How to Think About Military Budget Cuts

I saw this article this morning. As most people are intuitively familiar with the wasteful nature of military spending, I’m going to cut straight to the chase. Comments in bold. **Edit**Here’s the source memo, which came out after I wrote this article. I’m not going to re-do it, but rest assured that the content is accurate.**

WASHINGTON (Army News Service, Jan. 17, 2013) — In advance of possible extreme budget cuts [magnitude of cuts not noted. this is significant. The Army budget request this year is for $184.6 Billion, with some drawdown-type activities. I am skeptical that an “extreme budget cut” means anything more than 5%. sounds like scare-writing to me.] that could arrive in March, Army leadership has called for an immediate hiring freeze and spelled out other pre-emptive measures meant to help the service prepare for a fiscal cliff.

In a memo dated Jan. 16, Secretary of the Army John M. McHugh and Chief of Staff of the Army Gen. Ray Odierno laid out 15 “near-term” actions to help the Army “reduce our expenditure rate and mitigate budget execution risks in order to avoid even more serious future fiscal shortfalls.” [uh oh, we just realized that the wars are almost over! all those OER-enhancing programs are going to disappear. shit. ]

“We expect commanders and supervisors at all levels to implement both the guidance contained in this memorandum and the detailed instructions to follow,” wrote McHugh and Odierno. “The fiscal situation and outlook are serious.” [as opposed to all those other times we preached fiscal responsibility. I was on Odierno’s staff in Iraq (not in his office, but in the HQ). Complete shitshow. Made-up offices and positions so that officers could get promoted. Ridiculous spending programs and pet projects. I don’t know how much was his fault directly, but he was the man at the top. ]

WHAT HAPPENS NOW

First among those actions is an immediate freeze on civilian hiring, though Army leaders have left commanders with some latitude in the policy for “humanitarian and mission-critical purposes.” [ah so not an immediate freeze on military hiring, just all the civilians, and the non-mission-essential ones at that. I’d be very curious to see what the total budget for contractors is–it’s a lot, and the process is governed by the same folks who brought you the F-22 and F-35.]   Also among employment-related measures spelled out in the memo is a termination of temporary employees when “consistent with mission requirements.”

The memo also directs installation commanders to reduce base operations support for fiscal year 2013, which runs from Oct. 1, 2012 to Sept. 31, 2013, to levels that are about 70 percent of fiscal year 2012. Commanders have been asked to reduce support to community and recreational activities and to also reduce utilities consumption “to the maximum extent possible.” [again: Why are we doing this things if they’re nonessential anyway? And reducing utilities consumption? Really, that’s the solution? This is the sort of thinking that produces whiplash down the chain of command until you can’t get your barracks repaired, then you end up with this because you’re “saving money” on utilities. Then you have to buy whole new barracks to avert the bad press. I saw units buying multiple HDTVs for essentially recreational purposes with GWOT money. I saw ridiculous training contracts being written for “cool” 3rd party trainers. I promise that the attitude was more about “hey, if we overspend our budget by 20% this year, we have to get more money”, than responsible usage of funds. Spending more money on ammo would be ok; spending it on yet another gym is not.]

Non-mission-essential training activities are also up for reduction. [uh huh, like prop blast, right?] In particular, training not related to maintaining “readiness for Operation Enduring Freedom, the Korean forward-deployed units, Homeland Defense and the Division Ready Brigade.” [does this include the fall cleanup activities on many bases?] Also targeted is conference attendance and professional training that is not mission essential. [again, why are we sending people to conferences and/or training that’s not essential? for kicks and giggles? because they asked really nicely for taxpayer money to fly around and get a nice certificate and shmooze? What they’re telling people not to do anymore is an excellent indicator of what’s actually been going on.]

The secretary and the chief have also directed installation commanders to cease facility sustainment activity that is not “directly connected to matters of life, health or safety,” and to stop restoration and modernization projects. [I can’t gripe too much about that. Army bases are shitty relics and many need some upkeep to be livable. On the other hand, I knew of a CSM who had a fish pond contracted out in Afghanistan. Literally, a little concrete fishpond, in front of the dining facility, something about quality of life. Only problem? Not allowed by contracting regs, thus illegal or at least fire-able. I sometimes wonder what it took to sweep that under the rug.]

Army senior leadership has also spelled out changes for Army acquisition, logistics and technology. All production contracts and research, development, testing and evaluation contracts that exceed $500 million must be reviewed by the under secretary of defense for acquisition, logistics and technology. [oh good, so we’re going to see a lot of projects for $495 mil. See how this works?]

The assistant secretary of the Army for acquisition, logistics and technology must also assess the impacts of “budgetary uncertainty” on science and technology accounts.

The secretary and chief of staff state civilian furloughs could be a “last resort” possibility in fiscal year 2013. “Therefore, no action should be taken with regard to furloughs without the express approval of the secretary of the Army.” [Again: so, this means that the current state is that we’re paying for a lot way too much for civilian contractor vacation time. I know people who do or have done military contracting. Your mileage may vary, but you can expect that you’re paying way too much for the results you’re getting, and the employees have a lot of vacay time. This is one of the reasons that there’s such a discrepancy in pay between the sectors. John T Reed wrote that ideally pay should be about as much as you need to get the people you need, but not more. The long lines of folks waiting to feed at the trough of government contracting means that there’s an alpha opportunity, and that we’re spending way too much on contractors. This is merely oblique confirmation of that fact.]

Any measures taken as a result of the Jan. 16 memo must be reversible, the document states. [in other words: as soon as we get money back, full speed ahead! There will be no real changes here! Despite that we’ve made you identify all these unnecessary and extraneous budgetary activities!]

“At this point, the steps should focus on actions that are reversible if the budgetary situation improves and should minimize harm to readiness,” McHugh and Odierno write. [ah yes, my favorite argument. “We can’t cut because it will harm readiness!” and no one wants to challenge the “professionals” on exactly what “readiness” means. Please, Army CoS, which part of the civilian furlough program that you wanted curtailed harms readiness? I’ll bet cutting back on those non-essential conferences and professional programs makes us a hell of a lot less ready to take on the Taliban. You’re also assuming that the projects that used to be $500mil+ are simply going on hold, instead of contractors and agencies finding ways to push them through anyway, despite your temporary and purely symbolic attempts at cost cutting. We’re not even at the tip of the iceberg yet, we’ve only spotted the tip from a few miles away from the deck of the Titanic.

By the way, at the end of this article, remember that all of these things are supposed to carry the Army through those possible “extreme budget cuts.” “Cutting civilian furloughs” and “conferences” must be a huge part of the budget, if reducing them is going to get us through “extreme budget cuts”, right? Scare writing for publicity. 

You want to cut costs in the Army? Well of course you don’t, that was never the intent, but here are some real recommendations:

1) Reform the pension system. Get rid of 20-year fixed rate retirement. It encourages mediocrity and hangers-on, which means you get less bang for your buck structurally. It chases out excellence by making a society of fixed-rate conformists. Pay increased merit-based salaries and let folks do their own retirement planning. 

2) More on benefits: Get rid of the gold-plated medical bennies. There are needs for good medical care for soldiers, but I promise that there’s a lot of room here to work. I promise.

3) Publicize all contracts entered into with the military. Actually, I just want to see where the money’s going, and more importantly, I want to see if you know where the money’s going. Publicize which units go over budget, if you have the records. Put unit fiscal management  into officer evaluations. 

4) Give units budgets, the power to set pay, and make them stick to those budgets. I’ve already noted and written about this. You’ll end up with better people in the jobs and less money spent.

See, it’s all about the structural incentives to behave. Right now, there are none. All the incentives are aligned to spend money (and get promoted), and spend money they will. Until someone with some balls (not Michael Mullen) makes some serious cultural and structural changes to the military, it will continue to be absolutely horrendous at accountability. 

The memo also notes that “funding related to wartime operations and Wounded Warrior programs” will not be affected. [whew! good to know that wartime operations and the Wounded Warrior program (as separate from the warrior transition program and the aforementioned medical benefits programs) are considered of equivalent importance (to generals’ OERs, anyway) and won’t be touched. Why is the government funding the wounded warrior program anyway? Isn’t it a charity, a 501(c)(3)? Or is it sucking the government funding tit too? Wait, I just answered my own question.

And while I generally approve of the charity and the work it does (and therefore don’t fault it for seeking funding wherever), I totally disapprove of the victim imagery that it propagates through society of soldiers.]

Look. I among all people am for putting cold hard cash into a bad-mofo military capable of kicking ass and taking names. But right now, the system is not set up to encourage that. The spending system in the Army needs a lot more sober thought and a lot less caught-with-the-hand-in-the-cookie-jar mentality that we see in this article.

Gay marriage, your tax dollars, and the Army

Here is an excellent example of incentives at work and unintended consequences.

The political winds are shifting towards an overall support of Gay Marriage in the US.  This is a symptom of the changing perception of marriage as more of an emotional fulfillment mechanism than an economic contract for having a family, and will serve to hasten the decline of the traditional family.  Regardless of the benefits of “fairness” and “allowing everyone to be happy” and “equal”, the erosion of this cornerstone of society will have far-reaching effects, most of which will be unintended and not directly correlated in the public mind to the acceptance of gay marriage (updated for a bit more accuracy…) or other policies that have undermined the family.

I don’t know what all those are.  However, with my interest in the military, I can anticipate at least one set of effects on the military budget and unit discipline as a result of the acceptance and sanctioning of gay marriage and the end of Don’t Ask, Don’t Tell.  This angle has not been discussed (that I know of) at all in the debates of either gay marriage or gays in the military, and yet it does have some important consequences.  In fact, this is less about gay marriage than it is about abuse of policies that are currently in place which will be affected by gay marriage.  People are inveterate game-players, and this will provide a great ground to play games for tax dollars.

I think that Gay Marriage will eventually become accepted by a majority of American states.  When this happens, or when vocal minority states take appropriate legal action, the federal government (or Supreme Court) will rule on the issue.  When this happens, I suspect that Gay Marriage will become a legally accepted institution of American life.

The military has a whole host of allowances beyond basic pay for service members.  One of these allowances is Basic Allowance for Housing, or BAH.  BAH is based on grade, location, and… wait for it… family status, and is provided to those 70% of DOD folks not living on-post.  The folks currently living on-post are the actual soldiers–junior enlisted, 18-23 years old, in dorm- or apartment-like barracks.

For instance, a young E-5 Sergeant at Fort Bragg, NC, would be entitled to the following allowance:

Note the “with dependents” vs “without dependents” differential

For cost-savings and disciplinary reasons, many lower enlisted (E1-E5 or E6) live on post.  Eligibility is subject to housing availability on a post, although on the posts I’ve been at, the usual rule of thumb is that single E1-E5 have to stay on post in the barracks, and E6 and above can elect to go off post.  All servicemembers with dependents, if not electing to lodge in (and apply for) on-post Army housing, go off-post.

Now.  That last point is important.  Since the military is, depending on branch of service, 15-25% female, that leaves a bunch of guys on post.

When they are allowed by federal regulations (i.e Gay Marriage is legal, as is being Openly Gay in the Military) to marry each other, they can then do two things: Move off post (since they now have dependents) and collect BAH.  This is not different than current regulations, which allows married servicemembers (e.g. two married officers) to each be entitled to BAH at their posts.

So, now we have a majority of (presumably male) heterosexual-yet-opportunistic servicemembers who can and probably will be getting “married” for the allowance and to get out of the barracks.  This is an extra $10-12k per year per servicemember in pay. This is a strong incentive to sign a piece of paper. If I were a soldier, I’d do this in a heartbeat with a number of my buddies in order to go rent a house or 3- or 4- bedroom apartment and make some bank.  As an aside, let’s ask the question: Is this how you want your tax dollars spent?

It doesn’t stop there.  Married servicemembers are also entitled to separation allowance when one is deployed or moved to another post.  There are probably more benefits that accrue to married soldiers that I am not familiar with, and no one is as adept at working the military benefits gravy train as active duty military.

This becomes a great deal for enlisted soldiers or even single officers who want to work the system, and if you don’t think military personnel are PhDs in gaming the system for bucks, you’re dead wrong.  There are services that offer legally valid marriage certificates to soldiers on deployment for the additional family allowance, and their clientele would probably shoot through the roof when this becomes policy. I can’t think of a way that the Army would stop this except to prohibit BAH for single-sex couples, which they can’t do–it’s part and parcel of the family support system, which will never go away, and by the time same-sex couples are integrated into the system, the benefits package is a fait accompli.

There are cases of soldiers getting married specifically for the additional housing allowance and separation pay on deployments.  I don’t think that current rates of this are representative of what will happen when gay marriage is legalized because the circumstances are different.  A soldier’s marriage for convenience now is hard because of the difficulty of finding someone who is moderately trustworthy to be married to.  When soldiers have each other as available partners–people they live and work with and have formed social bonds with (think roommates, but all the time), then the risk of being taken for a ride decreases, making such a marriage a viable prospect for financial gain without the risk of having the local stripper max the credit cards, leave with the car, and extract alimony.

This will come at a particularly bad time for the military, as the Pentagon’s budget is being put under increasing pressure.

Lastly we have the disciplinary impacts of this.  I noted many, many disciplinary issues in the military.  Moving a bunch of college-age guys off post will result in decreased control over junior enlisted (and the military loves control!  Gotta get those 4 AM formations going!).  On libertarian grounds, this is a good thing–but as a practical matter for the military, it will probably have negative effects on unit readiness.  I’d need more evidence on this one.

Actually, I don’t need more evidence on this.  The Army does, and before this policy is implemented, too.

This is one of the unintended consequences of adopting a model for “fairness” instead of results.  This will end up being incredibly expensive in terms of money and readiness.