FISCAL CONSTRAINTS AND THE PRIORITISATION OF CAPABILITIES

The United States has been the world’s leading military power for years, its defence expenditure outstripping that of other great powers by a wide margin (see Figure 7). Trump promised soon after his inauguration to put in place “one of the largest increases in national defense spending in American history” (quoted in Greenberg 2017). This apparently reflected his political messaging calculations – specifically, his desire to underscore differences with the previous administration – rather than a considered analysis of US capability requirements. Still, even some prominent experts who served in the Obama administration have welcomed the prospect of additional resources for the Pentagon. The emerging debate will be over how much and for what purposes.

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The stakes in this debate are enormous, given that defence spending represents approximately one-sixth of all federal spending, or about three per cent of GDP (Congressional Budget Office 2017). In May 2017, Congress approved a total of $586 billion in spending for the fiscal year (FY) 2017, which represents a $6 billion increase over the 2016 figure approved by the Obama administration. As part of a deal between the President and Democratic congressional leaders in September 2017 to avoid a govern-ment shutdown, defence spending for at least the first quarter of FY 2018 was capped at the FY 2017 level, leaving major new Pentagon programmes proposed by the administration without funding. In November 2017, Con-gress passed a defence authorisation bill totalling $700 billion for FY 2018, a significant increase over the Trump administration’s request of $639 billion. As part of a short-term budget compromise to prevent a partial federal-government shutdown on the eve of Christmas, the Pentagon re-ceived an extra $4.7 billion (above the FY 2017 cap) for missile-defence and ship-repair programmes. However, the real battle over how much money

Figure 7: World military spending in 2016 Source: McCarthy, L. (2017)

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the Pentagon actually receives will be decided when Congress debates the FY 2018 defence appropriation bill beginning in early January 2018.

Hence, the stage is set for what promises to be a protracted and con-tentious fight in Congress. Republican “deficit hawks,” who are commit-ted to reducing overall federal-government spending, are uncomfortable with proposals by fellow Republicans (known as “security hawks”) to appropriate up to $650 billion or more for defence – or $70 billion more than statutory budget caps enacted in 2011. On the Democratic side of the aisle, liberal Democrats who oppose any increase in defence spending will be at odds with moderates in their party willing to accept a smaller increase than the Republican “security hawks” want. However, the li-on’s share of Democratic members are likely to vote against additional defence spending if it is not matched by increases in spending on domestic programmes such as health care and infrastructure. Trump (and most of the congressional Republicans) staunchly oppose the former, and the chances of a bipartisan compromise on infrastructure legislation appear to be fading, in part due to the President’s insistence on including funding for building a wall along the US-Mexican border. The longer Congress is unable to resolve these differences, the greater the chances will be of a government shut down in early 2018 and a concomitant freeze on sub-stantially increased defence spending.

Although less publicly, the debates on how to allocate defence spend-ing, which will take place within the Trump administration and between the administration and Congress, will probably be just as spirited. Given the size of the defence budget and the complexity of modern defence systems, it is very difficult to introduce radical changes in direction and to obtain quick results. Moreover, defence strategists must constantly seek a balance among the oft-competing priorities inherent in preparing for current or imminent operations, investing to meet anticipated fu-ture needs, and getting the associated force strucfu-ture right. Meanwhile, members of Congress keep a close eye on the effects of defence spending on their constituencies. Hence a substantial number of members in both parties, for example, appear to oppose the Pentagon’s desire to close or consolidate unnecessary basing structures in the United States and redi-rect the savings – about $2 billion annually, according to the Pentagon – to higher-priority readiness or investment needs.

Much of the FY 2017 and proposed FY 2018 spending increases will be devoted to improving war-fighting readiness in the near term – such as in the areas of training, equipment, maintenance and munitions. They will also help to fund a modest augmentation (by several thousand per-sonnel) in active-duty military ranks, which currently total about 1.3

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million soldiers, sailors, airmen and marines. If approved along the lines proposed by the administration, the FY 2018 budget will also include en-hancements to US power-projection capabilities in the air and maritime domains. Missile-defence programmes would receive a modest increase in funding, mostly for implementing existing plans (such as the deploy-ment of missile defences in Poland), maintaining the 44 ground-based interceptors currently deployed in Alaska and California, and upgrading various sensor capabilities.

Over the longer term, however, the Trump administration will face serious challenges to its promise to “rebuild” the armed forces. In addition to renewing strategic delivery systems, for example, the NPR is likely to endorse the modernising of the DCA; making safety and reliability im-provements to certain types of nuclear warheads; enhancing command, control and communications systems involved in detecting attacks and relaying orders regarding the deployment and/or possible use of weapons;

and sustaining the extensive nuclear-weapons laboratories, production

Base Budget OCO/Other Budget Numbers may not

add due to rounding

328 365 400 411 479 513 528 530 496 497 523 574

FY

Figure 8: US defence spending during the 2000s Source: US Department of Defence (2017)

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and dismantlement facilities. According to government estimates, the price tag of these programmes over the next decade will range from

$340-$400 billion, or about six per cent (versus three per cent currently) of the total defence budget in this period. Although manageable, the large increase for nuclear programmes would put more stress on resources for conventional weaponry, investment and force structure.

Trump’s appetite for other major defence investments may also be un-affordable. In March 2017, he promised to expand the Navy’s fleet from 275 to 350 ships, which would represent the largest proposed growth since the early 1980s. As the CBO pointed out in January 2017, however, the Navy’s mid-2016 plan to number 308 ships by 2021 came with an estimated price tag of around $20 billion annually for new ship construction – more than one-third more than the inflation-adjusted average spent on shipbuilding in recent decades. A notional fleet of 350 ships would cost around $25 billion annually for new ships – around 60 per cent above the historical average, according to the CBO. Meanwhile, the Air Force is seeking to boost funding for its top three priorities: the further production and de-ployment of F-35 combat aircraft; the development of a new B-21 strategic bomber; and the acquisition of new KC-46 aerial tankers.

Moreover, the purchase of platforms and weapon systems is only part of the story. The Pentagon will seek to maintain a reasonable margin of US technological superiority through innovation projects such as un-manned aerial and submarine vehicles, directed-energy weapons, and new space- and seabed-based sensors. Successful innovation initiatives will require that technology and resources be matched with the “best and the brightest” individuals drawn to military and civilian government service – an effort that is not helped by the President’s derisive references to the federal workforce.

In some instances, US defence innovation benefits from a willingness to work closely with allies and partners with special skills. However, the Trump administration’s “Buy American” mantra, if widely applied to defence research, development and acquisition programmes, would impede such international cooperation. Although imperfect, the previ-ous administration’s efforts to improve defence-industry relations with selected allies and partners yielded technological, cost and political divi-dends for both sides. The stated policy objective of the President’s July 2017 Executive Order – that the United States “must maintain a manufactur-ing and defence industrial base and supply chains” capable of providmanufactur-ing

“goods critical to national security” – might seem unobjectionable (White House 2017v). However, broad definitions of materials and capabilities deemed necessary for national security purposes, combined with the

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administration’s emphasis on returning manufacturing jobs to the United States, could set the stage for further constraints on the possibility for non-US entities to compete for Pentagon contracts.