Senior US Defense Department officials are expected to present three budget-cutting scenarios to the defense secretary when they wrap up a wide-ranging review of military strategy at the end of this month, according to sources.
These officials, part of the Strategic Choices and Management Review (SCMR), are preparing for a range of budget cuts — $100 billion, $300 billion and $500 billion — sources said.
Meanwhile, four Washington think tanks are preparing their own reviews of what they would cut and will present their findings May 29 on Capitol Hill.
Throughout the two-month review, DoD officials have agreed that closing bases and changing military compensation are critical components to achieving these targets, sources said. But these officials are pessimistic that Congress will sign off on such institutional changes, meaning force structure, acquisition programs and mission areas would bear the brunt of spending cuts.
The SCMR will not make any specific decisions, but it will frame the choices DoD must make depending on the level of funding Congress appropriates. It also will present options for how to cut. Sources caution against expecting a fully revised strategy when the review is presented May 31.
“The value of strategy in this budget environment gives you the basis to make tradeoffs or priorities,” said David Berteau of the Center for Strategic and International Studies (CSIS). “You can’t make tradeoffs and adjudicate priorities without working the numbers, so they’re applying the right prism because choices only become real with resources attached to them. The review is designed to set the stage for the next phase of the discussion, which is the [Quadrennial Defense Review] and in parallel the resolution of the ’14 budget and the development of the ’15 budget.”
The first SCMR — known as the “skimmer” or “scammer” in defense circles — assumes the White House’s fiscal 2014 budget proposal is adopted. That plan calls for $100 billion in cuts, but those cuts are back-loaded in the final five years of the decade-long plan. Pentagon officials favor this option because it gives them time to plan and gradually implement the cuts.
Sources say the Army would bear the brunt of those cuts, mostly to force structure. Still, Pentagon officials believe a greater spending cut will be levied on DoD.
If the second option — the $300 billion cut — were put in place, the cuts would be levied against all the services.
The third option assumes full sequestration, or $500 billion over the decade. Sources with insight into the SCMR say this option would wreak the most havoc on the military and force the cancellation or scaling back of several major acquisition efforts.
These sources also said the magnitude of the cut could prevent the military from being able to fight a major war against a near peer competitor.
The Pentagon’s January 2012 military strategy calls for focusing on the Asia-Pacific and Middle East. For more than a year, defense leaders have said that sequestration, which amounts to about a $50 billion cut each year starting this year, would destroy their strategy.
Still, some Pentagon officials said that strategy has some wiggle room to absorb spending reductions.
Deputy Defense Secretary Ashton Carter is running the SCMR project along with Army Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff. Comptroller Robert Hale and Christine Fox, the director of DoD’s Cost Assessment and Program Evaluation office, are also playing key roles in the review. Fox plans to step down in June following the completion of the SCMR.
At the same time, each of the services’ Quadrennial Defense Review offices is contributing to the review.
The goal of the project is to provide President Barack Obama and Defense Secretary Chuck Hagel “decision points,” which will inform DoD’s fiscal 2015 budget submission, and execution of the 2014 budget, Carter said. It will also guide the 2014 Quadrennial Defense Review.
“The review will define the major strategic choices and institutional challenges affecting the defense posture in the decade ahead, but it must be made to preserve and adapt our defense strategy and the department’s management under a wide range of future circumstances that could result from a comprehensive deficit reduction deal or the persistence of the cuts that began with this year’s sequester,” Carter said at the National Press Club on May 7.
“Everything will be on the table during this review: roles and missions, war planning, business practices, force structure, personnel and compensation, acquisition and modernization investments, and how we operate and how we measure and maintain readiness,” he said.
The review will produce “a clear delineation of the choices that we can make and might have to make” in areas such as force structure, investments, compensation, health care or even headquarters support,” Carter said.
Regardless of the budget situation, the Pentagon has already launched an effort to reduce headquarters staff sizes.
Hagel has targeted so-called overhead spending as a key area for cutting. Last week, a Government Accountability Office report found headquarters staffs at geographical combatant commands have increased by 50 percent to about 10,100 people. Mission and headquarters support costs at these commands is about $1.1 billion each year.
“If you’re really serious about the back office and you’re really serious about bringing down the force structure, you don’t need to terminate all the acquisition programs,” said Gordon Adams, an analyst with the Stimson Center who oversaw defense budgets during the Clinton administration.
Shadow Reviews Underway
As the SCMR wraps up, four Washington think tanks are conducting their own shadow reviews of areas to trim the Pentagon budget.
The Center for Strategic and Budgetary Assessments (CSBA), CSIS, American Enterprise Institute and Center for New American Security are scheduled to present their findings at a May 29 event on Capitol Hill.
Each think tank will come up with recommendations for how they would modify the military strategies and procurement profiles if sequestration budget cuts stick over the decade, said Todd Harrison, an analyst with CSBA, which organized the project.
“You get four independent solutions from the four think tanks,” he said.
While the four organizations have different political leanings, one goal will be to show common areas cut throughout the exercise.
The SCMR is supposed to wrap up by May 31 and remains on schedule, a defense official said.
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