Secretary Hagel's Cuts Don’t Translate into Less Spending

Secretary of Defense Chuck Hagel

Secretary of Defense Chuck Hagel/ Creative Commons image

Yesterday Secretary of Defense Chuck Hagel gave a major speech at the Pentagon, and a bold headline ran in The New York Times announcing that the Pentagon would shrink the Army to pre-World War II levels. While the speech did announce cutbacks in a number of military programs, the Pentagon isn’t planning any major reductions in spending any time soon.

What Secretary Hagel announced:


The Pentagon’s new budget, which will be rolled out in full next week, proposes a reduction in the number of active-duty Army from 520,000 to between 440,000 and 450,000. The Army National Guard would also decrease in size, shedding around 20,000 members, while the Army Reserve would lose around 10,000 and the Marine Corps would shrink by 8,000. The proposal would, however, add 4,000 members to the ranks of special operations.

The new budget will freeze pay for flag officers and generals – a recognition that the military has become top-heavy, with swollen ranks of highly-paid generals and other top officials.

Benefits for active duty personnel and their families also would be reduced, as Secretary Hagel acknowledged that payroll costs at the Pentagon have increased 40 percent more than in the private sector. His new proposal includes slowing the growth in the housing allowance for military personnel and reducing subsidies for household goods at military commissaries. And in an effort to contain healthcare costs for military personnel, service members and their families would see higher deductibles and co-pays in their TRICARE health insurance.

Weapons and Bases

The new proposal contains some changes to weapons programs, including eliminating the Air Force A-10 attack jet and the U-2 spy plane fleet, and reducing the number of Navy littoral combat ships, from 52 to 32. The Pentagon did not propose any reductions to the F-35 Joint Strike Fighter, which is the costliest system in military history and still has never flown in any military operation.

The budget also asks Congress to approve a new round of military base realignment and closure (BRAC) in 2017.

Actual Spending Projections:

Despite all of these changes, the new Pentagon budget does not project a commensurate decline in spending. Back in December Rep. Paul Ryan and Sen. Patty  Murray agreed on a budget blueprint that would allow military spending to grow slightly in fiscal 2015 relative to 2014 and 2013. And Secretary Hagel’s speech comes at a time when the president is proposing an additional $26 billion on top of that December agreement. That extra cash would support an “Opportunity, Growth and Security Initiative” that would fund “readiness and modernization” efforts. This extra funding is essentially a Pentagon wish list that would continue to protect the military from making any significant spending reductions in the near future.

Meanwhile new five-year spending projections at the Pentagon show that it plans to exceed the spending caps of sequestration by $115 billion over the next five years. What’s more, the Pentagon receives many tens of billions in additional funding to operate wars overseas, and that money isn’t subject to caps. In fiscal 2014 that war budget, known officially as “Overseas Contingency Operations,” totaled $85 billion – and was widely criticized for containing funding that wasn’t actually meant for war operations but instead would function as a slush fund for the Pentagon.