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Gates's Bottom Line: Weapons Contractors Will Be Just Fine

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Obama administration Defense Secretary Robert Gates has been receiving high praise of late for his efforts to cut costs at the Pentagon. The most obvious case in point is the recent cover story in Newsweek that portrays Gates as the second coming of Dwight Eisenhower.

There's no question that Gates has made an effort. In his first year in office, he ended the F-22 fighter program, trimmed some of the more dysfunctional missile defense programs, and cancelled the vastly overpriced Presidential helicopter. This year he is trotting out a series of management reforms that include reducing "gold-plating" -- the practice of adding more and more capabilities to a weapons system without regard to cost -- to increasing competitive bidding for service contracts. His procurement reform package includes 23 initiatives in all, all designed to get more "bang for the buck" out of Pentagon spending.

There's just one major problem with Gates's approach (along with many minor ones, but I won't go into them here). He wants to keep increasing the military budget, which is already at post-World War II highs. As noted in the recent report of the Sustainable Defense Task Force -- a group of experts convened with the encouragement of Rep. Barney Frank (which includes yours truly as a member) -- the only real way to introduce fiscal discipline at the Pentagon is to cut spending. As long as contractors like Boeing and Lockheed Martin know that what Gates takes away with one hand will be given back with the other, they have no real incentive to cut costs. And if Gates's reforms do manage to reduce costs, the savings should go to the taxpayers, not the weapons makers.

Take Lockheed Martin for example. When Gates ended their F-22 combat aircraft last year -- a budget cut of about $4 billion -- he increased the company's F-35 Joint Strike Fighter program by a comparable amount (about $4 billion). He even bragged that the F-35 increase would create more jobs than the number lost as a result of the F-22 cancellation, noting that "I think we've done a pretty good job of taking care of the industrial base."

Even Gates's examples of programs he hopes to get under control underscore the limits of his approach. He takes pride in the fact that his department will scale back the speed and size of a new ballistic-missile firing submarine so that its projected costs are more like $5 billion than $7 billion per ship. Leaving aside the question of whether these savings can be realized, why build a new missile-firing submarine at all? The administration has pledged to cut nuclear weapons substantially, and using these large submarines to fire non-nuclear missiles is an immensely expensive way to accomplish that task.

As Laura Peterson of Taxpayers for Common Sense writes in the organization's blog, "If Gates would try applying the affordability test to military personnel, operations and our national security strategy, we might find some real savings." The strategy is key -- as long as it is U.S. policy to maintain over 700 overseas military bases and a Navy, Army and Air Force designed to go anywhere and fight any battle, military spending will continue to go up, and there will be plenty of money for the weapons industry. In a tight budgetary environment, this spending will come at the expense of other priorities -- from deficit reduction to infrastructure investment to aid to the unemployed. Regardless of how one thinks the savings should be spent -- or not spent, so as to reduce the deficit -- the Pentagon needs to go on a serious diet. If Robert Gates takes on that task, he can truly be seen as a reformer.


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