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THE MISSING ISSUES // The peace dividend becomes a Pentagon shortfall

When the United States emerged victorious from the Cold War in 1990, politicians were quick to forecast a "peace dividend," a shift of money from war to peace.

Not only did the peace dividend never appear, taxpayers are supporting a smaller force with fewer weapons that cost more than in many of the Cold War years.

Part of the reason is sheer momentum.

But in the absence of a big threat like the Red Army, without a firm strategy to guide military spending and investments, politics has played an increasing role as contestants bid up the costs of combat readiness and the purchase of big new weapons systems, analysts say.

Now, the consequences are beginning to be felt.

Over the past few years, Congress and the White House have made downpayments on a half-dozen big new weapons such as the futuristic F-22 fighter and the Seawolf submarine. Soon, bills stamped "Pay in Full" will start arriving at the Pentagon, and there isn't the money to pay them.

As a result, despite such Cold War savings as deactivating more than 600 strategic nuclear missiles, the Pentagon is declaring a new budget "crisis," and is quietly making plans for a further retrenchment.

In order to finance the new weapons, Pentagon budgeters are weighing another cut in troops. Combat readiness may be trimmed back as well. And rather than preparing to fight two nearly simultaneous major regional wars, as it does at present, the Pentagon may shrink that goal to only one major regional war.

That strategic shift _ lowering the standard against which U.S. forces are recruited, trained and equipped _ may be a long-overdue recognition that the world is not as dangerous as defense planners once thought.

Or it may be a risky gamble.

Either way, the Pentagon's continuing struggle to define its post-Cold War size and strategy is taking place without much notice on the presidential campaign trail.

"No matter who is elected in November, the budget crisis will force (the Pentagon) to modify its strategy and the structure of its armed forces," said Marine Gen. Jack Sheehan, commander of U.S. Atlantic Command.

Estimates differ as to how much the Pentagon is in the hole.

The chairman of the Joint Chiefs of Staff, Army Gen. John Shalikashvili, puts it at about $20-billion a year. "We can't get there from here, if we continue doing business the way we're doing," Shalikashvili told a sobered gathering of officers and defense contractors last month.

One factor in the Pentagon's budget squeeze is the rising cost of operating today's forces. This "operations and maintenance" part of the budget, which pays for training and war stocks such as fuel and ammunition, roughly measures readiness.

In fiscal year 1997, which began Oct. 1, the Pentagon will spend about $61,000 to support each active-duty soldier, sailor, Marine or airman. That is about 19 percent more than it spent on readiness in fiscal year 1990, when it began sending troops to fight the Persian Gulf War.

The increased cost of operating and maintaining high-tech equipment is one reason for the increase. A 35-year-old B-52 bomber, for instance, costs $8,100 per flying hour; the new B-2 "stealth" bomber costs $14,000 an hour.

The high cost of excess military bases and large staffs required during the Cold War also contribute. According to Sheehan, bureaucratic staffs located near Washington currently tie down 150,000 military personnel _ 10 percent of total active-duty personnel.

Politics is the big driver behind increasing readiness spending, argues Lawrence Korb, a former Pentagon official who is a senior fellow at the Brookings Institution, a non-partisan policy research organization in Washington.

In Korb's analysis, President Clinton is particularly sensitive to any charge that he has let combat readiness slip. And Republicans in Congress have been eager to score points by one-upping Clinton's readiness budgets.

"The result is, whenever there's been any doubt, people add money into readiness," Korb says.

But readiness spending pales beside the upward pressure on the procurement of big new weapons systems.

The administration and Congress craft defense spending plans one year at a time. This year, for example, Congress added $700-million for a new attack submarine. That doesn't seem like much, but the eventual bill for a planned fleet of 30 such subs will come to $64.8-billion, according to the Pentagon's newest estimates.

Similarly, bills will be coming due in the years ahead for weapons that have so far cost only modest downpayments: the F-22 fighter ($70-billion), Arleigh Burke class destroyers ($57-billion), the FA-18 ($80-billion), the Seawolf submarine ($13-billion), the C-17 cargo plane ($41-billion) and the V-22 tilt-rotor aircraft ($46-billion).

Each of these new weapons is a razzle-dazzle advance in technology and capability, and carries a price tag to prove it. A B-2 bomber, for instance, costs $750-million, more than 10 times what the B-52 bomber cost in today's dollars.

"Costs are out of control," says Franklin Spinney, a senior Defense Department analyst.

Ironically, it is not anti-defense liberals pressing for change, but a Republican defense hawk, Sen. John McCain of Arizona, a former Navy fighter pilot who spent six years in a North Vietnam POW camp.

"Our forces today face a future armed with rapidly aging equipment which is difficult and expensive to maintain and operate," says McCain, who has emerged as the chief Republican spokesman on defense issues.

With little chance that defense spending will be significantly increased, he adds, "we face a significant gap between our force plans and the resources available to implement them."

For that reason, McCain has pushed hard for the Pentagon to reduce its strategy from the current two-war plan down to one.

Such a change, he acknowledged in a paper earlier this year, might mean "some additional risk." But accepting risk, he said, would be "far better than to plan for forces and capabilities that will never materialize."

Reducing the threat would justify reducing the number of active-duty troops, and Defense Secretary William Perry already has begun discussing such cutbacks.

The other side of the argument _ that new weapons and increased readiness should be measured against potential foes _ is also escaping public debate.

The Army, for instance, spends $547-million to equip and train each of its 36 combat brigades, while the NATO allies spend about $41-million per combat brigade, China about $26-million, and North Korea about $10-million.

"We're so far ahead of everybody," says Korb. "Who's so close that we have to worry about them catching up?"

David Wood covers national security issues for Newhouse News Service.

Newhouse News Service