technique. In addition to the unpaid bills associated with the recapitalization of the nuclear triad mentioned by Secretary Work, the replacement for the Ohio class submarine and many other major systems are also all awaiting an out-year deus ex machina to save the day.

For example, the Navy’s current, approved 30-year shipbuilding program only gets them to 308 ships—even though they just announced they need 355, nearly matching the president-elect’s promise to get to 350 ships. Yet when the Congressional Budget Office analyzed the Navy’s 308-ship plan, they found it would cost $3-5 billion dollars more per year than what was budgeted.

In an excellent study of the out-year issue, CSIS’s Todd Harrison suggested that just to execute the DoD’s planned modernization programs would require approximately 7 percent more funding— around $40 billion per year—than was budgeted. This includes nothing of the re-building that President-elect Trump has promised.

Other problems lie ahead. DoD has made optimistic assumptions about foreign currency exchange rates, counting on them to remain near where they are today, which is very favorable for the United States. Another liability includes Pentagon requests for changes to military health care programs that the 2017 NDAA did not fully support.

At the Bottom of a Very Deep Hole

The Pentagon has made big plans for which it lacks the money. The liabilities described above will build to about $100 billion a year over time, seriously complicating matters for a president-elect who has pledged to rebuild our depleted military.

The Pentagon can save some money through efficiencies, base realignment and closure, restructuring and better business practices, and some of these efforts are already underway. But those savings won’t be nearly enough to close liabilities of this magnitude. It’s unfortunate this critical information hasn’t been part of a national discussion by our nation’s leaders, including the president, prior to the imminent transition.

In It’s a Wonderful Life, George Bailey’s financial problems were solved with a crowdfunding solution among the residents of Bedford Falls. General Mattis won’t be so fortunate. It’s among the many challenges that the new administration’s leaders will have to grapple with in their first hundred days to begin the necessary restoration of our military.

Lt. Gen. Tom Spoehr (U.S. Army, retired) is the director of the Heritage Foundation’s Center for National Defense. He served as the Army’s Director of the Office of Business Transformation from 2013-2016.

Image: B1-B Lancer. Flickr/U.S. Air Force

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