Experts Say Economic Crisis To Halt U.S. Defense Growth

by












  Space News Business

Experts Say Economic Crisis To Halt U.S. Defense Growth

By JOHN T. BENNETT

posted: 27 March 2009
04:31 pm ET






WASHINGTON
— Many defense observers say the global economic slowdown and
Washington
‘s response to the crisis will halt the growth of
U.S.
defense spending, although some, including a prominent lawmaker, disagree.

Obama administration officials have said they will adjust their five-year projections, which show plans for modest growth, after they finish the Quadrennial Defense Review this fall. The projections were contained in the late-February outline for a $533.7 billion defense budget for 2010.

Gen. James Conway, U.S. Marine Corps commandant, sees “some lean years ahead,” he said at a March 11 conference sponsored by Aviation Week and McAleese & Associates.

A host of forces are adding pressure to the defense budget. There is the economic situation, to which
Washington
has responded by spending trillions of unplanned dollars. U.S. President Barack Obama has ambitious and costly plans to overhaul health insurance, education and environmental programs. Obama also wants to pay down the national debt at the same time. The price of oil likely will fall, changing how major nations act.

Add to that internal military budget pressures, such as rising bonus costs and the increasing cost of military health care. As many as 20 percent of those eligible for Tricare have yet to learn about those price increases.

Michael Bayer, chairman of the Defense Business Board, estimates the net interest on the national debt will jump by as much as $100 billion by 2015.

“That will put immense pressure on all other federal spending, including defense,” Bayer said at a March 10 conference in
Washington
sponsored by the Atlantic Council and National Defense University (NDU).

He said the forces likely will not leave a lot of funds to continue the defense spending spree under former U.S. President George W. Bush.

Harlan Ullman, a senior scholar at the Atlantic Council and NDU, and a former Navy commander, said the department “needs about $700 billion to $800 billion a year.” But he said he doubts the Pentagon will get that much of the federal pie.

But Rep. John Murtha (D-Pa.), chairman of the House Appropriations defense subcommittee, doubts defense budgets will be deflated.

“On procurement and [research and development], we’re going to have to spend the same amount” as in recent years because existing aircraft, trucks, tracked vehicles and other items “are too old” and worn out, Murtha said March 12 at the Aviation Week-McAleese conference.

“If we base defense spending on the threats,” Murtha said, “then we’ll have to keep spending money on defense.”

Bayer said the Pentagon missed an opportunity to stock up on modern weaponry. He told the conference that DoD spent $700 billion to $1 trillion on weapons during the Bush years, depending on which set of numbers is being examined, but received “only $190 billion worth of capability.”

While the spending spree was under way, “nobody said anything” about the lack of large numbers of new combat platforms being produced, Bayer said.

A mantra spreading through defense circles is the Pentagon likely will be forced in coming years to “do the same with less.”

Bayer presented a slide at the conference that showed during the last several defense spending downturns, annual Pentagon budgets bottomed out at about $340 billion.

“That’s a big difference” from the days of $500 billion base budgets and $100 billion supplementals packed with nonwar goodies, he warned.

Ullman
pointed to major programs that have overrun cost estimates in recent years as prime examples of the Bush years.

“These programs cost twice as much and we’re getting half of the numbers we need,” he said.

Experts said the problem was the Bush and Clinton administrations’ poor oversight of Pentagon acquisitions and budgeting.

“How many senior leaders at the department in the last 16 years made tough decisions?” Bayer asked.

Obama has vowed to end decades of rhetoric and finally bring order and reform to the Pentagon acquisition process.

But Murtha said he doubts Obama will achieve acquisition reform “during his first term.”