05/07/2013 04:12 am ET Updated Jul 06, 2013

'The Best Means of Keeping the Peace': The Time Is Now for Defense Spending Reform

In December 1945, with World War II at last ended, President Harry Truman focused on the future of the nation's security. In a message to Congress, Truman proposed a new idea: a unified "Department of National Defense" to more effectively confront the challenges and threats of a post-war world.

Uniting the disparate armed forces under a single departmental banner, he suggested, would bring greater coordination, efficiency and cost savings while enhancing the nation's military preparedness. He emphasized "the necessity of making timely preparation for the nation's long-range security now -- while we are still mindful of what it has cost us in this war to have been unprepared."

Two years later, Truman's vision became reality; in 1949, the department's name was shortened to "Department of Defense" (DOD). This reform served the nation well, with some caveats, during the tense years of the Cold War, as the U.S. military was forged into a fighting and peacekeeping force without equal.

Unfortunately, Truman's original goals of efficiency and savings have proven more elusive. Today's DOD, now the largest federal department, is beset by bureaucratic inertia and rampant inefficiency. Just as Truman sought a rethinking of U.S. defense in order to "overcome permanently the present imperfections in our defense organization," it's time for a similar rethinking about how our defense dollars are invested to ensure the long-term effectiveness of our defense capability.

This need is particularly compelling as our nation struggles with the reality of a $16.7 trillion national debt. Admiral Mike Mullen, the former chairman of the Joint Chiefs of Staff, is known for arguing that the "most significant threat to our national security is our debt."

That recognition is particularly important at the Pentagon, where the department is wrestling with the challenge of providing for the nation's defense needs in an era of budget belt-tightening and expanding entitlements. Indeed, the Obama administration had already slated about $487 billion in defense cuts before sequestration cuts began taking effect in March. The key challenge is to ensure we cut "fat" from the military budget while sparing the "muscle" of our defense capability.

That's not how the current debate is shaping up. Right now, the debate centers not on strategic needs, but on how much military we can "afford" -- with the expectation that Pentagon leaders will somehow figure out how to adapt that number to meet threats from North Korea and Iran and to fill the gap in global defense spending as our European allies slash military budgets.

But the Pentagon can play a valuable role in determining what its future will look like. Defense leaders should be searching for ways to reform out-of-date procurement processes, to collapse layers of Pentagon bureaucracy, and to restrain the growth in personnel and benefits costs. A critical first step in that process should be to conduct a full Pentagon audit to determine how DOD spends taxpayer dollars.

Remarkably, a full audit of the DOD has never been conducted, though it would no doubt shed light on the shortcomings in the department's financial management. Former Defense Secretary Leon Panetta endorsed the idea of a Pentagon audit, though he did not follow through in his tenure. That means it's up to the current defense secretary, Chuck Hagel, to provide the needed leadership to make it happen.

And it may be that Hagel is just the leader to do so, based upon his recent public statements. In his April 3 speech at the National Defense University (NDU), Hagel articulated a vision for DOD reform that is grounded in both reality and strategic sense. I should note here that I was troubled by the president's nomination of Hagel to serve as defense secretary. My concern, shared by other defense hawks, was that Obama had selected the Republican war hero and defense skeptic to provide cover for carving up of the nation's defense capability.

However, in his NDU speech, Hagel spoke in the voice of a judicious reformer, reasonably explaining the need to get a handle on acquisitions, personnel costs and overhead, which he tagged as the chief drivers of spending growth at DOD.

As a successful entrepreneur, Hagel suggested the DOD look to the private sector to learn lessons about reducing management layers and developing more agile organizational structures. He spoke critically of the unplanned cuts under sequestration -- some $41 billion this year alone -- that are having an adverse effect on military training, maintenance and readiness.

Most importantly, the secretary spoke of American leadership as an essential precondition for global stability, security and peace; arguing that the United States does not have the luxury of withdrawing from the world -- and shouldn't hope for such. "A world where America does not lead is not the world I wish my children to inherit," Hagel stated. That sentiment reflects a clear-eyed view of American power, and why it's worth preserving.

With the winding down of the conflicts in Iraq and Afghanistan, the United States now has an opportunity to implement real defense reforms without having a serious impact on immediate battlefield needs. What's important is that these reforms should center on emerging threats and strategic realities, rather than how much money we have (or don't have) to spend. That will be, in Truman's words from 1945, "the best means of keeping the peace."

Pete Hegseth is the CEO of Concerned Veterans for America (CVA). He is an infantry officer in the Army National Guard and has served tours in Afghanistan, Iraq, and Guantanamo Bay. For more proposals on defense spending, see CVA's 2012 "Defend & Reform" series.