Budget Agreement Reached! - By Gordon Adams

The fiscal cliff is all the rage. The lame-duck Congress is back and the tidal wave of pressure for a budget agreement is almost overwhelming. The public discussion and the negotiations are about taxes and entitlements, as anyone could have predicted. And, despite a year of special interest lobbying, the defense budget is headed down further, as a byproduct of those talks.

We're not talking about sequester; that drama is almost over. We are talking about defense budgets that will go as much as another $500 billion below the 10-year forecast Secretary Panetta offered last February -- making the overall reduction, including his budget request, at least $1 trillion. Real defense cuts, not a budget that keeps up with inflation, the way Panetta wanted. And it is time to plan accordingly.

Think tanks are often the canary in the coal mine when it comes to change in Washington, and their perspective on defense has changed dramatically since the election. Over the past few weeks, think tanks right, left, and center have issued reports that lay out the road to a disciplined defense drawdown, in which they rethink strategy, military force, weapons buying, and management. The reports come from the Stimson Center/Peterson Foundation, the Center for American Progress, the Project on Defense Alternatives, the Center for Strategic and International Studies, and, interestingly, the RAND Corporation. They agree on a surprising number of things, and all of them suggest deep cuts are inevitable.

The Stimson report, endorsed by a wide range of analysts (disclaimer: with a dissent, I am one of them), carefully describes a series of budgetary options, including one that would increase defense spending (however unrealistic) and one with additional cuts ranging from $350 to $590 billion beyond Panetta's. The CAP report strongly advocates $1 trillion in defense reductions (including the Panetta reductions). The PDA report calls for an additional $560 billion in defense cuts. The CSIS report (disclaimer: I am also part of its working group) starts with the assumption that defense budgets (including war costs) will decline around 30 percent in constant dollars (consistent with past drawdowns). As CSIS working group leader (and former DOD official) Clark Murdock puts it: "DOD needs to accept the likely reality that it will absorb a deeper reduction in defense spending and plan accordingly." And the RAND study, while eschewing any support for defense cuts, says it is realistic to think that defense budgets will go down $300-$500 billion below the Panetta estimate.

I think these estimates are actually on the low side. The last defense drawdown, from 1985 to 1998, saw defense budgets fall 36 percent in constant dollars. If the FY 1985 defense budget had been allowed to grow with inflation over the same period, DOD would have had $1.6 trillion more in resources than it got. So there may still be a way to go and, frankly, we won't know until we get there how deep the drawdown will actually be. But when we look back, we will see it was very deep, indeed.

Readers can surf the reports at will. But there are a number of strikingly consistent options they propose:

• All agree that the days of long-term stabilization operations, nation-building, and insurgent-chasing (read: Iraq and Afghanistan) are over. The Panetta strategy from January 2011 said this; all the reports endorse that view, and more. (Though RAND, to be fair, does provide an option that has the United States still chasing insurgents and instability in the Middle East through the next decade.)

• All of them agree that shrinking U.S. ground forces (Army and Marines) is the easiest and most appropriate way to cope with the new national security challenges in light of fewer resources. Some would have the overall military shrink below 1 million troops, while others suggest 1.15-1.2 million (again, except RAND's Middle East option).

• All of them would sharply reduce U.S. strategic nuclear forces, though none of them appears to endorse my favorite option: a submarine-based monad. This means, for many of them, between seven and nine nuclear-missile subs (down from the current 14), smaller ICBM forces, and an end to nuclear bombers and fighters.

• All agree that a robust investment in defense research and development is a suitable hedge against the future.

• None of them thinks China is a near-term military threat, which flies in the face of the Washington cottage industry that seeks to make China the next major enemy. For the most part, however, they hedge with a continued Pacific presence (RAND has a Western Pacific option).

• All agree that terrorist organizations are not a strategic threat to the United States and do not necessitate a large military force. Some, particularly CAP, argue that non-military instruments -- diplomacy, law enforcement, training -- are key to dealing with terrorist organizations. But virtually all of them, left or right, endorse special operations forces (which the PDA proposal would grow) as the military arm of a counterterrorism strategy.

• All say cyber threats present a strategic challenge. However, none of them analyzes this challenge in any depth, tells us why the military should lead the response, or looks for even a moment at the risk of a rapidly-growing U.S. cyber-offense capability.

• Virtually all of them, from left to right, call for greater "burden-sharing" from U.S. allies as a way of reducing the U.S. load.

These studies tell us that the drawdown is now inevitable; with less money, we need to do some serious thinking. But there is more road to travel here, and there are several issues the reports do not discuss in much depth that will be a critical part of the drawdown.