Beware The Phony Defense-Budget Prognosticators

As printed by Defense Week, Feb. 2, 2003.

Today, the Bush administration rolls out its fiscal 2005 defense budget. Many of the things journalists will write about it will be confusing, if not misleading, and many of the prognostications from Capitol Hill, the Pentagon and the presidential candidates will be quite phony.

The press will start out with a literal confusion of numbers. A comparison across different newspaper articles will reveal that they cannot agree on the levels for the new budget, or even the old one. For fiscal year 2004, some will say it was set at $380 billion; others that it was $400 billion, and still others $462 billion. They will all be correct: The Defense Department spent $380 billion for peacetime operations; adding Department of Energy and other non-Pentagon defense spending brought it to $400 billion; and with Iraq and Afghanistan operations—that is, to actually use our forces—it cost a grand total of $462 billion. However, almost none of the articles will explain these differences.

The press will sow more chaos with what articles will say is “real” (i.e. inflation neutral) growth in the defense budget from 2004 to 2005. Few of those calculations across papers will agree. Last year, The Washington Post had it at 4.4 percent, The Wall Street Journal had it at 4.2 percent, Bloomberg news service had it at 3.8 percent, and a well-distributed trade journal, Defense News, had it at 6.5 percent. This year, The Washington Post has already had it at both 5.7% and 7.9%. Don’t bother paying much attention.

First, we may not even know the size of the old 2004 defense budget, which could see another supplemental; and we certainly don’t know the true size of the new 2005 budget. Wary of revealing the cost of the fighting, occupation and reconstruction in Iraq and Afghanistan (a number sure to be in the tens of billions), the administration will delay and obfuscate the ultimate costs until after the elections. Nor do we know what actual inflation rates will be for 2005, or for that matter 2004. So we can’t calculate an inflation adjustment, either.

Moreover, even accurately calculated “real growth” in defense spending is a bogus concept. If we’re not replacing ships and aircraft at the rate we are retiring them, which is DoD’s plan, will a defense budget that increases by four, five or six percent in “real” dollars but which shrinks the size of the force mean “real growth” or “real shrinkage?”

“Real growth” gets even more misleading on an issue like military readiness for combat. Some will recall George W. Bush trashing Bill Clinton at the 2000 Republican Convention for having two Army divisions that were “not ready for duty, sir,” because they had not recovered from their deployments to the Balkans. Back then, the prognosticators decided Bush was wrong because the Army conveniently rated those two divisions as “ready.” But no one visited even one of the two units, as I did in September 2000, to find enormous readiness problems that Clinton’s Pentagon overlooked. Today, Bush has several Army divisions and Marine units that will surely meet his own criteria for “not ready for duty, sir.” One wonders if the Bush Pentagon can deal with declining readiness in a “real growth” budget any better than Clinton did.

Meanwhile, gaggles of big spender defense budget swamis and some candidates for the presidency eager to sell current defense spending as modest will claim the $420 billion for peacetime DoD spending in 2005 comes to just 3.5 percent of the Gross Domestic Product. That, they will point out, is below the 6, 8, or 10 percent we spent during the Cold War, and even below the puny 5.6 percent we spent in 1941, the year of Pearl Harbor.

These arguments are specious in the extreme. They assume there is a meaningful relationship between the size of today’s larger economy and the defense budget; that defense is entitled to some particular “share” of the nation’s growing wealth no matter what the nature and size of the threat. Moreover, in years when the economy is growing and the defense budget is also rising, but at a lower rate, the GDP measure shows “decline.” And, if the economy is shrinking, and if defense spending were to shrink, but less, this measure would show “growth.” If Bush is lucky, the economy will grow faster in 2004 than the defense budget; this will bring the “good news” that the percent of GDP for defense is falling.

These are just some of the tired and empty arguments we will hear this week as newspapers, experts and politicians chew over the defense budget. It has been this way for years. Both sides of the political spectrum have been using measures that sound like they mean something to create a meaningless or false picture. Sadly, too many press articles will only partially explain, or not at all.

Check the articles in this journal, and see how well they do.