Transcripts For CSPAN3 Discussion 20240702

Spepding, military budget, the cost of reform and personnel pensions. The discussion with fiscal policy and military strategy researchers was hosted by the brookings institute. It is about an hour and 20 minutes. Good morning. Im director of fiscal Monetary Policy here at brookings. I want to welcome everyone to the event today. How much money for defense is enough . This event began with a call i got from someone i respect who said to me simply, how do we decide how much money the u. S. Should spend on defense . I know a little bit about the federal budget but im more comfortable talking about Social Security, low income home energy, the state and local tax itductions than the Defense Budget. So i called my colleague and he said i just finished a 20,000 word answer to the question. So here we are. You can read all 20,000 words on the website. But he promised he will not try to read all of them today. I want to start with a yegz i cant answer, how much does the u. S. Spend on defense. So dan, can we get the first slide up . The short answer is we spend a lot on defense. There are a lot of ways to measure this but lets start with a few basics. This is a pie chart that shows how we spent the federal budget in the last fiscal year. We spent about 900 billion on defense, roughly one out of every 8 in government spending, 12 of all federal spending. You can see here that the biggest slice of the budget is mandatory spending or entitlements, benefits like Social Security and medicare. That is a growing part of the budget. But the defense slice is big when you compare it to the nondiscretionary budget which funding all of the things that the federal government does, grants, parks, local governments, and so forth. Even though it is only 12 of the budget, its pretty big. The department of defense buys more goods, services, software than all other Government Agencies combined. The department compared 2. 2 million. That is substantially more than any other executive Branch Agency combined. The work force is about 1. 5 million. Something i learned in prepping for this, one third of all civilian federal employees are employed by the department of defense. In fact, some peoples tallies says we spend asmuch on defense as the next countries combined, china, russia, india, u. K. And so forth. But mike tells me that the sort of calculation may understate how much chinese spend on defense. They dont have a table to tell us about function 50. But we can look at what we spent over history. This is a chart that shows historical funding for defense in real terms, inflation adjusted terms. It shows what cbo projects will spend based on the department of defenses base budget. The green line is what congress does. They say we have so much for base budget and if we have a war like in afghanistan or ukraine, they put that on t so it is not built into the base athough it often does. Mostly the point is that you can see that defense is expected to rise in realterms over the next decade. Travis sharp was one of our speakers today and says the trend of generally rising defense spending represents one area where washington policy makers of both parties keep finding ways to agree. When you listen to the congressional debate, it seems to be should we spend more or less on nondefense discretionary or how much more should we spend on defense in real terms . Another way to measure the Defense Budget is to look at the share of gdp, how much effort dowe put into Defense Budget and of course the shart looks a little difference. This is defense spending at shared gtp, very high during the vietnam war for obvious reasons. It has gone up and down with wars. It is now about 3 of gdp. That is an interesting number because we keep telling our allies they have to spend at least 2 of gdp. So mike is going to talk about this all in more detail. And then you can turn off the slides. Let me explain to you the order of today. Mike will give a 15 minute presentation on the paper. He is a man of many titles. He is a defense strategy, director of the strove Talbot Center of technology in our Foreign Policy program. Mike has been at brookings for 30 years. He has a phd from princeton and public and international affairs. After mike speaks, im going to be joined on the panel with two other experts on defense spending, mckenzie eaglin with the Enterprise Institute who has had a variety of jobs and roles advising the pentagon and members of congress on defense spending. She has a graduate degree from georgetown. And also will be travis sharp who is a senior fellow at the center for strategic assessment where he has been for five years. Travis is Lieutenant Commander in the naval reserve. He has a phd from princeton in Security Studies which woe got in 2020. So with that, im going to turn the podium over to mike and i will be back after his presentation. Thank you. Thank you, david. Good morning, everyone. It is really nice to have you here. Im going to try to spend 15 minutes making the Defense Budget accessible to those who dont think about it fulltime like mckenzie and travis is i and send up a conversation on how much is enough. To quote the famous book of the two whiz kids of the 1960s who wrote a book of that title. And of course david has captured the i didnt know and yang about this. The military budget is enormous, almost a trillion dollars or 900 billion. That doesnt count Homeland Security and veterans benefits. It is a lot of money and more than the cold war average, even after adjusting for inflation. It is substantially more than the peak of the cold war. On the other hand, as the last chart showed, it is a little more than 3 of gdp. As mckenzie and i were observing a moment ago, a poi chart of the federal spending, 12 of the federal budget is a lot but it is a lot less than it used to be. In the early years after world war ii, when we were down sized but in the cold war, we were spending about half of the federal budget on military. So it is entitlement that jumps out at us that do Foreign Policy as the big enchilada. I come at this as the perspective of a chief hawk. Those of you who have been around and remember Newt Gingrich when he was speaker. When republicans took congress in 1994, someone asked how does down sizing Government Square with you being a hawk, part of the legacy of the reagan revolution, and a loyal apostle of president reagan who only left office a few years before at that point. And gingrich said im a hawk but im a cheap hawk. Im not really of the same political persuasion of Newt Gingrich in general but on this point, im sort of in the same boat. I would like to talk to you today about how to be a cheap hawk. Im trying to spend enough to make sure at least based on my analyses we are in a robust position in a troubled time in Global Politics with a lot of challenges around the world, and yet trying to minimize the burden on the taxpayer and also viewing the overall size of the deficit and the debt as Long Term National security challenges unto themselves. The Defense Department cant solve that problem. Im concerned about the politics that come back to the discretionary accounts, which are obl a third of the federal budget together, defense and domestic. And try to put pressure on those to reduce spending while we leave entitlements alone and leave the revenue issue alone. That wont work. None theless, at a time of fiscal distress, i think it is better to be a cheap hawk than to essentially bless each and every pentagon request. So thats the philosophy that im coming from. When you think about how to build a defense strategy, we should begin with this question. It is part of why david wanted to have this event. We wanted to think from principles. If you are a general, how do you understand the basic conceptial drivers of an 850 billion a Year National Defense Program . And a military that is not huge by historical standards or by Current International standards. 1. 3 million activeduty, 2. 1 total employees when you count civilians. Even if you add in all of the reservists and guardsmen and women, we are up to about 3 million. That is small compared to the cold war average and compared to china today. It is not that big compared to north korea. So it is fairly small in size. Yet, being asked to do a lot. So what is it being asked to do . When you think of building a military strategy, you have to consider who might fight against you, who might fight with you, how many of these kinds of fights or wars do you have to be ready for at a given moment and to what degree of readiness and advance, and finally, what does the war look like and what is an adequate margin of insurance or safety in terms of your confidence level that you could win that war . With the ultimate goal being that we want to deter the war. We want to convince our would be adversaries that it is not worth the fight against us. So mckenzie has coined this phrase when she talks about preparing for war. She wants to be smart enough that if we wind up in conflict, that we live and they die. She says it better. But the core point for me is that you want to have enough military capability and credibility to fight that we will prevent the wars from happening in the first place. We are at a point in our National Defense strategy where china and russia have become our top concerns for planning. Heaven forbid we actually fight them. We have to go back to the old line that the purpose of military forces in the future much largely be to prevent war from happening. Ideally, it would always be true but it is especially true when you are dealing with a Nuclear Armed super power. So who might you against who might you fight, who would fight with you, how many wars at a time and what does the war look like, what margin of insurance or advantage or overmatch do you see so the enemy will hopefully not want to fight you in the first place. For those of you who think we spend too much on the military, i would submit to you that we have a modest and minimal set of standards on how to define the answers to those questions. Ever since the National Defense strategy of 2018 and continued now with secretary austins of 2022, we are only planning to fight one war at a time. For a long time after the cold war, we hypothetically envisioned be able to fight two at a time. And the goal was that if we are involved in one war at one point, no other opponent sees a window of opportunity. So you want to prevent the aggressors seizing on the opportunity that you are engaged in one place and attacking you. That is a nice standard to have. It is an extra margin of insurance and gives you an extra margin in case you are wrong about how much is required to win a given conflict. And we are always wrong about that because military planning is imperfect. During the first bush administration, that administration thought that defeating Saddam Hussein may take 10 to 20 Times American casualties as it did. We exaggerated or overinflated our best prognostications of what the war would look like. The Second Bush Administration made the opposite problem. What im trying to convey is not a political point of agendas. It is more a point of military planning. In military planning, if you get it within 25 to 50 of the ballpark of what you need to win a war and that turns out to be validated by events, that is as accurate as it will be. The two war capeict is an extra margin. That was a nice thing to have when iraq and north korea was the chief concern. It wound up being harder to defeat taliban, isis and the iraqi resistance. Woe dipd not have success even against the limited capabilities. But today, we plan on being able to defeat either russia or china, not both at the same time. If we do wind up fighting russia or china, we dont assume that north korea will attack at the same moment. We want to have limited deterrence against them on the peninsula but otherwise, not assume an additional conflict and similarly with airan. We are only assuming one big war at a time for military framework. We will have a debate about how much is enough to sustain the strategy but i think it is worth dwelling a little on the fact that it is a fairly modest set of planning criteria for what a super power with 60 allies around the world really needs to have. And also, we have just seen a period of two decades of conflict in which the United States did fight two wars at the same time. And not a very good job when we had to do both simultaneously against lesser foes than we are talking about today. Thats a framework. Let me now ask my colleague to call up a few slides. I will give you background on the Defense Budget and then race through the points before our conversation on stage. I want to pick up where david left off to remind you in historical perspective, we are below the peak of iraq and afghanistan conflict in the Defense Budget, once you adjust for inflation. We are well above the cold war piece. This doesnt really answer any bottom line question. Dollars dont fight dollars on the battle field. They buy capeicts that are adequate to win wars or deter them. That is my first graphic, just to remind you about where we are. There was a mini build up during the trump years. It is shorter than certainly the buildup we had after 9 11 or the buildup we had during the vietnam conflict or the reagan peacetime build up of the 1980s. The cold war numbers range from 500 billion and 700, 750 billion a year. If i could have the next slide . To give you a sense of the international perspective, depending on how you count it, we spend more than the 6 to 8 countries combined. Thats not the ultimate question but it is worth knowing as a matter of input who is putting resources into their military and there is good news if you put the Defense Budget in global perspective. I know this is hard to read but i will tell you that the United States on this graph a couple of years ago was spending about 38 of the worlds total of all expenditures on armed forces. Then our allies, nato allies added in another 17 so that all of nato combined is 56 of World Military spending. That is good news and bad news. It is good news in the sense that we have a lot of rich allies. Many have not been spending it well. Many are not spending as much as we think they should. They all represent obligations. Now we have to have a big enough and Strong Enough military to defend all of them. It is not that the Defense Budgets add to our own but their territorial protections becomes our burden as well as if it were american soil. Thats what the article five mutual defense path means. I want you as some sense have resource allocation. Theturate will continue this. All of the allies around the world add 12 of the World Military spending. The u. S. Led coalition if you will of nato allies, asian allies and other major Security Partners in the middle east represents about 68 of the military spending. That should give us confidence that we are in a strong position. But it should not give us any kind of overconfidence for the very reason that most of the conflicts we would fight is near adversaries own soil. And dollars dont fight dollars. You dont have to have a Defense Budget near the size of the allies to defeat us. They just won a war against us with a military budget of their own in the range of 1 1000th of ours. So i want you to see the input but not that they are of outcomes in any conflict. And the next slide, just a couple more and i will make some general points. Woek go fast. This is giving you a sense, mckenzie were talking that 140 billion estimate of chinas military budget is lily debated and uncertain. It could be well into the 300 billion range when you convert and aei has done a study saying it could be higher. Somewhere between one third and one half of American Military spending. Easily the second biggest budget on earth and doubling every 7 to 10 years. It is less than 2 of chinas gdp but the gdp is substantial enough that it is still a lot of money. The war we worry about fighting against china is far from our shores. I dont think they could come close to being a bottom Line Assessment of whether we spend on. A couple more tobreak down the Defense Budget request. If you are sewerious about which military services spend the most, at this point, it is the navy and the air force. Although bear in mind the air forces budget includes a lot of the intelligence budgets. Out of the 850 billion in total u. S. National Defense Budgeting now, 100 billion is the intelligence budgeting, hidden within the Defense Department, hidden in plain sight because of the number 100 billion is now public and unclassified. Every other detail about the intelligence budget more or less is clsified. But about 100 billion of that is overall defense spending. Much of it is in the air force to put up satellites and otherwise maintain technical capeicts. The navy bunl t includes the marine corps because the department of the navy includes the marine corps. The department of navy includes the space force which is tiny but still expensive. The army used to be the biggest Budget Service back when it was bigger and very active in iraq and afghanistan. It is now the smallest of the big three departments. And then a lot of activities have been essentially shared across the whole defense base and represent almost 150 billion worth of total spending. If i can go to the next chart . And then finally, if you are wondering functionally how do we spend, this is the breakdown by appropriations title. We spend almost 200 billion a your on military personnel as we should for an all volunteer force. We spend about 330 billion on operations and maintenance. The 2023 number was higher because it included a lot of ukraine money. And then we spent another 300 billion between procurement and research and development, acquiring new weaponry. About 850 billion, 300 is investment for future, the acquisition budget. 300 is operations which includes the civilian salaries, but also the equipment repair, training, recruiting, many other things. And then finally, almost 200 billion is for the men and women of the all volunteer force. So i think now what i would like to do and really closing this part of the conversation, and setting the stage for the conversation that will follow, what i would like to do is for you to understand how i did my calculation to argue that we need small real growth in the Defense Budget, above inflation. I think that the agreement between Speaker Mccarthy and President Biden from last spring, the default avoidance agreement that is now in some degree of flux and jeopardy as we try to Bring Congress back to town and see if they can come up with a budget for 2024, i think that agreement was not quite enough money for the military. High colleagues on stage may tell you it is not nearly enough. I think it is about 10 billion too little. The way i did that calculation was to take the force the pentagon believes we should have for the future, the 1. 3 million activeduty military personnel along with the modernization agenda that we believe is important for deterring china and russia, and improving future capabilities. Take that budget and project it out over a 10 your period. Look at what kind of expectations we should have about costs growing faster than currently budgeted for, what expectations about weaponry, costing more to build than we think. By the way, you shouldnt be surprised by that. Modernizing weaponry is the same thing as inventing new weaponry. Why would you think you could set inventions to a schedule or exact cost . Im not trying to be complete defender of each and every program in u. S. Defense industry but as a rule, you should expect costs to grow in some cases for technology that we dont know how to build when we start the program and we have to figure it out on the way. The process of invention is nonlinear and nonpredictable. You will see cost growth in that area. A couple of more points i would make in thinking about why im a choep hawk and why it is so hard for a cheap hawk to find savings in a Defense Budget, let me tick off two or three as i wrap. One is that in the personnel account, this is not a good time to think about whether we can save money on military housing or some benefits are a little too generous. Generally speaking, we pay our all volunteer force very well but they are doing incredible work. They are asked to do a lot. They dont make overtime and fewer and fewer people want to join. We have a krois s in recruiting in the all volunteer force. Which means one of the next times im up here is a conversation on whether we need to seriously consider the draft. It is getting to that point. Before we get to that point, we should protect probust military commonsation. I think we woe owe it to our men and women. Military readiness, reflected in the budget, already a difficult and dangerous world. There is the potential for crisis and conflict today. That means we cant skimp on maintenance or training, forward presence abroad. It is hard to think of ways to save money. I have a few ideas to save a few 100 million. My old colleague who was comptroller at the pentagon said finding savings in the military budget is hard but keep trying. That was a title of one of the papers he wrote. It was not a particular chur chilean phrase but he was right. When you find it, it is a couple 100 million here and there. It is real money and worth picking up off the sidewalk but it will not solve the dilemma of the unmet needs of an 850 billion enterprise. Before, we want our troops not only to be well compensated but to have the best equipping in the world so that if we fight, they live a i mentioned before, i like to quote mckenzie, we want our troops not only to be well compensated but to have the t best equipment in the world so that if we fight, they live andb our enemy dies. Again, mckenzie puts it better than i do but im quoting her almost exactly. Were at the time dswe must be successful in the deterrence of russia and china rather than wo fighting it out in figuring outn who was better after the fact once the smoke settles and maybe the Nuclear Mushroom dissipate. We dont want to get to that point. I would submit that for agencies in the western pacific over taiwan for deterrence of ee our nato allies in eastern europe, we have to be pretty robust and especially look for vulnerabilities in our current r force where china or russia make perceive and achilles heel. May perceive they can knock outt our commandandcontrol, not after forward bases, dr. Ford deployed combat units in such a way they have a window of opportunity to then successfully complete some kind of an aggression in their neighborhood before we can get ourselves back off the mat and come back at them. So, in my paper, i recommend a few savings in a few cuts in certain weapons. Ill talk about those of the e discussion. But i also think that there are a few specific vulnerabilities o we still have that i want to close as quickly as possible to make sure china and russia dont see a pearl harbor like opportunity to knock us out of the ballpark for a month or two so they can complete an aggression and hoping that we wont have the commitment to build ourselves back up and come back at them. That is the most likely way in which deterrence could fail. Not that in the many think they could out slug us but they think they can knock us out of the fight long enough to do their dirty business in their et own neighborhoods before we can come and reverse the aggression. We dont want to have those achilles heels. We dont want to have those vulnerabilities. There are some where the an government has not proposed enough spending to redress some of those concerns. I realize this is a broad picture overview. Well get into some of the details im sure the g discussion. I look forward to being joined by my colleagues on page. Thanks, mic. I want to start by reading that jane harmon wrote. They said that we understand that her almost shorthand. While spending more on defense doesnt guarantee we will deter chinain and rollback russian aggression, spending less will almost certainly fail. But it is also true that buying incrementally more of the same mix of weapons and Technology Wont produce a force azeri to meet the challenges posed by an increasingly aggressive china and russia. More alone isnt better. Better is better. Mckenzie, do you think that we can meet what you think are the defense needs of the united sc states with the kind of big picture budget that mike is talking about annually over the next decade or not . Thank you for taking me back to grad school. How much is enough . We had to read the book. I think it was two years of my life spent answering that question. The point, the answer to your question and the answer to the oped is if we lived in a world where you could clean sheet the Defense Budget, we would have more than enough money. We dont clean sheet anything. That not how the budget process works. I agree there is no set baseline either for mandatory spending. Auto increases with or above inflation. Just money tacked on. We do that because we do that for what are primarily Healthcare Programs. Its a little bit face sometimes more or less than other times. Its really much like your pac man chart, where the dollars go. Essentially on the mandatory side of the house, i called the pacman the glue that you had. Those are essentially Healthcare Programs for the most part. Within our own Defense Budget, it looks like that too. It is just a microcosm of su federal spending. We have fixed the automatic spending, spending that is on autopilot that doesnt change year over year unless there is a total rebrand of that strategy. That like a fundamental review. Theres been attempt at doing this. Were we just slowly cut to reduce. If you can clean sheet a budget, build it from scratch every year and have a white board behind you, there is enough money. That not the world we live in works. Essentially how it changes th cycles each year particularly in the recruiting pricing that we have had for several years now. Different levels of severity by service. Most of the Defense Budget is er not available for strategic choices and changes yearover year. Its probably less than 18 . Within that 18 or so to 20 , can you make a lot of changes and reductions . Sure. There are consequences and maybe stsome benefits. But i want to just present the budget as it is. We dont start from a whiteboard. With how they budgeted last year and change from there. Is 1 real enough or not . Ceo has a great work over the years. What they find is the pending on the major account within defense, operations and maintenance, whatever, those accounts tatend to exceed inflation by 2 per year. The total growth that is under inflation, you have under budgeted bills. You have to cover those spreads. When usb is 1 above inflation enough by the typical annual costs were for the defense ob budget just to exist on autopilot is due to 8 above inflation. S you have to cut to exist. That was bob works line as on deputy secretary defense just to maintain the military as it i is today. Ba no big idea. Ti you have to cut every year to exist. So is 1 enough . As long as your diminishing your global objective and your manpower and your workload. Where are you on this 3 question . I think 1 real growth per e year is not enough. I think somewhere in the range of 1 real growth to 3 real growth is what would be necessary to afford the type ofi additional investments that mike outlines as being necessary. Be i will briefly sketch where that comes from. Mikess paper that are worthy ideas but feasibility of lamenting some of those proposals will be difficult just to focus on the congressional side of things. Each year, dod proposes certain divestments to weapon systems. Each year, congress blocked ornaments some of those divestments. That means that i think because of constraints on congresss ability to implement reforms al and also on dods ability to s implement reforms, the savings we would get would be less than we would hope for. T to put that differently, the ng expected value of the savings is probably going to be than h what it is theoretically ne possible. So since we are going to be able to save less for the sites of proposals in order to invest in the types of things that mike outlines as being necessary, were probably going to have to increase the top line. One more comment on the ef benchmark that i mentioned. From 2016 to 2023, average real growth in the u. S. Defense budget has been 2. 5 in real terms. That is when including supplemental funds. I think a 1 to 3 target that i 2. 5 average outcome is sort of a reasonable projection that e. Reflects some of the agreements for policymakers have been reaching. Im concerned that you guys are conceding defeat before you fought the battle here. If i gave you that same spiel and i said, well, we are stuck f with Social Security the way itc is and it is going to run out of money in 2033 so theres no way we are going to cut benefits on old people so we just have to find a way to increase the spending of Social Security. Healthcare runs faster than ed Everything Else so we need to fi keep pumping more money into healthcare. This seems like a dangerous way to run a government budget. Assume that everything screwed up will be screwed up forever and find a way to borrow money to pay for it. I understand what youre saying, mackenzie, if we cut the Defense Budget below 1 ns that they would have to make some choices. Of wonder, isnt that yo the point . Gu how are we ever going to get an efficient Defense Budget or Efficient Health care budget ifm we dont say, look, you guys have to figure out how to do better with this amount of money. Im going to find the premise of that question. If the Defense Department were a private company, they would be bankrupt, chapter 11, sued repeatedly. Taken to court. That my question. If you give them a budget constraint, they may have to meet it. If they take 80 of the spending off the table, i thinkk will force them not to take it. Right. Okay. Let me revisit one of the main points. Cu i know you wont let me off the hook. I talked about the limited strategic choices a decision actually has not budget. Theres basically like eight dials and reels that you can move up or move down. If you are the most seasoned person, you are the s. E. C. Deck. Those range things from power competition, less midtier defense. E. Counterterrorism, what you want your military to special in more than other skill sets or service or capabilities . But then you have four sides like mike talked about. Readiness, total dollars spent and modernization. How modern is it . Of course the military is always a blend of old and new and brandnew stuff. That kind of what you are working with in terms of making choices and changes and youre pretty limited. Those are big choices and c changes and they have big dollar tales to them. That silly faction of total spending. Like i said, you want major muscle movements, you have to make major changes to outcomes that you expect the military to achieve. I see the opposite happening. What i see as military is the Super Walmart of federal agencies. It is the easy button that everyone pushes for everything. Its not moving in the il direction of due west to be better at the fewer things we want you to do, china, et t. Cetera. The House Appropriations bill with more federal agencies that are really good at counter drive. They should be doing that. The border, principal. These are really important things. I dont want the defense Sh Department doing these things. I dont see a serious discussio about, what you want them to do . I can tell you where im going to take the money from. C absolutely. Ch im not saying there is no by any sense. I do say we have to be u realistic on the outcomes. Just a couple of things i n would add. Its an important eun yang yangi some of the specific things that i proposed which i know that at least a couple of them are not supported to my left ear today. Some are. Good ideas like the name he a prefers to operate one crew per ship. I have never been a sailor so i dont claim to understand all the details of how every ship would vary from the other ships in that class. But it still strikes me that we could be more efficient. Ne if we use an idea, we already appliedup with minesweepers and some summaries and to have a couple of crews work on the same ship. You fly across the ocean to meet with your ship in korea or japan and the crews stop out. I think we should ask the navy to do more of that. Logistically, it is hard. I am in favor of pushing them to do it. That is one of the reforms in my paper. I know because he doesnt like this. There are a lot of jobs that it strikes you is young, striking men and women. They are sittings around desks. Why not make similar into civilian jobs . Civilians dont need to go to training. They dont need to have professional education. Estimates are that there are maybe 300,000 out of the 1. 4 million are essentially like he that. Im not suggesting all of them c turn into civilian jobs but because of the efficiencies of having someone who doesnt have to do the military specific tasks involved, you could d perhaps cut her workforce by 20 or whatever number of jobs you decide is in that category. I would like to put pressure on dod to look for those jobs. W i dont know how to cackle at exactly the right number but i have an estimate in my paper. The more specific problematic idea, i think we have a nuclearr weapons capability in the u. S. We basically lost before we even know the outcome. On the other hand, we also have two countries with big Nuclear Forces that are simultaneously problematic for us. One of which is willing to throw around its nuclear a little bit. Im in favor of building db 21 e bomber partly because it also to is important for commercial missions. Im in favor of replacing the summary force because you have o to keep our sailors safe undersea. Im going to look at things like, do we really need a second place to build new plutonium pits down in South Carolina as we are currently nd fighting to build for the department of energy to do we really need a longrange missile and can we delay the replacement . That is a closer call but i think it is worth looking at. These are the kind of proposal i have in my paper. Ar none watch are easy to implement. The sum total of which, if you did all the reforms in my paper and actually got them through, were saving maybe 15 million a year which is a lot worth saving. But compared to 850, its a modest percent. What you think about this er more than one crew per ship thing and what else . Du they keep me on the shore because that is probably safer for everybody involved. I think i will probably steer clear of telling me colleagues. R i wanted to Say Something to remind everybody of something that mike said in the introductory comments. There is a classic paper about i how to generate efficiencies in the Defense Budget. The title the paper is, keep trying but be realistic. I think that is a good es description of what is happening with it for now. Mike is emphasizing that we are going to keep trying and mackenzie and i are saying that we need to be realistic. Here is why the symantec is so important. I dont think you can realistically hope to achieve 1 to 3 in the Defense Budget unless you are actively pursuing the types of reforms that mike outlines in his paper. The logic behind that is fairly straightforward. How can we in good conscience ic go to the american taxpayer and asked them to continue investing enormous amounts in the defense unless we are demonstrating that we are r making efforts to be more efficient . The debate has to be the specifics of some of the programs. W the tension between these two e impulses is essential to ha achieving any of our Defense Budgets. Mackenzie, you made a point of something that you wrote. We have had 14 Reform Efforts in the last eight congress is bo on the pentagon. Is there any way to change the dynamics of that we dont end up with a situation which both you and travis refer to . There are things that should be done that we cant do because the wi 535 members of the Board Directors wont do them. As says, they are buying weapons that the pentagon doesnt want. Is there any political economy think that will change this dynamic . There is. I have thought and published a lot on that question. How i summarize those reform t efforts almost two decades now, with zealous reformers are overfocused on how the pentagon buys things. Of course that they buy fewer things in labor and services and technology and software. Weapon systems are increasingly the commodity. So, until reformers start to think differently and broader in scope about what covers reform, and so similarly you see flow from that. The kind of reform ideas, which focus on t. One account that for weapon systems, particularly procurementou as opposed to the operations and maintenance of v the systems. Once there is a broader scope, a broader view of total defense investments and what can be reformed, then it opens the aperture. Here are my big five takeaways that ootom spurr and i wrote about. Kind of looking, we kind of took a scalpel to the defense line, we took a step back and looked at it. S anyway, basically, a couple of r things only reform. Serious defense reform is bigger than the purchase and acquisition of things changing how the on buys things. N that is important to some extent. Although i think it is over reformed. Serious defense reform is a io patient work of many years. Can you cut this weapon systems and be like, yeah, a week me after, or smart, where thoughtful. Yeah, sure, that great. That just an easy decision that makes you feel good that probably has been made by someone somewhere. It doesnt mean you should. It requires leadership. You have to build coalitions to have real defense reform that , has meaningful money behind it. The kind that michael was talking about. You have to build coalitions with other committees. With Service Organizations like the Armed Services bridges so that their own veteran Services Organizations and others, you have to do actual work and outreach to build a case and make your case and bring them in. Then, must reforms for the Defense Budget including some that mike will talk about which i firmly support, there is an up front cost before you save a single daughter. Usually the cost before you reach the semi, about five years later. Almost no reform can i find that doesnt cost money up front. If you want to close a basic legal to pay people. You have to do environmental l remediation. You do new military contractor that another base if you are losing a certain capability like a hanger. They had to go but once in florida. The options are cost associated with the forms. Serious reform is not like the pe line in the budget and saying, im a reformer program. Its just a congregational mark in the budget program. An travis, i think from the back of the envelope i did about 30 of the Defense Budgete is personnel and personnel are expensive. We weknow that wages and Healthcare Benefits are going fo to rise faster than the rest of the budget probably. We know as mike said that there are some choices to be made about uniform versus civilians. But unless we are going to replace the armed forces with robots and ai, how does the pentagon get its arm around that cost . Or is that just something we have to expect . I will focus on congress and answering that question. I guess weve established t that the congress is the root of all evil. I see a thing. I thought it was china but i am. Having second thoughts. I agree, if congress. Yes. From 2016 to 2023, congress added an aggregate 80 billion s to procurement account. That 80 billion amount is larger than the congregational adjustments that were made to the three other major defense ng spending accounts combined. The point of me tell you that is to emphasize something that problematic terms through the medium of procurement. They take much less interest in terms of making spending th adjustments to the military personnel account. Ol what does it require in order to make reforms to military y personnel as of all things, dependui on the access of individuals. You need policy entrepreneurs who are willing to frame problems and build coalitions in order to enact any type of meaningful change. It is worth thinking about whatd is the current pipeline of defense policy entrepreneurs in congress . The United States has been sli blessed since the end of the world war ii with having some incredibly powerful entrepreneurs. But i think for various reasons , the political rewards associated with becoming an expert in defense policy, of that pipeline of defense policy and entrepreneurs has shrunk a g lot. You know, i think kind of a necessary first step in thinking about how you would implement any type of reform is identifying those member of congress who will be willing to leave their college to better outcomes. Its unfortunately a pretty small list of people. Declare your candidacy for congress. I think there are a lot of things that are peoples mines going on right now. I wanted to address ukraine in c two respects. The one that comes my first, i have been startled. Sometimes m the stories out of ukraine sound like we are refighting world war i with people in trenches. Re and sometimes i feel like i am watching a star wars movie where the ukrainians are sending drones, unmanned drones and hitting apartments, or whatever they are trying to hit , in moscow. What is it that we have learned from how ukraine fights and how the russians seem to be better defense and offense . Ou what have we learned that we should keep in mind as we tweak the u. S. Defense budget . I will first speak briefly to the previous conversation. Partly to the defense of congress in the sense that if wa you look at the interaction between congress and the executive branch over the years. It travis was looking blissfully back at some of the w great reformers and censors and horsemen and congresswomen. I think u. S. Policy overall is pretty good. There are some potential tweaks here and there. From a budget point of view and negative terms, i dont know how to shrink the military personnel account. That another way of saying that we as a country are paying our men and women uniform well. We should continue doing it. We are not making them rich. But they are reasonably well compensated compared to people o in similar experiences. They make more than about 90 of their civilian counterparts. They dont make overtime. They dont control their own schedule. They deployed to combat zones when told to go. They cant take their families h with them. They dont get the help from their families they might need and a lot of people in military have young kids. Im not suggesting they are over prayed by any stretch of the imagination. But i think we should feel generally good about the ha compensation. There is not a lot to it. The one thing i thought was not particularly optimized when i i got into this business 30 years ago is the way we did military m pensions. And we fix that. It used to be that you understand for 20 years. Ce if you did, you got a very good pension. If you sit in 19 years and 11 months, you got that. This was a perverse set of incentives. A lot of people will say and just to make 20. A lot of people would get out before 10 because unless you are going to commit to being there for 50 more years, youre not going to get a pension anyway. Now we are doing it more like the 401 k . I hajust wanted to put that positive spin on two things which then comes back to this uncomfortable reality, its hard to cut the Defense Budget when you spent 50 building up the compensation system. On ukraine, i like the way that you frame it. As usual, your pithy and brilliant. I think the way i would put it, yeah, more strikes me as being the past than being futuristic. There are good debates about this right now. So my good friends and favorite scholars in the field have recently written about this. Dave pretorius and fred kagan just wrote an article about how we sit with ukrainians, they may still achieve a major breakthrough. I lean towards the biddle interpretation to the extent there is a discriminant but we will find out on the ed battlefield. I think so. Lesson one is that you have to stay flexible and supple because the lessons are being learned month by month. Lesson two, you got to make sure your control survived the initial attack. Thank goodness we help president zelensky and his government do that. The cia deserves a lot of credit. They kept the ukrainians cyber system robust. Kept zelenskyy himself aware of the dangers to his own presidency. On he was more careful in those early days and weeks. On the tactical battlefield, drones in these apps that when you send in the information about where the russians might be,he all of that, they are coo and they do work until the russians figure out how to conquer them. Iv for every measure, there is a countermeasure. Earth is still a really good er protective medium against explosives. N you are still pretty safe. You have to have ways of communicating and ways of knowing where the enemy is. That is where the competition happens. The surface to air missiles. Xc that competition will continue. One side may get a bit of an advantage. So far, it looks more t like a wash. B the one exception, i will ou finish on this point, if you can strike hard and early with the capability the enemy doesnt know you have an is and compared against, you can be effective. If you leave yourself vulnerable to that kind of strikes, you can really be in trouble. Generally still problematic. We depend on big bases and in a koala and warm. We have to go more to a dispersed system. Unmanned underwater systems, muscles to make sure that the chinese dont see that pearl harbor opportunity. Ro that is my obsession. It is more about resilience and survivability than it is about improving our lethality. Travis, do you have views on what we have learned from b ukraine and fighter jets with fleets of ai powered drones . Is our Defense Budget prepared for this kind of technological change . Yeah, one fimplication of ukraine that i think is important is, i think the conflict so far, the need for the u. S. Military to maintain some degree of balance in the force by which i mean, yeah. Good. Like star wars. Not becoming overly invested or committed to the highest Technology Solution to military problems. Although in some cases, we are i going to make those types of investments. The reason is as follows as mike already mentioned. Ukraine conflict as been a conflict where lowerlevel technologies, classic technologies have often proved h quite effective. The battle moves and counter moves, so me opportunities. I would just be concerned about the United States getting into position in the future where our military forces are not able to operate alongside our allies and partners of the type that we are seeing demonstratede in ukraine because we have on too much into the higher end technology. By the way, because of classification might make it difficult to be sharing information or operating. There is still a place for some of the lower technical procedures. Mackenzie, you much at reform. For instance, cutting staff by 25 . Serious reform come through eliminating 100 of something. I really like that line. I want to make a question about what we should eliminate. Does o that make sense for us to still build huge aircraft carriers . Are they just sitting ducks for attack missiles and stuff . I thought you were to ask me about a different article i wrote i propose limitation. You right a lot of articles. Mike here is the book rider. I had proposed eliminating the secretary of defense later thisa week im going to call for limitation, its good to break the brains of washington. You are talking about re capability. I want to talk about organizations i salem nation on something. The future of the carrier. It is not that simple. I understand that thinking by some of the sound if xyz ra doesnt survive the threat, the Rocket Missile range of china, its not useful anymore. I dont want to get to the war. Wars are really expensive. I would rather prevent it. We use our navy primarily. Dissuasion, competition, gray zone, everything can think of that is showing. Something likew that. These are carriers that primarily do that. At least according to the commanders, we have a supply demand mismatch that is so fundamentally out of whack. When you talk about this or that capability in the carrier, i think broader in terms of deterrence which is what we usea are carriers for. And avoiding the war which is so much more expensive. I have about 100 more questions. You like you wanted to Say Something. Too i spent about eight pages s of my paper. Not letting the combat did have quite as much say. N saving them more for deterrence referenceses but also having longerrange fight off them so they dont have to be within range. As mackenzie points out, deterrence of iran, deterrence of other contingencies. Na potentially if we wind up in a fight with china, heaven ci forbid, the carriers might be more useful in the indian ocean. If we wind up ocdoing a counter blockade, the china blockades taiwan. And we decide we want to break that blockade, we are going to l need carriers to do so. In the pacific, we may also want to use carriers and or summaries to threaten chinas c lives. Ro we are going to have to get into a world of those messy ways of thinking about military outcomes. Carriers can still have a role r but it might not be right up against the shore in china. This is taking a depressing turn. I want to turn to questions. If you have a question, raise her hand or stand up so mike on can find you. Wait for the mike, tell us you are. T there are a couple over here. Why dont you go right on the aisle here. We are going to take two or bo three at a time. Stand up and tell us who you are. I work for capital one. Good to see yall. This is an acronym freezone. Almost a onetime cost. In addition to the base. It got me thinking about the up front costs, sometimes in addition to the constituents mo who dont want to change things. Is there any opportunity for what are essentially onetime ou costs that you implement in order to save money in the future . It seems to be it is a much better use. Not continuing resolutions that result in purchasing power loss, delays, inefficiencies. What can be done to get that message across that that is the easiest thi i think you are ngfairly to rightly knocked congress through the discussion. One big piece of this that is easy, low hanging fruit would be actually passing budgets on time and not continuing resolutions that result in substantial purchasing power, and efficiencies. What if anything can be done differently to get that message across that is arguably the easiest thing to gain efficiency and budget power and the defense. Hi, my name is caroline reed. Im hearing is getting a lot of comparisons with cold war spending. Basically, we all know that came to a head with the fall of the berlin wall and after that came peace dividends. Im wondering what your opinions are before we could ever take a look at perhaps decreasing defense spending . Great questions. Im going to suggest that not everyone answer. Question, is there something we could do to encourage congress to spend money on things that could pay off in the long run . You want to take that one . One idea that i was kicking around last year, we should just borrow it. Creating a reserve account that will be money set aside to deal with the unpredictability that is inherent to Inflation Forecasts and defense spending which is been a huge issue for the last few years. It has been volatile. The Defense Budget is structured around a series of assumptions. If these are, you may have less money or you could have too much. The idea between this reserve account, you set aside some money in order to make the Defense Budget hole. If it ends up that you dont need to spend more in order to make up for inflation, the money just stays in the account. It creates this way of dealing with inflation i think would be more rigorous and probably have a better outcome than alternatives. That is one of the sites of proposals. What about the notion or the question, can congress somehow structure at scoring so that you dont get penalized for doing things that cost money . I like the idea a lot. No one is looking at it, to your question. At least im not hearing any chatter about it. Its not a bad idea, its worth trying. Exactly. Where you have budgets. Where you have a clear picture of what buys true military capability that can go get the bad guy. Not in a fair fight. That fine. What buys the tip of the spear capability to go fight and win when needed. Sort of that machinery and bureaucracy, the annual budget. It takes five years to get this building, this carrier to get wherever. They think it is all going to go to aircraft carriers. I would prefer that. I have to take the second question. Their paycheck should be sequestered for each day on the continued resolution. Is not a totally wacky idea. They probably get their job a little sooner if there was some consequence for sku members that they are opposing. Let me help my colleague there. What are the downsides of operating a continued resolution for the Defense Budget . Outside we have . We dont have very much. Mike you want to try that . If youre trying to be subtle lessons from ukraine and react. Your delayed six months or what have you. When he tried to get into the longerterm maintenance or acquisition, all those kinds of smart things that would allow you to do things, become hostage to this process. It interferes with strategy, it also interferes with doing business in menstruation and economics. Is there any hope that we would have a piece of it and in my lifetime . No. Not for us, dude. We are too old. It is going to take 10 to 30 years to settle the relations. My estimation. Obviously, never trying to predict the future. It is easier to predict the past. I tend to think we have the means to save a relationship over time. I think it is going to take 1 to 3 decades. You and i are in our 60, right . I think our odds are modest for a big peace dividend in our lifetime. Mike, you did a wonderful job of putting our spending in the context of other nations. I think it is worthwhile. I am asking if you are the other panelists would elaborate on the challenges involved in taking advantage of the defense into another nation. We have data in some places. We have other defense and others. Could you talk a little bit about leveraging ally spending . We largely have a structure that was built for the past 20 years. Not necessarily that defense that we are likely to face for the next 20 or 30. We will treat their territory like our own or something pretty close to that with an informal understanding. Mostly in the broader middle east. What that means is that we have a lot of places we may have to fight. And hopefully deter. When i was in graduate school before the cold war ended, no joke, the cold war was underway already. All the theorists i read were talking about the likelihood that once the cold war ended, there will be new blocks of power that would form because people want a balance against each other. We havent seen that. We have made mistakes in vietnam earlier. We made mistakes and how we thought the iraqi and afghanistan wars. They believe that democracy is a better form of government. We have all of these allies. That is where the allies are hugely helpful because they together constitute 30 of World Military spending. They also give a 60 more places we have to worry about around the world. On balance, it is a very good thing which is based on the idea we should not let the ratio tend to its own matters because that didnt work so well before world war i or world war ii. I think the strategy is important. It should not be seen where the contributions just weigh in and give us the additional assets. We know that it will be hard to convince them short of just abandoning the alliance that we are going to have some help with the security challenges. The places that we must credibly threaten abandonment are places where they are already spending the most. Donald trump did not like south korea but south korea has been an amazingly good ally. Also, some of our middle eastern allies. They may not be the best but they spend 5 to 6 of their gdp on military. Sometimes using those forces against their own people, its a little bit of a mixed bag. We are always good you have to view the allies in a mixed bag in strategic terms. Sure. Can we produce a larger number of Unmanned Systems that perform Different Missions and have modular designs . Yes. We have done it before. During vietnam, the lightning bug was an unmanned system that was basically one of the first Unmanned Systems that went on to play a significant role. The lesson from that case is that the air force had to create a series of exceptions to standard acquisition policy. They also want to form very Close Relationships with the industry. Rapidly respond to the operational environment. Can we do the same thing today with the collaborative combat program . I think cedar lessons are saying the right things and definitely recognizing what is needed but there is more to do. The history of technology is that incumbents often are the ones who struggle to do this. How much of a threat to the way the pentagon is organized is the growth of autonomous vehicle, ai and all the self which really requires a different approach to using people and thinking . It is going to require a lot of big changes. Having pilots of manned aircraft comfortable. As is often the case of military innovation, you need Senior Leaders setting the tone from the top to let the rank understand that if they are taking actions to achieve these goals, therell be achievements of their advancement. We have time for a couple more. Is there another one . Okay. My name is roger. Im an editorial contributor to the newspaper. I am one of the few people in the room claims no expertise whatsoever on the subject that has been very informative. I am with you on that one. Like most laymen, if i could use the term, i tend to reduce the question two very simple propositions. In economic terms, what usually ask, i look at the menu. If im looking at a house to buy, what do i pay for and what do i get . You can slice and dice the Defense Budget many ways. The average person would be most comfortable with a geographic slicing and icing. If i could pose the question, i think will be informative for those of us who have no activity spicing, okay, if we spend a 20 a year in defense, 20 50 billion is for east asia. 250 billion is for the middle east and Everything Else is for the rest. If you had to address the question and the possible way for an expert, geographically, how much do we spend on defending our borders. How much do we spend of the budget defending our territory . And then pretend for a moment that you had to answer the question, lets extend that. How much more should we spend for this that or the other thing . If i can start. Bill kaufman, my colleague here when i started was a great defense planner attended to do what you pointed out in the last book he wrote. It was after the cold war had ended. He tried to adapt a little bit of these. The problem with doing it, i was glad he did it and i repeated his percentages in my old books, defense 101. That i proceeded to talk about why it is so hard to actually answer the question on the terms that you just requested. In fact, the forces that we have are brought. Out of that 1. 3 million, about 200,000 are abroad at any given day. Mostly, they are in japan, korea, germany, italy. And a few countries in the uk. There are a few hundred here and places like australia. Singapore, the netherlands. Et cetera. Most of those 200,000, however, dont really cost us more to have a broad than they do if we had kept them at home. The allies pay for a lot of the additional cost. With the added cost to us, it is less than 10 . It is not so much the bases abroad. It is the fact that we have these commitments to reinforce in the event of crisis or conflict. Then you could start asking, if we didnt have a commitment to south korea, for example, the geographic for a faraway continental. That is a tiny frar defense capabilities. A little over 2 . If you want you can say we spend 2 of our annual budget on south korea even those forces could swing elsewhere. Even those forces are somewhat fungible. The bottom line is korea represents more than a 15 billion commitment per year in our defense establishment because we would need hundreds of thousands of u. S. Troops to win a war there. We are only planning to fight and win one more at a time. If we did not worry about korea we stopped worry about aranda, russia, china. You said the green commitment is no longer there, the south koreans have asked us to leave, lets make a clean departure. I would say on whether that 30,000 contingent can be demobilized. Otherwise i do not think the hundreds of thousands of troops we would have used to read orson korea, i do not think those forces can be demobilized because they might be needed for other contingencies. We are already doing defense planning on the cheap with a one war standard. It is a complicated questions. When you wind up asking how much could you save if you illuminated this or that ally, usually winds up being small. Final point. If you went to a fortress america approach, defending our homeland alone, yes we can do that on the cheap until and unless eurasia decides to fight itself and wins and has the ability to fight with us the way hitlers would have liked to have been world war ii. If you think we can ignore eurasia and only protect ourselves, you can probably do that with 25 as much money. The problem is you dont know when and if something from eurasia is going to strike at you. That is the question i think is fundamental. If you answered that differently than we have since world war ii you could have a much smaller Defense Budget. I think you have a much more dangerous world. David on that cheery note, please join me in thanking mike, travis, and mckenzie. [applause] this video will be on our website so you can watch it over and over again. I am sure mike would be happy to talk with anybody about the specifics in his paper, which is also on the website. If i could ask you on your way out to take the coffee cups in your feet and put them in the receptacle, our staff would appreciate it. Thank you. Jason good morning. For joining the session and thank you for having a di good morn