The moderate Obama, the middle-of-the road Obama, the great compromiser, Obama, the bipartisan-seeking Obama, the negotiator Obama is a myth and those who buy into it are insane.

Here is my summary of a summary – The Executive Summary of the Project on Defense Alternatives. The entire summary can be read by a CLICK HERE. The whole 60 plus pages can be read with another CLICK HERE.

An Undisciplined Defense: Understanding the $2 Trillion Surge in US Defense Spending
EXECUTIVE SUMMARY – 18 January 2010
1. Contours of the surge
The rise in US defense spending since 1998 has no precedent in all the years since the Korean war. If we treat the 1998 budget level as a “baseline” and project it forward to 2010 (adjusting for inflation), we find that the total amount of funds that have been given to DoD above this level during the years 1999-2010 is $2.15 trillion (in 2010 dollars). This figure constitutes what we call the post-1998 spending surge. (All told, DoD budget authority for the period was $6.5 trillion in 2010 dollars).

The rebound in annual defense spending reached its recent peak in 2008: $696.5 billion (2010 USD) – which is 92.7% above the 1998 level. The portion unrelated to contingency operations (the so-called “base” budget) was $503 billion that year – which is 41% higher in real terms than in 1998. Total DoD budget authority receded slightly in 2009 and 2010. But it now seems likely that 2011 will set a new high – somewhat over $700 billion in DoD’s authority to spend.

Whether one looks at the total DoD budget, or just that portion not attributable to today’s wars, US defense spending is now stabilizing at levels significantly above Cold War peaks (adjusted for inflation) and far above the Cold War average, in real terms. Measured in 2010 dollars, average DoD budget authority was:
# $423 billion for the period 1954-2001; # $517 billion for the Reagan years; and, # $495 billion for the Vietnam War “high tide” years 1966-1970.
All told, the Obama administration plans to spend at least $5 trillion (2010 USD) on defense during 2010-2017, which is 5% more in real terms than the Bush administration authorized for 2002-2009.

The most ready explanation for the post-1998 spending surge is that it is due largely to post-9/11 military operations. In fact, however, these operations account for just 52% of the surge (and only 17% of total spending during this period). Moreover, the wars have themselves been exceptionally expensive by historical standards. Measured in 2010 dollars, the Korean conflict cost $393,000 per person/year invested; the Vietnam conflict cost $256,000; and the Iraq and Afghanistan commitments, $792,000 so far. Rather than adequately explain the post-1998 spending surge, the high cost of recent military operations only adds to the explanatory burden.

2. The reallocation of DoD funds
Related to the rise in spending, the allocation of DoD funds among appropriation categories also has changed, and this provides some important clues about cost drivers. The four major appropriation categories are Personnel, Procurement, Research and Development (R&D), and Operations and Maintenance (O&M). Looking at spending patterns in the 1990s and during the first decade of the new century we find:
Overall spending – When divided by the number of full-time military personnel, DoD budget authority appears remarkably stable throughout the 25-year period 1983-1998. It begins to rise in 1998, accelerating sharply with the onset of the Iraq War. For 2007-2010, it averaged $459,000 per full-time person in uniform. This is 78% higher than the Reagan peak, 95% higher than in 1989, and nearly three times the inflation-adjusted peak during the Vietnam era.

About 85% of DoD’s civilian payroll is counted as an O&M expense. Over the years, the civilian payroll portion of O&M spending has mostly varied between 30% and 50%. Much of the remainder of O&M costs involve DoD purchases of goods and services. Since 1989, the “goods and services” portion has grown significantly, however. Today, it claims around 80% of the O&M budget. And, within this trend, the portion that is contractor services has grown.

Military personnel spending
During the 20-year period 1981-2000, budget authority for personnel varied by only a few percent around an average of $73,200 (2010 USD) per person. It then rose by 46% between 2000 and 2010. The increase was enough to bring total personnel expenditures back up to Cold War levels – for a military only 69% as large.

Modernization spending for 2000- 2009 surpassed the 1980s level by 47%.
Comparing just the past four years (2007-2010) with the four peak Reagan years (1983-1986) shows current procurement spending to be 40% higher in real per person terms. In similar terms, R&D spending is 135% higher.

Effects on the DoD budget and workforce
Increased operational tempo, increased support, and the loss of economies of scale were evident in the relative rise in O&M spending beginning in the early 1990s. Among other aims, the prospective reforms were meant to allow a transfer of funds from O&M and infrastructure accounts to procurement. Although some reform efforts – such as base closures – achieved some savings, these have not amounted to more than 4% of the DoD budget. This has not been sufficient to cover the costs of increased operational tempo, much less a rebound in procurement.
These developments also have reshaped the DoD workforce. As noted above, the increase in O&M spending correlated with an increased reliance on contract labor, which is generally less expensive than either military or civilian DoD labor. (In 2004, the life-cycle cost of a US military officer amortized over a 20-year career was approximately $88,000 per year; for enlisted personnel, $43,400 per year.)

Rather than add end strength, DoD has focused on squeezing more effort out of the existing pool of military personnel and migrating more of these personnel from the non- deployable to the deployable portion of the force, and from non-combat to combat positions. Civilian DoD and (especially) contract labor have filled the support gaps left behind. Beyond this, the increased support required by increased operational tempo has been increasingly provided by contract labor. Indeed, the role of contractors now extends to some basic security and intelligence functions. The result is that DoD’s total workforce is probably as large today as it was in 1989 (or even larger), but less of the total is in uniform. This accords with the rise in O&M spending and also with studies by Paul C. Light of the Brookings Institution, which suggest that the contractor workforce may have grown by as much as 40% since 1989. By comparison, the full-time military and DoD civilian workforces are both about 32% smaller today than in 1989.

3.3 Going to war (with the military you have)
The third process contributing to the post-1998 spending surge was America’s protracted commitment to two wars of a type for which its armed forces were ill-prepared. As noted above, fully 52% of the spending surge (and 17% of total spending since 1998) can be attributed to contingency operations – principally to the Iraq and Afghanistan wars. Although war costs explain a significant portion of the surge, they also beg the question: Why have these wars proved so much more expensive in real terms than their predecessors?
Part of the reason is that the United States found itself inadvertently fighting “Mr. Johnson’s war” using a reduced version of “Mr. Reagan’s military.” Unlike during the Vietnam War era, the United States today employs an all-volunteer (that is, professional) force. The logic of this policy ensures that long, exhausting, labor-intensive wars will drive personnel costs sharply higher, as DoD must bid higher to recruit and retain personnel. And they have: after remaining virtually flat in real terms for 22 years, military personnel spending measured on a per person basis rose 46% between 2000 and 2010. Slightly more than half of this was war-related.

4. Trillions to burn
The three policy paths outlined above have converged to give America a historically unique global edge in military spending. It is as though the nation has trillions to burn. A permissive spending environment is the precondition for the types of problems identified in this report. It is easy enough to point to the 11 September 2001 attacks as the progenitor of this condition. However, as we note, the surge in spending began before 2001. Moreover, Gallup polls show that public support for increased spending was higher in the two years prior to the attacks than in the two years after. And it has receded significantly since then. This points to a more fundamental enabling condition: presently there seems to be little political gain (and much risk) in pressing for the type of tight DoD budget constraints that might prompt through-going reform and transformation. Nonetheless, emerging fiscal realities may soon compel increased attention to how the nation allocates scarce resources among competing national goals — foreign and domestic, military and non-military. And this might put the nation on the road to a disciplined defense.

PROJECT ON DEFENSE ALTERNATIVES n COMMONWEALTH INSTITUTE CAMBRIDGE MA: 617-547-4474 n WASHINGTON DC: 301-493-8769 www.comw.org/pda n pda@comw.org