Money Without Any Discipline Posted by David Shorr

No, not the derivatives market. Matt is right to be concerned about Pentagon budgeteers getting ready to steamroll the next administration. Here on DA, Lorelei has been eloquent on this subject, but Adam Blickstein captured the problem several months ago when he talked about the wish-and-a-prayer nature of US strategy in Iraq. Adam pointed out that only in military matters do policy makers get away with simply throwing money at a problem.

And that's the parallel with the financial crisis -- defense budgets have been throwing money around with all the discipline of an investment banker at bonus time. Our domestic political debate on the issue has been the functional equivalent of deregulation. We have been really been sloppy about accepting the simple equation that spending equal security; the more we spend, the more security we have. It's time to be more dilligent and persistent in asking exactly how our tax dollars bring national security.

I've had my own ambivalence about Pentagon cuts. With all the multiple deployments endured by the troops and their families, I'm left thinking we need a larger force, even after we pull out of Iraq. But of course the defense budget doesn't all go to personnel. Does "support the contract officers" have the same patriotic resonance as "support the troops?"

Which brings me to the latest version of the Unified Security Budget from Foreign Policy in Focus (written by Larry Korb and Miriam Pemberton). The report gives a cogent analysis of expensive weapons systems that should be cut, but it's the basic premise of a unified security budget that interests me the most. Everybody from Defense Secretary Robert Gates on down has stressed that the State Department and USAID are too atrophied to make their necessary, critical contribution to US national security (I've been working on a Stanley Foundation - Center for a New American Security project on this issue).

When the budget is drawn up, it's as if expenditures on defense, diplomacy, and development (credit 3D Security for this strategic triad) are denominated in different currencies. Defense budgets are spent more freely, with less scrutiny or reluctance, while decision makers approach the budgets of the civilian agencies with the green eyeshades and sharp pencils of a CPA. It would be great to somehow bring these budgets together into the same process; the new president should start, though, by telling his secretaries of defense and state and USAID administrator to work together on a budget that strengthens State and USAID, especially by adding personnel.

Comments

[Don Bacon]

In October to date the Pentagon has announced the award of 194 contracts valued at $5 million or more. Let's cast aside all the contracts for "petty cash" ($67 million, etc) and look at the contracts in the $100K range and above, of which there were 22, including some to fund health care for the new fiscal year starting October 1st, with a total worth of about $5 billion. Now remember, these are just awarded contracts, over and above the normal operating budgets of the military.

* General Electric -- $641,000,000
* Team Construction LLC and four other construction companies -- $100,000,000
* Goodwill Industries -- $96,658,904
* Rolls-Royce Defense Services -- $90,462,600
* Boeing Co. -- $523,419,558
*Saint Vincent Catholic Medical Centers -- $104,162,748
* CHRISTUS Health Systems -- $153,955,515
* Johns Hopkins Medical Services -- $226,117,266 for the one year base period.
* Martin’s Point Health Care -- $206,667,030
* Pacific Medical Centers -- $631,325,000
* Walton Construction Co -- $184,883,550
* VETCO Contracting Services -- $114,000,000
* Hess Corp -- $94,282,706
* John C. Grimberg Co. and three other construction companies -- $450,000,000
* Pacific Program-Design Management Services -- $100,000,000
* Caddell Construction Co -- $99,763,000
* Manu Kai, LLC -- $737,932,436
* Valero Marketing & Supply Co -- $234,721,965
* Lockheed Martin -- $173,000,000
* Raytheon Co -- $171,124,519
* American Ordnances LLC -- $427,782,611
* Bechtel Bettis Inc -- $205,340,000

Now (1) note the dispersal of these contracts around different business categories (and also geographically), (2) extend 194 contracts in eight business days throughout the year, (3) consider that some congress-critter probably has an interest in many if not all of these contracts (as well as the operating budgets of military installations in each district) and (4) one quickly realizes that this is a monster that will not easily be slain, especially with people saying that we "need" an even larger force, for what purpose they don't say.

[David Shorr]

Another bias / blindspot that I'm willing to cop to (to which I'm willing to cop?). When thinking about issues for US foreign policy, I tend to think of the country as a unitary state. Which, I must admit, glosses over more parochial interests. Think of it as a 'country first' attitude. Same problem when it comes to all the benevolent views of majoriy opinion; we shouldn't forget how often vocal minorities hold sway. As an advocate, I'm not sure what can be done about this except reach into the grass roots as far as possible, marshal our arguments, and try to overcome the resistance. My idea for funding the civilian international affairs agencies is to call for increases for USAID and DoS regardless of what happens to the DoD budget (though I have to believe that fiscal realities will force greater discipline there). If I'm honest, the associated congressional strategy needs more fleshing out.

[johannes_scotus]

"We have been really been sloppy..."

Indeed. ;)

[Don Bacon]

erratum: Of course I listed all contracts $100M and above, not $100K.

They say that all politics is local. The humungous Pentagon corporate welfare budget provides easy money into each congressional district. Representatives campaign on how much money they can bring in. This is the primary, very real motivator for Pentagon spending. It makes no sense, but that's the way it is.

Case in point: Congressman Joe Courtney, who campaigned to increase submarine production at a time when even the Pentagon didn't want or need more submarines. For what?? From Courtney's website:

//Congressman Joe Courtney secured an additional $79 million in the Defense Appropriations spending bill, shoring up plans to allow Electric Boat to begin construction on a second Virginia-class submarine in 2011. "This is a banner day for southeastern Connecticut’s economy and the goal of building a stronger Navy," stated Courtney. "Two years ago, many in southeastern Connecticut – and especially at the Electric Boat waterfront – were uncertain if they would ever see the day when our nation built two Virginia-class submarines a year. Now, with this bill we can finally look forward to building two submarines a year starting in 2011 and a more steady future for the workforce in Groton."//

A more steady future for the workforce in Groton -- that's the ticket. Joe is a hero in Groton. When he attends worker meetings at the sub plant he's treated as a conquering hero. Courtney is merely one example of how congress-critters are motivated to maintain and, even better, increase needless Pentagon spending. Try that with your USAID and DoS dollars.

NOTE: Virginia class attack submarines are 377 feet long, displace 7,800 tons, have a complement of 134 seamen and cost over $2B per copy in acquisition costs alone, plus operating costs. There is no current need for them.

[Don Bacon]

The Pentagon talks about "limited resources" but there is no apparent limit to their profligate spending forecasts, which Congress will treat as a floor and add even more wasteful spending (including earmarks), all borrowed.

From the June, 2008 National Defense Strategy (p. 20): "Implementing the National Defense Strategy and its objectives requires balancing risks, and understanding the choices those risks imply. We cannot do everything, or function equally well across the spectrum of conflict. Ultimately we must make choices. With limited resources, our strategy must address how we assess, mitigate, and respond to risk."
http://www.defenselink.mil/news/2008%20National%20Defense%20Strategy.pdf

news report, Oct 9: Pentagon officials have prepared a new estimate for defense spending that is $450 billion more over the next five years than previously announced figures. The new estimate, which the Pentagon plans to release shortly before President Bush leaves office, would serve as a marker for the new president and is meant to place pressure on him to either drastically increase the size of the defense budget or defend any reluctance to do so, according to several former senior budget officials who are close to the discussions.
http://www.cqpolitics.com/wmspage.cfm?docid=news-000002973555

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