08/31/2010 09:51 am ET Updated May 25, 2011

The Pentagon Owes the United States $1 Trillion

From 1999 to 2010 the Pentagon's managers squandered $1 Trillion. In the next ten years, it should be returned to the Treasury.

In 1998, the Pentagon budget was at a twenty three year low at $361 billion. For 2010, the DOD budget was $697 billion (all dollars in this piece are normalized to their 2010 value). According to the analysis of the Project on Defense Alternatives, between 1998 and 2010 Congress appropriated to the Pentagon $2.144 Trillion more than was anticipated by the 1999 "baseline." Of that amount, $1.113 Trillion was spent on the wars in Iraq and Afghanistan, and $1.031 Trillion was added to "base" (non-war) Pentagon spending. (See this study, "An Undisciplined Defense: Understanding the $2 Trillion Surge in US Defense Spending".)

What did we get for that extra $1 Trillion? Basically, a smaller Navy and Air Force and a tiny increase in the size of the Army. As an extra bonus, the hardware those forces use is now older than it was in the Clinton administration in 1998.

How can that be?

Each year the Defense Subcommittee of the House Appropriations Committee publishes the size of the major components of the Army, Navy, and Air Force in its committee report for the Department of Defense Appropriations bills. The tables are not particularly user-friendly, but - for the most part - they are an apples to apples count of Army brigades, Navy ships, and Air Force squadrons.

In 1998, the Navy had 333 "battleforce" ships. In 2010 the Navy lays claim to 287 "battleforce" ships (a decline of 46 ships, or 14 percent).

In 1998, the active duty Air Force, plus the Air National Guard and the Air Force Reserve, had 108 squadrons of fighter and attack aircraft and long range, heavy bombers. In 2010 it had 72 of the same, a decline of 36 squadrons or 33 percent.

The Army is an exception, but the amount of increase is rather pathetic. In 1998, the Army tallied 10 divisions plus three independent regiments, calculating to 43 brigade combat team equivalents. In 2010, the Army tallied 1 division, plus 42 Heavy, Infantry, and Stryker brigades, making a total of 46 combat brigade equivalents. That's an increase of three brigade combat team equivalents, or 7 percent.

The cost of that Army "expansion" was considerable. Army appropriations in 1998 were $90.5 billion; in 2010, the non-war Army appropriation request was $140.3 billion. A 55 percent increase in money produced a 7 percent increase in the force.

The substantially smaller, much more expensive defense inventory is not - on average - newer and more high tech. It is older (in addition to being smaller). As the Congressional Budget Office has periodically assessed, not only have most parts of our hardware inventory grown older, the officially approved plan is mostly for that negative trend to continue.

Donald Rumsfeld (2001-2006) is generally acknowledged to be the most incompetent secretary of defense since - well - Donald Rumsfeld (1975-1977). Since 2006, his successor has come to seek some terminations in DOD acquisitions - most prominently the F-22 - and to transfer $102 billion from overhead (bloat) to "force structure" (hardware). However, the last two DOD reports on major hardware (known as Selected Acquisition Reports) show the number of major defense programs to have increased from 89 to 91, and the Government Accountability Office has measured the cost growth as now larger than even.

Finally, that $102 billion efficiency drive being pursued by Secretary Gates is over five years. The current Pentagon budget plan is to spend $3.245 Trillion over that period. In other words, the much touted Gates plan would shift from overhead to hardware just 3 percent of the planned spending. History shows this additional money for hardware will worsen our problems, not fix them, given how the money is being spent.

If the soft spoken Secretary Gates is to avoid the derision generally slung at the blustering Secretary Rumsfeld, the former will need to do more - a lot more - to evade a legacy of failure. Gates' highly effective soft spoken technique of overpowering Congress when he wants to and his mutually reinforcing relationship with President Obama will be seen by history as wasted assets if the secretary does not mobilize them for a far more pervasive program of real reform.

The right place to start is to adjust the Pentagon's spending plan for the next ten years to return that squandered $1 Trillion to the Treasury. A member of President Obama's Deficit Commission, Senator Tom Coburn, R-OK, has proposed just such a plan. Coburn also recommends the essential precursor to reform: forcing the Pentagon's hapless managers to understand the system they sit astride by requiring a comprehensive audit of all programs and components. (Find the Coburn plan here.) Only this kind of start will prompt the follow on reforms to help the Pentagon survive, even prosper, in the coming age of scarce money.

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