Funding America's Nuclear Triad

"The argument in favor of funding 'national assets' through defense-wide accounts is a convincing one, but only when applied to the military."

In a quiet but significant development in the annual defense policy bill recently passed by the House Armed Services Committee, the Navy strengthened its argument that its soon-to-be-built nuclear ballistic missile submarines are “national assets” that should not be paid for within the traditional shipbuilding budget.

This effort to increase money for the Navy and shipbuilding through back-door accounting is selfish, but smart, and should prompt a wider discussion about the looming modernization cost of America’s nuclear triad and the strategic wisdom of service funding parity. Rather than attempting to siphon off funds from within and among the joint force through the usage of unobligated funds in this special account, the services should argue for a topline increase to ensure a capable nuclear triad and a balanced future force.

National Asset Argument Increasingly Attractive as Pentagon Acquisition Squeeze Looms

The argument that each service provides “national assets” or “public goods” from which many benefit is not new, but has grown more attractive as smaller budgets continue to restrict military capability. Over the next ten to fifteen years, the Navy and Air Force will conservatively spend over $100 billion each to modernize all three legs of the nuclear triad: ballistic missile submarines (SSBNs), nuclear-capable bombers, and land-based intercontinental ballistic missiles (ICBMs). The Navy has publicly argued that the cost of 12 new nuclear submarines at $7 billion a boat will crowd out funding for carriers, destroyers, and attack submarines. The argument is far from specious. When the Navy last recapitalized its boomers in the 1980s, the Reagan administration successfully gave the admirals an upfront boost to the shipbuilding account.

This latest budgetary maneuver is different from those Reagan-era increases, however. Last year, Congress established the National Sea-Based Deterrence Fund, which moves dollars from the Navy to a defense-wide account. This shell game essentially makes the Navy’s shipbuilding budget appear smaller so that officials can more successfully argue for funding increases for conventional ships and submarines. Yet the money has not disappeared—it still counts against the topline of whatever final number Congress appropriates for the defense budget.

In the current House version of the defense authorization bill, Congress is proposing to move $1.4 billion in Navy shipbuilding funds to the National Sea-Based Deterrence Fund. Additionally, the bill language opens the door to possibly funding aircraft carriers and attack submarines through the same defense-wide account. It also would allow the Navy to use prior year unobligated balances from elsewhere in the defense budget to do so. Unobligated funds, which number in the tens of billions, are not magic money—they are dollars set aside for specific programs, but which are not yet under contract. Funding anything through unobligated funds means that other needed equipment programs and weapons systems will quietly suffer without debate or clarity of consequence.

The Government Accountability Office estimates that the Navy will spend over $11 billion on research and development of the Ohio-class replacement program and another $84 billion to build the 12 submarines. Yet the Navy’s claim that it faces a unique funding squeeze rings hollow. While the Navy’s budget crunch starts sooner, the Air Force’s shortfall in the mid- to late-2020s is equally challenging and may, in fact, be worse overall. When the Air Force begins building its new bomber and modernizing ICBMs, it will also be in the middle of replacing its entire fleet of tankers and fighters—over three-quarters of its total aircraft.

Worse yet, the Air Force has surely underestimated the cost of its new long-range strike bomber program. While a stated cost of $550 million per aircraft seemed reasonable five years ago, cost growth is to be expected. Conservatively assuming a 16 percent growth rate—the low end of what a RAND study considers average historical cost growth of major weapons programs—the bomber will be closer to $640 million per aircraft. Including an estimated $20 billion in development costs based on a Congressional Research Service analysis, the total bomber program price tag begins to approach that of the Navy’s Ohio Replacement Program.

And though the shape and scope of the Minuteman III upgrade or replacement efforts remain uncertain, the definitive RAND study on the program estimated that even a minimal recapitalization would cost anywhere from $1.5 to $2 billion per year, leaving the total program cost at over $35 billion for the Air Force.

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