Defense Officials Reject Rosy Cost Estimates

In a House Armed Services Committee hearing on nuclear deterrence last Thursday, Chairman Mac Thornberry (R-TX) brought up budget estimates in a forthcoming report from Todd Harrison and Evan Braden Montgomery of the Center for Strategic and Budgetary Assessments (CSBA). Chairman Thornberry, who has been making the case for increased nuclear weapons spending, on and off Capitol Hill, may have been encouraged by the new report. In the summary that’s been released, Harrison and Montgomery write that the cost of nuclear spending will stay at or below 5 percent of the Pentagon’s budget over the next few decades, making new spending “affordable.” Chairman Thornberry asked his witnesses, Deputy Secretary of Defense Robert Work and Vice Chairman of the Joint Chiefs of Staff Admiral James A. Winnefeld, Jr., if this percentage was correct—and they both said it was too low.

According to both Work and Winnefeld, the main inaccuracy in CSBA’s analysis was undercounting the cost of the new Long Range Strike Bomber (LRSB). “Right now, we're spending about 3 percent,” annually on nuclear weapons, Work testified. According to CSBA, that is due to jump to 5 percent, but their report only adds the “nuclear portion” of the LRSB to the cost of the nuclear arsenal. As Work told Chairman Thornberry, when the full cost of the bomber is counted, current plans require “about doubling the level of effort that we’re doing now…about 7 percent.” That’s a significant chunk of change—approximately $18 billion a year—and a far cry from the “affordable” arsenal described by Harrison and Montgomery.

More information about the LRSB helps explain the problem. The new bomber will succeed the B-2, and will replace many B-52s and B-1s in the bomber leg of the nuclear triad (which also includes Intercontinental Ballistic Missiles and submarines). These planes can be used for nuclear or conventional missions, but CSBA’s review only counts “partial costs for dual-use systems based on how costs would change if the nuclear mission is reduced or eliminated.” That is a distinction irrelevant to the military, which can’t fly a “partial” aircraft, and probably to taxpayers, who will foot the bill for all costs and uses of the bomber. Even giving CSBA the benefit of the doubt, the review still should show how it’s calculating partial-cost.

CSBA’s report also doesn’t show how it’s calculating cost inflation over time, which, as anyone familiar with the F-35 knows, is essential to evaluating affordability. The Air Force estimates the LRSB’s cost at $55 billion (in 2010 dollars) for 80 to 100 planes, but few, including Harrison, anticipate it can be built at that cost. Even if the program manages to stay at the low end of historical cost growth averages, it can still be expected to cost around $640 million per aircraft, plus its $20 billion in research and development costs. As Mackenzie Eaglen of the American Enterprise Institute writes, at that point the “price tag begins to approach that of the Navy’s Ohio Replacement Program”—the nuclear missile submarine program currently threatening to break the Navy’s shipbuilding budget. Harrison has previously estimated that the LRSB’s price may be closer to $810 million per plane, which could crowd out the Air Force's other two top programs, the F-35A and the KC-46A tanker. That’s indicative of the tradeoffs a nuclear budget increase would require. The variation in estimates also highlights the problem of employing CSBA’s (or anyone’s) budgetary estimates without knowing how they were calculated.

Whatever the cost of new bombers, Air Force leadership is concerned enough about finding funding for the bomber that it might ask for a special procurement account. In January, Lt. Gen. Stephen Wilson, Commander of Global Strike Command, told the Defense Writers Group the Air Force was “looking to see how we can do something like” the National Sea-Based Deterrence Fund, the special off-budget account the Navy asked Congress to provide so the service can afford the new nuclear missile subs. Air Force Secretary Deborah James has also parroted the Navy’s language to justify a separate account by calling new bombers a “national asset” in a briefing last July. As the Project On Government Oversight has previously written, such funding gimmicks create a raft of oversight and spending issues. No matter if, or how, CSBA segregates partial costs, the Air Force is suggesting it can’t pay for the bomber within its budget. That is the definition of unaffordable.

In contrast to CSBA’s claims of nuclear arsenal affordability, there is a lengthy record of officials from the Department of Defense warning of the high costs of current plans. Earlier this year, Frank Kendall, Under Secretary of Defense for Acquisition, Technology and Logistics, stated that, “We have a problem with recapitalizing the strategic deterrent…we do have a huge affordability problem with that basket of systems.” In 2013, former Principal Deputy Assistant Secretary of Defense for Nuclear, Chemical, and Biological Defense Programs John Harvey called the plans, “a major challenge.” Finally, the Congressional Budget Office—Congress’s official estimators—put the cost at 5 to 6 percent of the military’s budget between 2015 and 2024. Many hope the Pentagon’s nuclear spending plans are affordable, but preliminary assessments from the Department of Defense and independent cost estimators raise the specter of significant costs and tradeoffs for the missions the U.S. conducts on a regular basis.