- May 10, 2010
WASHINGTON — Defense Secretary Robert M. Gates said Thursday that the nation's "extreme fiscal duress" now required him to call for cuts in the size of the Army and Marine Corps, reversing the significant growth in military spending that followed the terrorist attacks of Sept. 11, 2001.
The White House has told the Pentagon to squeeze that growth over the next five years, Mr. Gates said, reducing by $78 billion the amount available for the Pentagon, not counting the costs of its combat operations.
The decision to go after the Pentagon budget, even while troops remain locked in combat overseas, is the clearest indication yet that President Obama will be cutting spending broadly across the government as he seeks to reduce the deficit — and stave off attacks from Republicans in Congress who want to shrink the government even more.
Republicans have for the most part resisted including military spending as they search for quick reductions in federal spending.
To make ends meet, Mr. Gates also announced that he would seek to recoup billions of dollars by increasing fees paid by retired veterans under 65 for Defense Department health insurance, even though Congress has rejected such proposals in the past. And he outlined extensive cuts in new weapons.
Cutting up to 47,000 troops from the Army and Marine Corps forces — roughly 6 percent — would be made easier by the withdrawal under way from Iraq, and the reductions would not begin until 2015, just as Afghan forces are to take over the security mission there. But Mr. Gates said the cuts in Pentagon spending were hardly a peace dividend, and were forced by a global economic recession and domestic pressures to find ways to throttle back federal spending.
"This department simply cannot risk continuing down the same path where our investment priorities, bureaucratic habits and lax attitudes toward costs are increasingly divorced from the real threats of today, the growing perils of tomorrow and the nation's grim financial outlook," Mr. Gates said at an afternoon news conference.
The president's budget for the 2012 fiscal year, which is due by mid-February, would freeze discretionary spending, but that would not apply to military, veterans and Homeland Security programs. Last fall, a majority of the members of Mr. Obama's bipartisan National Commission on Fiscal Responsibility and Reform, including three Republican senators, said military spending also should be reduced as part of a long-term debt-reduction plan.
The Pentagon's proposed operating budget for 2012 is expected to be about $553 billion, which would still reflect real growth, even though it is $13 billion less than expected. The Pentagon budget will then begin a decline in its rate of growth for two years, and stay flat — growing only to match inflation — for the 2015 and 2016 fiscal years. (The Pentagon operating budget is separate from a fund that finances the Afghanistan and Iraq wars.)
"This plan represents, in my view, the minimum level of defense spending that is necessary, given the complex and unpredictable array of security challenges the United States faces around the globe: global terrorist networks, rising military powers, nuclear-armed rogue states and much, much more," Mr. Gates said.
To be sure, the actual size and shape of future military budgets will continue to be reset by annual spending proposals from the president, and those in turn will be based on shifting economic factors — decline or growth — and threats around the world, as well as by Congressional action.
But for now, the Army is expected in 2015 to begin cutting its active-duty troop levels by 27,000, and the Marine Corps by up to 20,000. Together, those force reductions would save $6 billion in 2015 and 2016.
Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, said that all four service chiefs supported the proposals, and that the military would still be able to manage global risks. "We can't hold ourselves exempt from the belt-tightening," he said. "Neither can we allow ourselves to contribute to the very debt that puts our long-term security at risk."
The Army's ranks number 569,600, and the Marine Corps has just over 202,000 members; both would remain larger than when Mr. Gates became defense secretary four years ago.
Mr. Gates already had instructed the armed services and the Pentagon bureaucracy to find ways to operate more efficiently, with the savings plowed back into the budget to make up for anticipated shortfalls; otherwise the cuts in troops and weapons would have been even steeper.
The armed services have identified about $100 billion in savings over five years.
Separately, the Defense Department bureaucracy had identified about $54 billion more, from things like reducing contractor hiring, freezing personnel rolls, reducing the number of generals and admirals and closing or consolidating headquarters.
Many of those changes can be carried out unilaterally by the Pentagon or the armed services.
But some — especially increases in fees for the military's health-care system, called Tricare — require Congressional approval, and have been rejected before.
Proposals to increase Tricare fees will pit Mr. Gates against those in Congress — and veterans' groups — who say retired military personnel already have paid up front with service in uniform. Ten years ago, health care cost the Pentagon $19 billion; today, it tops $50 billion; five years from now it is projected to cost $65 billion.
But Tricare fees have not increased since 1995.
Mr. Gates was expected to press for increasing the cost of health insurance premiums and spot fees only for working-age retirees and their families, not for those on active duty or those 65 and older, to save $7 billion over five years.
Mr. Gates also announced cuts in several weapons systems, led by the cancellation of the Marines' $14.4 billion Expeditionary Fighting Vehicle, a combined landing craft and tank for amphibious assaults.
Mr. Gates said the Pentagon would add $4.6 billion to the cost of developing the F-35 Joint Strike Fighter, made by Lockheed Martin, and would cover much of that expense by delaying purchases of 124 of the planes.
He said that one of the three versions of the aircraft might need to be redesigned, and that he was placing that model, made for the Marines, "on the equivalent of a two-year probation."
Federal officials said Mr. Gates had been seeking to increase the basic Pentagon budget, excluding war costs, to $566 billion for the 2012 fiscal year, but had to push the White House to approve $553 billion.
Gordon Adams, a Clinton administration budget official who served on Mr. Obama's transition team, said he understood that White House budget officials initially wanted to shave the Pentagon's original, larger request by at least $20 billion for 2012.
Mr. Adams said Mr. Gates met with Mr. Obama three times before Christmas to get at least $7 billion restored. Mr. Gates was also able to persuade the White House to reduce its demands for cuts over the next five years to $78 billion from $150 billion. Even so, Mr. Adams said, "I think the floor under defense spending has now gone soft."