Another Procurement Holiday?

A lot of people have been waxing nostalgic for the 1990s. You know, that supposed era of peace, prosperity and fat 401k accounts.

But the decade of the 90s had a dark side--and we're not referring to Clinton's cigar and that infamous stained dress. In an effort to keep his poll numbers high (and secure re-election), President Clinton put off a number of key decisions, setting the stage for debacles that followed.

As we've recently discovered, he opened the door for the sub-prime lending mess, by putting the Community Reinvestment Act on steroids, and threatened banks that refused to lend to risky customers. Mr. Clinton also put his cronies in charge of Fannie Mae and Freddie Mac, the quasi-public institutions that bought up the loans and packaged them as securities. Folks like Franklin Raines and Jamie Gorelick got rich while running those organizations into the ground, and triggering the recent economic collapse.

In terms of national security, Bill Clinton is remembered, most infamously, for ignoring the rising threat of Islamic fundamentalism. Despite a series of attacks at home and abroad, he refused to response decisively, encouraging terrorists to up the ante and execute the 9/11 attacks.

But there's another element of the Clinton legacy (and the 1990s) that often goes ignored. We refer to the so-called "procurement holiday" that gripped the Pentagon during that decade. Critical decisions on major weapons programs were postponed or shelved, forcing the Pentagon to extend the service lives of existing systems. Investor's Business Daily aptly described the problem--and its consequences--in an editorial published earlier this year:

In the first six years of the Clinton administration, Bush 41's budget projections for weapons procurement were slashed by $160 billion. For fiscal 2000, the Congressional Budget Office said $90 billion a year was needed to hold procurement steady. The Clinton procurement budget was a mere $55 billion. During the Reagan buildup (fiscal 1981-87), we spent an average of $131 billion on procurement.

[snip]

Because we didn't spend enough on defense and procurement during the Clinton years, it's going to be expensive to catch up. Because we're still spending too little on defense, the Air Force's original plans for 750 F-22 Raptors to replace the aging F-15 has been reduced to just 183.

MacKenzie Eaglen, senior policy analyst for national security at the Heritage Foundation, told Cybercast News Service:

"The U.S. Air Force has been engaged in continuous combat for the last 17 years with fewer airplanes today than in 1990 — only increasing their age more quickly. Moreover, current Air Force plans call for retiring two F-15s for every new F-22 brought into service."

To be fair, the administration of George W. Bush has, in some respects, ignored the problem as well. It was his Secretary of Defense, Robert Gates, who elected to cap F-22 production at 183. He has also incurred the wrath of lawmakers, for refusing to spend $140 million allocated for buying parts and supplies needed for the next batch of Raptors.

But that little squabble seems trivial to what lies ahead. There are signs that DoD is bracing for major budget cuts, which may lead to a new "procurement holiday" under an Obama Administration.

Given the recent meltdown in the financial sector--and projected decreases in government revenue--some budgetary modifications were inevitable. But according to The New York Times, Pentagon leaders are quietly preparing for a "worst case" scenario:

Across the military services, deep apprehension has led to closed-door meetings and detailed calculations in anticipation of potential cuts. Civilian and military budget planners concede that they are already analyzing worst-case contingency spending plans that would freeze or slash their overall budgets.

The obvious targets for savings would be expensive new arms programs, which have racked up cost overruns of at least $300 billion for the top 75 weapons systems, according to the Government Accountability Office. Congressional budget experts say likely targets for reductions are the Army’s plans for fielding advanced combat systems, the Air Force’s Joint Strike Fighter, the Navy’s new destroyer and the ground-based missile defense system.

For his part, the new commander-in-chief has promised to keep defense spending at current levels, at least initially. But, Mr. Obama has also promised to cut spending on military programs that he considers "unproven," including missile defense. He has also pledged to accelerate U.S. troop withdrawals from Iraq, a move that he claims would save $10 billion a month.

But analysts warn that some of those savings are illusory, at least in the early stages. Moving equipment back to the states is an expensive proposition, and the planned expansion of ground forces will consume much of the money now devoted to the Iraq War.

Meanwhile, Congressional Democrats have made no secret of their desire to cut defense spending. Massachusetts Representative Barney Frank recently proposed a 25% reduction in the military budget; while that goal is far-fetched, there is strong Democratic support for substantive reductions in defense, in favor of social spending.

The way ahead seems painfully obvious. Between Mr. Obama's pledge to cut selected programs--and wider Democratic plans to reduce military spending--the Pentagon will wind up with less money in the years ahead. And unfortunately, major acquisition programs represent the most convenient (and likely) targets, allowing Obama and his allies to trim billions from military spending.

That result in more aging weapons remaining in service for even longer periods of time. For example, if Obama decides to reduce the F-35 program, that means that many F-16s (built in the 1980s) will solider on almost indefinitely. So far, we haven't seen any Falcons fall apart in flight, but the stress of training and current deployments will make the aircraft more difficult to maintain over an extended service life.

Given the financial issues facing this country--and the national security preferences of the party now in charge--it's not hard to envision another procurement holiday under an Obama Administration. That means that Mr. Obama's successor will face even greater defense challenges in 2012 or 2016.
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ADDENDUM: Democratic analysts have long argued that "exotic" programs like missile defense can be easily cut, along with such big-ticket items as the F-22 and F-35. But potential cuts will be felt throughout DoD, affecting such programs as the C-17 transport, and upgrades of older airframes, like the C-5. That, in turn, would mean substantial reductions in critical military capabilities, at a time we can ill afford them.