Defense budget priorities for 2015 and beyond: A conversation with Acting Deputy Secretary of Defense Christine Fox

Defense budget priorities for 2015 and beyond: A conversation with Acting Deputy Secretary of Defense Christine Fox

After operating for several years in an uncertain and austere budgetary environment, the Pentagon is facing increasing pressure as it looks to reconcile its strategic goals for the post–Iraq and Afghanistan war era with current fiscal realities. As last year's Strategic Choices and Management Review made clear, the Pentagon must be prepared to make difficult choices regarding force structure, readiness, and modernization to achieve a balanced, capable force for the future. Ahead of the president's fiscal year 2015 budget submission, the Marilyn Ware Center for Security Studies will host Acting Deputy Secretary of Defense Christine Fox for a timely discussion of US defense budgetary priorities in 2015 and beyond.

  • Agenda
    8:45 AM

    9:00 AM
    Mackenzie Eaglen, AEI

    9:05 AM
    Christine H. Fox, Acting Deputy Secretary of Defense

    10:00 AM
    Comment ()
  • Thank you for your patience. Our conversation will be starting momentarily.
    Comment ()
  • Christine Fox (after snow delay): From my perspective, and as I hope my remarks make clear, the two categories of stakeholders most protected from these changes are people we should all feel most accountable to: the average American fighting man (or woman) – and the average American taxpayer. ... Despite a drawdown in Afghanistan and a reduction in size, the military is able to deal with global conflicts. President Obama articulated top military priorities, which are worth revisiting here: Shifting operational forces and focus to the Pacific, sustaining commitment to key allies in the Middle East, being able to defend, while opportunistic regimes, counterterrorism, countering weapons proliferation, cybersecurity, maintaining a smaller but credible nuclear deterrent, reducing size and frequency of presence in Africa, South America.
    Comment ()
  • Fox: Obviously, there has been no peace deterrent like after WWII, but resources may not reach the level to fully support the president's strategy. The Budget Control Act of 2011 – even before its sequester provision was triggered – reduced projected defense spending by $487 billion over 10 years. The next two defense budgets submitted by the president stayed generally on this fiscal course, though last year’s request added $150 billion in reductions back-loaded towards the end of the BCA period. I worked closely with JCS and the secretary to put together these budgets. While no government official likes having his budget reduced, most senior officials in defense recognized the need. Then sequester hit.
    Comment ()
  • Fox: With our leadership's stern warnings, one of Sec. Hagel's priorities is to prepare the Defense Dept for significantly lower funding than anticipated, wanted or needed. But we must deal with the world as we find it, not the one we'd like it to be, both globally and inside the Beltway. ... The budget plan announced Monday would provide $115 billion more over the next five years than would sequestration-level funding. It is a realistic proposal that reflects strategic imperatives as well as the resources this department might reasonably expect to receive
    Comment ()
  • Fox: AEI has made important contributions in our understanding of several of the issues that we're facing. In a recent exercise, four think tanks presented scenarios to the QDR, there was a good deal of overlap between recommendations and our plans. We needed to reduce force structure in order to be technologically prepared. ... To be sure, shrinking the military further contains real risks – as a smaller force, no matter how ready or technologically advanced, can go to fewer places and do fewer things – especially when confronted by multiple contingencies or a scenario in which mass is required. However, attempting to retain a larger force in the face of potential sequester-level cuts would create, in effect, a decade-long modernization holiday on top of the program cancellations and delays made so far.
    Comment ()
  • Fox: During last year's SCMR, we took a look at overhead costs: The proverbial back office. We found that some reductions are necessary and some are doable, but the savings are significantly less than imagined. ... These "tail" functions can be done with fewer executives, generals, admirals, and contractors.
    Comment ()
  • Fox: As a result of the last few months of analysis we identified what the post-sequestration military would look like over the next decade if it returns in 2016: Fewer Navy ships – including at least one less aircraft carrier, dropping the Army down to 420,000 active duty soldiers, cutting more air force squadrons, delaying or curtailing the purchase of joint strike fighters and other platforms critical to U.S air superiority; and Shorting combat units of all the services of spare parts, basic maintenance, and the ability to conduct complex, realistic training.
    Comment ()
  • Fox: The Navy is pursuing aggressive cost-savings initiatives, including reducing support contracts and achieving better pricing initiatives, to maximize the possible size of their ship inventory. However, if these efforts generate fewer savings than planned, there will be little choice but to further reduce the Navy’s fleet size. ... When presented with spending cuts on the scale of sequestration, I would suggest crafting a strategy devoid of risk and unencumbered by resources is not a relevant strategy. We must look at resources, outcomes, and courses of actions. As analysts, we do an assessment of what this will buy and what is the process. Each strategic element informs one another on the path to final decision. It is neither budget-driven nor budget-blind.
    Comment ()
  • Fox: When talking about risk in the Pentagon sense of the term, it's not about the ability to prevail, but how long it takes and at what costs, material, financial and human.
    Comment ()
  • Fox: If we don't like the strategy that results, we redesign the budget to meet the best strategy. We were able to juggle the future: Fewer Navy ships, including one less aircraft carrier, 420,000 active-duty Army soldiers, delay of joint strike fighters, shorting combat units of spare parts and the ability to conduct complex training.
    Comment ()
  • Fox: Beyond that, we saw how this would look: America would remain but no longer be the guarantor of security. Pretending that a return to sequester is not harmful is the most harmful thing we can do. The country must understand the consequences of cutting drastically the resources available for national security.
    Comment ()
  • @AEI DepSec Fox: DoD strategy devoid of risk and resources is ‘logical phallacy and historical fiction’ #sequestration
  • Q: Can you walk us through the budget? A: If we tried harder, we couldn't have made this budget more complicated. There are actually multiple budgets embedded in this list. We took one budget with sequester in place, a description included int eh budget, but not actually a submission. We then had two budgets. Complex force structure takes time to get out. Reducing Army that remains capable requires planning. We left that in the budget, but we know where the off-ramps are. For instance, if we go to the president's plan, rather than sequester, we know how to respond. In 2015, we will hold and determine if the budget is going up in FY16 over down. If sequester returns, then we have no choice, we will park the carrier, we will cancel programs, parts of our structure, like the KC10s, we will just take out.
    Comment ()
  • Acting DSD Fox: Military after sequestration would no longer be guarantor of global security. #AEI
  • Fox: Acquisition-related efficiencies the Navy promoted this year: We got $200 billion to date, but it's difficult to count on them. We want to have efficiency to be tougher in contract negotiations, more stability in partner businesses, for example. The more efficient, the more structure we can keep. We are counting on those predictions. It reinforces the point about stability. We're fully in support that the Navy's efficiencies can be carried across the department.
    Comment ()
  • Fox: We are going to do everything in our power to explain tradeoffs. If they force us to keep things we don't want to keep and we don't need, it comes out of readiness or we end up slipping and sliding and making our programs more expensive. We're trying to make our case. With the Army and Guard, for example, we wanted to put together a balanced rationale for our reasons. There's no room for slop here.
    Comment ()
  • Fox: QDR tracks very closely with the remarks I just made, and we did it in an iterative way so that we don't put forward a view of the world that doesn't match reality.
    Comment ()
  • @AEI DepSec Fox: We made a choice to make this QDR fiscally constrained #qdr #pentagon
  • Fox: We aren't communicating and we weren't able to communicate that with sequester. We talked about readiness, but no one understands what readiness is. For example, having your teenager drive to Ohio in a snowstorm. Can he drive in snow, does he have snow tires, does he have tools in the trunk in case things go bad? This is how it works. This is readiness. Trying out our story outside our own circle is a great idea.
    Comment ()
  • Eaglen: Talking to Congress is like taking you toddler to the hair stylist and saying, i want you to take an inch off, but not from the back, the front, or the sides. Just off the top.
    Comment ()
  • Q: We're ready now, but is our force prepared for future challenges? A: We have to move to the future, and our budget reflects that, we're protecting cyber, soft, submarines. But things like the aircraft carrier, we have to look at its use in the future. I understand it's incredibly important, we're bringing carriers down when Chiina is trying to build them. That's because we want the platform to be viable. We're so used to dominating in the sea and the air, we don't spend near enough on electronics, which in this budget, are affordable and can do so much. We have to make sure the platforms we have today can work tomorrow.
    Comment ()
  • Eaglen: In our exercise, we looked at combat logistics, space and satellite, taking things down further than sequester in order to build them out for the future. This is part of the future-proofing.
    Comment ()
  • Q: How do you drawdown the Army smartly. A: The Army is extraordinarily capable in certain areas. We want to keep the Army ready and repurposing. We need to keep seasoned combat veterans. If we were sequestered, we would lose all those people immediately. While we have a force, the size of that force has to be capable, and it has to become smaller as it is trained to be capable. How do you bring it down relative to the budget you expect to have and plan so the money is enough to cover what you need to be able to do? That's a difficult effort, and the Army has been on the forefront of making it happen.
    Comment ()
  • Fox: Schools are really important to the quality of life for military families. Some confidence that we provide for the military's family's education was important to recruit and retain. The compensation package we came up with is hard enough. Logistics, things like depots, we looked at that as well. Here's the situation. There's a lot we can do and we like to do to reduce the base infrastructure. We need a BRAC to get to the efficiencies. We put BRAC in the budget. In the early years, it costs money, in the later years it saves.
    Comment ()
  • Fox: The importance of our relationship and commitment to South Korea is not affected by our plan. In fact, it was one of our strategic imperatives. We made sure of that as we went through. The challenge of our smaller Army, at 440, 450, we meet the requirements. It's a challenge, Gen. Odierno said. to protect the homeland, base at Korea, and do another activity. When it comes to relying on our allies, we decided that the Global Hawk Block 30 costs have come down significantly. The contractor was very aggressive to bring those costs down, and the Air Force was very aggressive. With those costs down, it makes sense to keep them, and the implications for our allies is something I look forward to sharing.
    Comment ()
  • Fox: In terms of our rebalance to Asia, we're doing more than just lip service. We intend to do a lot more of what we're doing. The Marine Corps is doing operations in Australia, for the first time in a long time, and our fleet is oriented there. The secretary is taking numerous trips to the Asia Pacific AOR.
    Comment ()
  • Eaglen: Great way to end. We've learned so much more about the budget. Thanks for being here.
    Comment ()
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