06/08/2011 05:00 pm ET Updated Aug 08, 2011

Panetta Must Rein In Military Personnel Costs, Panel Says

BY Colin Clark
Editor AOL Defense

Washington -- The day before Leon Panetta goes before the Senate for his first defense secretary nomination hearing, a panel of respected defense experts said the CIA director must come to grips with the Pentagon’s soaring personnel costs and build a strategy to guide coming budget cuts as soon as possible.

The tenor of the panel was grim. "The question now is what are we willing to sacrifice," said David Chu, former undersecretary of defense for personnel and CEO of the federally-funded Institute for Defense Analyses.

The all-volunteer force that America now relies on "is unaffordable," former Air Force Chief of Staff Ronald Fogelman said at an event organized by the Center for Strategic and International Studies. Rising health care costs, retirement costs and a handsome array of benefits mean the Pentagon is "now a center of entitlements." the former leader of the Air Force said. "They have been untouchable."

Fogelman noted that lobby groups representing veterans and former officers are already actively opposing the idea of any benefit cuts.

Health-care costs are eating the military alive, Defense Secretary Robert Gates has said, pointing to soaring costs that have grown from $19 billion in 2001 to $52.5 billion.

President Obama has said he wants the national security establishment to find an additional $400 billion in cuts -- and most of those savings are expected to come from the Pentagon budget. And there is little appetite among senior defense or military leaders for substantial cuts to the number of soldiers, sailors, airmen and Marines who serve the nation. Those leaders look at the world and see a tremendously challenging place likely to require American forces to respond often and far afield, which requires well-trained people in substantial numbers.

If serious cuts were to be made to the Army or Marines, the two services most likely to see cuts, then the US will have to reduce the missions it expects the military to execute, panel members said. Former Deputy Defense Secretary John Hamre, president of CSIS and a member of the Defense Policy Board that advises Gates, was almost plaintive as he said, “we don’t want fewer shooters, so what do we do?”

In his presumed new job as defense secretary, Panetta must decide “what our appetite is” for military interventions in light of our fiscal crisis, Hamre said. “Maybe this debacle in Libya is the beginning of trimming our appetite.”

All this occurs in light of a so-called roles and missions review set in motion by Gates, an exercise that attracted considerable skepticism from the panel members.

“Every one of these I’ve been involved with starts off with lofty goals and every one of these ends up in a budget cut drill,” said Fogelman. The retired general dealt with the budget process each year of the three years he led the service as Air Force secretary. Each military service builds a budget each year, as does the Office of the Secretary of Defense.

Fellow panelist Sean O’Keefe, president of defense company EADS North America and former Pentagon comptroller, was also highly pessimistic of the review.

“The process is supposed to serve decision makers but the building serves the process,” he said, using military shorthand of the “building” to refer to the Pentagon.

Panetta is expected to zoom through the confirmation process.

When the panelists were asked to advise Panetta on what he must do, Hamre urged him to work closely with the leaders of the Army, Navy, Air Force and Marines because they are “the four people who are going to make the difference.”

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