The Bunker: Pentagon Tries to Dodge Inflation

The Bunker, delivered to our subscribers Wednesdays at 7 a.m., is a newsletter from the desk of National Security Analyst Mark Thompson. Sign up here to receive it first thing, or check back Wednesday afternoon for the online version.

In The Bunker this week: the Pentagon stumbles again when it comes to financial storm clouds it would prefer to ignore; after-the-war costs continue to grow; taking a moment on this Memorial Day; and more.


Defense Department avoids the tough math…again

The Pentagon seems to be treating inflation the same way it dealt with the Taliban — by ignoring it, and hoping it goes away. The outcome’s going to be the same, too — a disaster for the U.S. military. This doesn’t mean the Pentagon needs more money. It does mean that it must spend what it has more wisely. But the first step is to acknowledge that a problem exists.

Pentagon-friendly lawmakers are eager to give the Defense Department more money, but it won’t play along. “The Department has not identified any required additional authorities…to address the current inflation spike,” the Pentagon told the Republican leaders(PDF) on the armed services committees earlier this month after they asked how inflation is affecting the Defense Department.

Over at the hawkish American Enterprise Institute, John Ferrari and Mackenzie Eaglen say the Pentagon’s 12-page response makes five basic points about inflation’s impact on the 2023 defense budget:

  • No inflationary adjustments were made to the budget since November.
  • The Pentagon does not track inflation’s effect in budget execution.
  • Leaders are not updating their forecasts even though six months of new data has emerged.
  • No financial help is needed from Congress at this time.
  • None in the department are seeking a higher pay raise for military members because of inflation.

The Pentagon’s response is surprising given what Army General Mark Milley, the chairman of the Joint Chiefs of Staff, told Congress last month. “This budget assumes an inflation rate of 2.2%, which is obviously incorrect because it’s almost 8%,” he said. “Because the budget was produced quite a while ago, those calculations were made prior to the current inflation rate.” Crudely speaking (The Bunker is no economist), that works out to perhaps a $30 billion bite out of the military’s proposed 2023 budget of $813 billion.

Meanwhile, Democratic lawmakers are pleading with Defense Secretary Lloyd Austin to reduce the financial hit the troops are experiencing…due to inflation. “Today, many of our military families are struggling to meet their basic needs due to rising prices,” eight House members wrote in a May 11 letter. They encouraged him to cut prices on goods sold at military commissaries to put more money into “our military families’ pockets.”

Let’s face it: even though presidents can’t do much about inflation, they get blamed for it. And the Pentagon doesn’t want to add to President Biden’s headaches by embracing the GOP’s invitation to seek more money. Congress will throw more money at the Pentagon, no matter what the Pentagon says (and no matter what the inflation rate is). But instead of a methodical and transparent process to deal with the evils of inflation, the Pentagon has chosen to duck the challenge.

We’ve seen this war movie before. More than a decade ago, Congress ordered $1.2 trillion in cuts over 10 years, including half from the Pentagon, if lawmakers and the White House couldn’t reach a budget accord. Pentagon officials whispered that Congress couldn’t be so stupid as to let that happen. So they didn’t prepare for the budget shortfall. “Normal rules would require the Pentagon to begin planning for the cuts, so it could inform its various constituencies how each is going to be affected,” The Bunker reported in July 2012, six months before the ax fell. “But that would make too much sense.”

Those cuts — known as sequestration — led to chaos in the military made far worse by the military’s failure to plan for them. In the same way, the Pentagon push to play down inflation is going to lead to haphazard slashing and wasted spending that could have been averted with a little foresight.

More critically, scrambling to deal with inflation preoccupies the Pentagon and keeps it busy shifting money around and scuttling programs, instead of doing the hard thinking required to build a more efficient U.S. military for the 21st century. Ultimately, the Defense Department will seek to recover from inflation’s ravages by seeking more money down the road.

More money may be the easy answer, but it won’t be the right one.


The hidden costs of war

Key senators reached a deal May 18 expanding health care and benefits to U.S. combat veterans who might have been exposed to poisons during their military service. The key changes cover an estimated 3.5 million veterans who may have breathed in toxic smoke from burn pits — basically flaming garbage dumps spewing thick black smoke — during the wars in Afghanistan and Iraq. President Biden has said once the legislation reaches his desk, likely next month, he will “sign it immediately.”

Until now, the Department of Veterans Affairs has denied some 70% of veterans’ burn-pit claims, citing a lack of evidence that there was a link to ailments like cancer and lung disease. Records of what was burned, and who was exposed, are scant to non-existent. But over a 13-year fight, veterans and their advocates, including Biden (who thinks his son Beau’s fatal brain cancer may have been linked to burn-pit fumes during his service in Iraq), have pushed for broader coverage that would automatically cover certain ills for those who served in certain countries.

“For far too long, our nation’s veterans have been living with chronic illnesses as a result of exposures during their time in uniform,” the leaders of the Senate Veterans Committee said. “Today, we’re taking necessary steps to right this wrong with our proposal that’ll provide veterans and their families with the health care and benefits they have earned and deserve.”

While the Senate legislation didn’t estimate its cost, the Congressional Budget Office pegged that of the companion House bill at $208 billion(PDF) over the next 10 years. And while The Bunker is a strong veterans’ booster, it’s long past time we officially count such costs as an integral cost of waging war, and not some afterthought routinely delinked from the conflict.

The government does this by running wars out of the Pentagon, and veterans care out of the VA. That gives taxpayers a cut-rate cost of the nation’s wars. The Costs of War project at Brown University estimates that while the nation has spent $465 billion tending to post-9/11 vets through 2022, the cost of their care between 2023 and 2050 will be more than $2.2 trillion. Veterans’ care, in other words, will account for an estimated 33% — one-third — of the more than $8 trillion the U.S. will spend on its post-9/11 wars.

“Out of sight, out of mind,” the old saw goes. That’s one reason why the VA’s budget has soared from $37.5 billion in 1995 to $258.6 billion in 2021, a six-fold increase (Pentagon spending grew only about half as much). And that trend is going to continue. Beyond the burn-pit benefits, the just-approved Senate bill also makes veterans who served in Thailand, Cambodia, Laos, Guam, American Samoa, and Johnston Atoll eligible for benefits associated with exposure to Agent Orange during their service in the Vietnam war a half-century ago.


Pondering that last full measure

This year we note this solemn holiday, renamed Memorial Day following World War II, on Monday, May 30. It was held every May 30 from 1868 to 1970. Then Congress shifted it to the last Monday in May to give car dealers, and sundry other merchants, a three-day weekend each year to launch their summer sales blitzes. In 2022, we get the best of both worlds.

But commerce aside, it’s worth remembering that Memorial Day is for those Americans who died fighting for their country. It’s not to be confused with Veterans Day, which honors all veterans. (Congress also changed Veterans Day, to the last Monday in October in 1971, but returned it to November 11 several years later, after veterans’ groups objected to the change. The living, it seems, speak more loudly than the dead. Plus, they can vote.)

Calendar confusion aside, Memorial Day has always struck The Bunker as the most poignant national holiday, eclipsing both Veterans Day and July 4th (Congress, in its wisdom, elected not to try to shift July 4th to the first Monday in July, for reasons obvious even to members of Congress).

Nearly 60 years ago, The Bunkerexperienced his first real Memorial Day memory. He detailed what the day means to him back in 2018 for the Project On Government Oversight. This year will be the first time in a quarter-century that Colin Powell, who died last autumn, won’t be speaking at PBS’s annual Memorial Day Eve concert on the National Mall.

While we may bicker over defense policy, we shouldn’t question those who wear the uniform in our name. And those who have given their all, in causes both just and ill-advised, warrant our gratitude. “Do not hasten through Memorial Day,” Powell told us. “Above all, take the time to honor our fellow Americans who have given their last full measure of devotion to our country and for the freedoms we cherish.”

So take a moment, or two, Monday to do just that.


Here’s what has caught The Bunker's eye recently

Pentagon toolbox

The Congressional Budget Office posted a revamped interactive tool May 17 to help interested civilians tweak U.S. military forces in that never-ending quest to get more bang for the buck. Three days later, the Congressional Research Service conveniently issued a primer(PDF) on how the U.S. military builds its budget, in case you’re seeking guidance on how not to do it.

Hocus-pocus focus

Raytheon has unveiled Department 22, a secretive outfit designed to checkmate China, ExecutiveGov reported May 19. Two years ago, the company became the Pentagon’s second-biggest contractor after it merged with United Technologies. Moving into the big leagues pretty much requires such a super-secret division, although The Bunker still thinks #1 Lockheed’s Skunk Works has the cooler name.

Mushrooming fight

Congressional Republicans are up in arms over President Biden’s proposal to retire the ancient B83 megaton nuclear bomb, 80 times the size of the weapon that destroyed Hiroshima, Defense News reported May 19.

Roe v. Wade reversal?

If the Supreme Court overturns a federal right to abortion, it could lead to “disastrous consequences” for the U.S. military, Navy veteran Allison Gill wrote May 18 in the Washington Post.

Union soldiers…

The Department of Justice has given the green light to National Guard members on active duty for their states to join labor unions, the Associated Press reported May 18.

And thanks for joining The Bunker this week. Better yet, spread the word by forwarding this on to a friend so they can sign up here to get it Wednesday mornings.