U.S. DEFENSE STRATEGY AFTER SADDAM

Michael E. O’Hanlon

July 2005

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FOREWORD

 This paper, by Michael O’Hanlon of the Brookings Institution, 

reconstitutes SSI’s Letort Papers series. This group of publications 

include papers, retrospectives, speeches or essays of interest to the 

defense academic community that may not correspond with our 

mainstream policy-oriented publications. 

 In this Letort Paper, Dr. O’Hanlon suggests how reductions in 

various weapons modernization programs and other economies 

might release funds for the critical needs of U.S. ground forces.

DOUGLAS C. LOVELACE, JR.

Director

Strategic Studies Institute 
iv

BIOGRAPHICAL SKETCH OF THE AUTHOR

MICHAEL E. O’HANLONis a senior fellow in Foreign Policy Studies 

at the Brookings Institution. His recent books include The Future 

of Arms Control (Brookings, 2005, with Michael A. Levi), Neither 

Star Wars nor Sanctuary (Brookings, 2004), and Crisis on the Korean 

Peninsula (McGraw Hill, 2003, with Mike Mochizuki).
v

SUMMARY

 In this defense strategy and budget monograph, Michael 

O’Hanlon argues that America’s large defense budget cannot 

be pared realistically in the years ahead. But given the extreme 

demands of the Iraq mission, particularly on the U.S. Army and 

Marine Corps, he suggests how reductions in various weapons 

modernization programs and other economies might free up enough 

funds to add at least 40,000 more ground troops to today’s military. 

O’Hanlon also addresses the important question of how the United 

States might encourage and help other countries to share more of 

the global military burden. Finally, he sketches other cost cutting 

measures such as privatization. These cost saving ideas all require 

serious consideration because of the enormous strain being placed 

on the size and cost of the U.S. ground forces.

1

U.S. DEFENSE STRATEGY AFTER SADDAM

 What military will the United States need in the future, and 

how much will it cost? In an era of apocalyptic terror, and at a time 

of $400 billion defense budgets and $400 billion federal budget 

deficits, these questions are of central concern to Americans―both 

on national security grounds and economic grounds.

 Answering these questions is extremely difficult because the 

United States simply does not know what type of world it will find 

in the future. The United States can, for the foreseeable future, be 

confident that its armed forces will remain engaged in Iraq, as well as 

in Afghanistan and other theaters related to the war on terror. It will 

also need to remain involved in deterrence missions in the Western 

Pacific, most notably in regard to Korea and the Taiwan Strait. It will 

wish to remain strongly engaged in European security, less because 

of threats to that region than because it is the continent where most 

of America’s main security partners are located―meaning that the 

strength and capabilities and cohesion of the NATO alliance have 

important implications for the United States globally. 

 But the United States does not know which, if any, major new 

wars it may have to wage in the coming years. It does not know if 

relations with the People’s Republic of China will continue to improve 

or again worsen, even risking the possibility of war over Taiwan. It 

does not know if the current nuclear crisis with North Korea will be 

resolved peacefully; it cannot predict whether any other countries 

will allow their territories to be used by terrorist organizations bent 

on attacking the United States. Additional military scenarios could 

be immensely important to America as well, even if they are not 

of the classic variety―such as civil conflict within nuclear-armed 

Pakistan or another between that country and nuclear-armed India, 

both of which could lead to large-scale stabilization or peacekeeping 

missions. Other major uncertainties include the degree to which the 

proliferation of dangerous nuclear and biological technologies can 

be contained, and the degree to which Islamic fundamentalism will 

affect the politics of countries such as Iran and Saudi Arabia in the 

coming years.
2

 Thus defense planning must be based on subjective assumptions. 

The important thing is to postulate circumstances that are realistic 

but not imprudently optimistic. The nation should spend what is 

required on the military, including a margin of safety. But it should 

not and cannot waste money on its armed forces. Federal deficits are 

on course to remain over $400 billion and exceed $500 billion a year 

by the decade’s end. Even if Mr. Bush is successful in halving them 

by then, an unlikely proposition, they are likely to grow quickly 

thereafter. They will thus remain at the economically unhealthy 

level of nearly 4 percent of gross domestic product (GDP), driving 

down national savings rates and increasing America’s dependence 

on foreign investors to propel its economy. Longer-term fiscal trends 

are even worse, given the pending retirement of the baby boomers, 

together with rising health care costs.1 The United States cannot 

afford to waste funds on combat formations and weapons that are 

not truly needed.2

 It is easy for defense planners to dwell on the problems, but a great 

deal is good in today’s global security situation. The United States 

leads a remarkable and historic alliance system. Never before has 

a great power elicited such support from the world’s other powers 

and provoked so little direct opposition. These observations remain 

true, if more precariously so, even after the Bush administration’s 

internationally unpopular decision to go to war against Saddam 

Hussein in 2003. Even powers outside this alliance system―Russia, 

China, India, Indonesia―generally choose to cooperate with the 

United States and its allies on many security issues. They are 

likely to continue doing so, provided that American military power 

remains credible, and that the U.S.-led alliance system continues to 

be founded (however imperfectly) on common values on which most 

countries agree. This conclusion can be jeopardized―by a United 

States that seems too unilateralist, or by allies that seem to prefer free 

riding to doing their fair share in international security. But what 

is most impressive about the western alliance system is how strong 

and durable it has become.

 Some fear American power, and even many Americans think it is 

excessive. Indeed, it is impressive. But as Barry Posen convincingly 

argues, the United States is far from omnipotent. Past historical eras 

such as those during which the European colonial powers could easily 
3

conquer distant lands are gone.3 In today’s world, the United States 

can be understood in Posen’s phrase to possess impressive command 

of the commons―air, oceans, and space―but to have a great deal of 

trouble contending with many conflicts on land, particularly against 

irregular resistance fighters.4

 Moreover, America’s high sensitivity 

to casualties limits its inclination to use military force. And its highly 

open and democratic political system suggests that it need not be 

feared to the extent many do.5

 So American power is, even in these politically contentious 

times, generally a force for good in the world. Alas, maintaining 

global military capabilities, holding together this alliance network, 

and preserving stability in the global system cost money. The 

United States presently accounts for almost half of all global military 

spending. But even so, the central budgetary argument of this 

monograph is that the U.S. defense budget must continue to rise at 

the pace planned by the Bush administration―roughly $10 billion a 

year, or 2 to 3 percent, above and beyond the inflation rate. Indeed, 

more funds are needed to increase the size of the active ground forces 

by some 40,000 personnel for several years, meaning that certain 

weapons programs preferred by the administration will need to be 

slowed or streamlined to stay within projected budgets. Once the 

Iraq mission is concluded, it may be possible to then hold real-dollar 

defense spending steady―but right now it is simply too soon to say.

U.S. MILITARY BASICS

 The current U.S. defense establishment is not large in terms of 

personnel. U.S. troops and most types of military force structure 

have declined about one-third since the latter Cold War years. (They 

now number 1.4 million active duty troops, plus about one million 

reservists, of whom some 150,000 to 200,000 have been activated at 

any time in recent years.6

) That active duty force is just over half the 

size of China’s military, and not that much larger than the armed 

forces of India, Russia, or North Korea. Nevertheless, the American 

armed forces are extensively engaged around the world―not even 

counting the large forces now in and around Iraq. The United States 

has a larger military presence outside its borders than does any other 

country―some 400,000 troops as of early-to-mid-2005.
4

 Republicans and Democrats generally agree about the broad 

contours of American military planning and sizing. Secretary 

of Defense Donald Rumsfeld’s 2001 Quadrennial Defense Review

reaffirmed the active duty troop levels of about 1.4 million maintained 

during the Clinton administration and also retained most of President 

Clinton’s agenda for weapons modernization. After September 11, 

2001, Secretary Rumsfeld sought and received a great deal more 

budget authority than President Clinton’s defense plan called for. 

But a Democratic president would almost certainly also have boosted 

defense spending after the tragic attacks, since the existing Pentagon 

plan was underfunded. Moreover, no major Democratic candidate 

for President in 2004 made a major issue out of the enormous size of 

the U.S. defense budget. 

 That Rumsfeld retained most Clinton-era ideas and programs is 

relatively unsurprising. Although decisions to buy specific weapons 

can be debated, the military needs many new or refurbished planes, 

ships, and ground vehicles since much of the weaponry bought 

during the Reagan buildup is wearing out. America’s technological 

edge in combat may not require every weapon now in development 

or production, but the advantages to maintaining a resounding 

superiority in weaponry are evidenced in the rapid victories and 

relatively low casualties (on all sides, America’s and its enemies’) 

in Bosnia, Kosovo, Afghanistan, and Iraq. Talk of cutting back on 

ground forces during the early Rumsfeld tenure has stopped―at 

least for the foreseeable future―given the challenges posed by the 

post-Saddam Iraq stabilization mission.

The Two-War Framework and Beyond. 

 Since the Cold War ended, U.S. armed forces have been designed 

to be able to fight two full-scale wars at once. Rumsfeld modified 

the requirement in 2001 so that only one of the victories needed to be 

immediate and overwhelming. 

 But the basic logic of the idea was retained―and should be 

retained, even assuming the successful stabilization of post-Saddam 

Iraq. A two-war capability of some sort permits the United States to 

fight one war without letting down its guard everywhere else, which 
5

would undercut deterrence and perhaps increase the likelihood of a 

second conflict. This capability is needed with or without the Bush 

administration’s preemption doctrine―a controversial cornerstone 

on which to base American security policy, but hardly a controversial 

concept since no U.S. president should be expected to stand by while 

an enemy visibly prepares an attack on this country.7 Moreover, as 

Rumsfeld noted in his revised plan, the U.S. military must be able to 

conduct a limited number of lesser contingencies.8 

Readiness. 

 There is little doubt that the readiness of U.S. military forces 

should be very high. That term, according to the Pentagon, refers 

to the ability of individual military units to perform the tasks they 

have been assigned in a timely and proficient way. In other words, 

readiness does not refer to broad choices about sizing or modernizing 

the military or properly defining its strategy. Instead, once these 

broad strategic choices are made, readiness refers to how well the 

DoD’s individual fighting units can carry out the missions they have 

been assigned.

 Viewed this way, readiness is still a very broad subject. 

Measuring it accurately requires a wide array of metrics ranging 

from the competence and training, and even the morale of people, 

to the availability of spare parts and ammunition and fuel, to the 

condition of major equipment. Weaknesses have arisen in readiness 

in certain parts of the force over the past decade, such as insufficient 

numbers of pilots and other technically skilled individuals and some 

deterioration in the availability of Air Force transport and combat 

aircraft. Still, readiness has, overall, been quite robust in the modern 

era and remains that way, though that conclusion must be tempered 

by the fact that DoD was far less forthcoming with readiness data 

recently than in the past. It may have suffered some degradation due 

to the high pace of recent activities, and lately was described by Joint 

Chiefs of Staff Chairman General Richard Myers as “good” rather 

than the more customary “high” or “excellent.” Some indicators 

are worrisome, such as the increase in the rate of serious aircraft 

accidents.9 But it is no surprise, and generally presents only modest 
6

risk, that recently deployed divisions or air wings or carrier groups 

require a few weeks or months of recovery after being deployed. 

So some perspective is in order. Moreover, the peculiarities of the 

service’s readiness scoring systems, and the opaqueness of some 

readiness methodologies, should not be forgotten.10 As Richard Betts 

reminds us, in readiness debates statistics often lie even more than 

they do in other spheres.11

Current Deployments. 

 Prior to September 11, 2001, the U.S. military had about 250,000 

uniformed personnel stationed or deployed overseas at any given 

time. Just over half were in permanent bases; the others on temporary 

assignments away from home base and families. In broad terms, just 

under 100,000 U.S. troops were in East Asia (mostly in Japan and 

South Korea or on ships in the western Pacific), just over 100,000 

were in Europe (mostly in Germany, with other substantial totals 

in the United Kingdom and Italy), and some 25,000 were ashore or 

afloat in the Persian Gulf region. 

 Since that time, of course, deployments have increased 

enormously in the Central Command’s (CENTCOM) theater of 

responsibility, encompassing, as it does, Afghanistan and environs, 

as well as Iraq. As of early 2004, more than 200,000 personnel were in 

the CENTCOM zone (modest numbers being Coast Guard personnel 

or civilians working for DoD). That number included 114,000 in Iraq 

and 26,000 in Kuwait. All together, these deployments made for a 

grand total of about 400,000 uniformed personnel overseas in one 

place or another.12

 DoD is planning major changes in its overseas basing.13 Among 

the proposed changes are to relocate many American forces in Korea 

south of the Han River and out of Seoul, and to move large numbers 

of troops who have been garrisoned in Germany either back home 

or to smaller, less permanent bases in eastern Europe where they 

would be closer to potential combat zones.

THE PENTAGON BUDGET

 America’s defense budget is staggeringly high. Depending on 

how one estimates the spending of countries such as China and 
7

Russia, U.S. defense spending almost equals that of the rest of the 

world combined. In 2002, prior to additional U.S. budget increases 

as well as the added costs of the war in Iraq, American defense 

spending equaled that of all the rest of the North Atlantic Treaty 

Organization (NATO), Russia, China, and Japan, combined. 

 That said, judging whether U.S. defense spending is high or 

low depends on the measure. Compared with other countries, it 

is obviously enormous (see Table 1 on international comparisons). 

Relative to the size of the American economy, by contrast, it remains 

modest by modern historical standards at about 4 percent of GDP 

(half of typical Cold War levels, though nearly twice the current 

average of most of its major allies). Compared with Cold War 

norms, it is high in inflation-adjusted or constant dollars, though not 

astronomically so. 

 The reasons for a very large U.S. defense budget are not hard to 

understand. The United States has security alliances or close partnerships with more than 70 overseas countries (all of the other 25 

members of NATO, all of the Rio Pact countries in Latin America, 

several allies in the Western Pacific, and roughly a dozen countries 

in the Persian Gulf/Mideast region). It alone among the world’s 

powers takes seriously the need to project substantial amounts of 

military power quickly over great distances for sustained periods. 

Indeed, the United States possesses more than two-thirds of the 

world’s collective power projection capability (and an even higher 

percentage if one focuses on high-quality units).14 The United States 

alone undergirds a collective security system in the western world 

that helps countries from South Korea and Japan, to Kuwait and 

Saudi Arabia, to many NATO members, feel secure enough that they 

do not have to engage in arms races with neighbors, launch preemptive wars of their own, or develop nuclear weapons. 

The Recent Growth in the U.S. Defense Budget.

 Still, one might ask why an active duty military of the same size 

as the Clinton administration’s has grown in cost by more $100 

billion a year during the Bush presidency. Specifically, the 2000 

budget for national security (DoD plus nuclear weapons activities 
8

MEAN SPENDING MEAN SPENDING,

YEAR OR PERIOD LEVEL Percent OF GDP 

1960s (1962-1969) 382 10.7

 Peak year 1968 463 9.5

1970s 315 5.9

 Peak year 1970 414 8.1

1980s 379 5.8

 Peak year 1989 440 5.6

1990s 359 4.1

 Peak year 1991 430 5.4

2000 325 3.0

2001 328 3.0

2002 364 3.4

2003 412 3.7

2004 454 3.9

2005 445 3.7

2006 413 3.4

2007 416 3.4

2008 426 3.3

2009 436 3.3

Note: Peak years refer to the year when the inflation-adjusted dollar total was highest for 

the time period in question. This table shows budget function 050, including DoD and DoE 

(but it does not include homeland security activities except those carried out by DoD).

Source: President George W. Bush, Budget of the United States Government, Fiscal Year 2005: 

Historical Tables, Washington, DC: Office of Management and Budget, 2004, pp. 126-128.

Table 1. U.S. National Security Spending in Modern Historical 

Perspective (Outlays in Billions of 2005 Dollars).

of the Department of Energy [DOE]) was $305 billion and the 

administration’s 2005 request was $423 billion.15 Inflation accounts 

for 10 percent of that $118 billion increase between 2000 and 2005, 

but that leaves roughly $100 billion in real-dollar growth. (Note that 

these figures do not even count the costs of military operations in 

Afghanistan and Iraq that have been running at more than $60 billion 

annually. Of the total increase, 27 percent is in military personnel 

accounts, 27 percent in operations and maintenance, 17 percent in 

procurement, 25 percent in research, development, testing, and 

evaluation, and about 4 percent in nuclear weapons activities. 

 Of these totals, the personnel increases are due primarily to more 

generous compensation packages (funds for activating reservists 
9

and for temporarily increasing the size of the active duty military are 

primarily in the supplemental bills). The operations and maintenance 

increases reflect the relentless upward pressure on accounts for 

health care, equipment maintenance, environmental cleanup, and the 

like, together with the Bush administration’s decision to fully fund 

“readiness” accounts for training and equipment maintenance. The 

increases in acquisition funding are partly due to missile defense ($5 

billion a year higher than under Clinton), and partly to Rumsfeld’s 

“transformation” initiatives (again, about $5 billion annually). 

But they also reflect the necessary decision to restore funding for 

hardware to historic norms after a “procurement holiday” in the 

1990s. 

 How much does the war on terror account for this increase in the 

defense budget? Not very much, since, as noted, most of those costs 

(including those for protecting American airspace through Operation 

NOBLE EAGLE) are funded out of supplemental appropriations 

bills. The Pentagon’s funding for homeland security, for example, 

is only about $8 billion, made up of activities such as the support 

provided by some 25,000 soldiers in the United States to protecting 

the homeland.16 Similar activities overseas make the total for activities 

such as base security funded through the regular DoD budget about 

$10 billion annually.17 Roughly another $5 billion may have been 

devoted to expansions in the classified $40 billion annual intelligence 

budget (hidden within DoD’s budget), some of which are clearly 

tied to the war on terror.18 Similarly, the annual budget for special 

operations command has been increased by about $3 billion, to $6.6 

billion (and personnel totals by about 5,000).19 But even adding up 

all these pieces, less than 20 percent of the $100 billion real-dollar 

growth in the annual Pentagon budget is due to the direct effects of 

the war on terror.

Further Planned Budget Increases.

 The current era of increasing defense spending does not yet 

appear to be over. Expectations are for continued annual increases of 

about $20 billion a year―roughly twice what is needed to compensate 

for the effects of inflation (or to put it differently, real budgets are 

expected to keep rising at about $10 billion a year). By 2009, the 
10

annual national security budget would total about $500 billion, in 

rough numbers―about $450 billion when expressed in 2005 dollars. 

Indeed, given the administration’s plans, that is a conservative 

estimate of what its future defense program would cost the country 

(not even including any added costs from future military operations 

or the ongoing missions in Iraq and Afghanistan). The Congressional 

Budget Office estimates that, to fully fund the Pentagon’s current 

plans, average annual costs from 2010 through 2020 would exceed 

$480 billion (in 2005 dollars) and perhaps as much as $530 billion.20

WHAT CAN BE DONE TO CONSTRAIN 

FUTURE DEFENSE BUDGETS?

 Given the country’s security needs, it is important to spend as 

much on the military as is necessary. But given its fiscal predicament, 

it is important not to spend more than prudence dictates. 

 To get a rough sense of what economies may be feasible within 

the Pentagon budget, it is worth noting that several factors push 

defense spending up faster than that 1 percent real growth level―

but also several may permit slower (or even zero) growth. Starting 

with these factors in mind makes it easier to see why 1 percent real 

growth is probably the right general frame of reference within which 

to project future defense spending.

 Historically, real operating costs per uniformed individual have 

increased at 2 percent to 3 percent per year. Weapons costs have 

grown comparably. Rising health care, environmental cleanup, and 

other such activities affect the military as much as any other sector 

of the economy. For example, DoD’s medical costs almost doubled 

in real terms between 1988 and 2003, to just under $30 billion.21 In 

addition, while military compensation is now rather good for most 

troops (by comparison with civilian jobs requiring comparable 

experience and education), it is important that it stay that way. To 

attract top-notch people, military pay increases must keep up with 

civilian pay, which can require real growth of at least 1 percent a 

year.22 Moreover, further increases in pay for certain specific groups 

may be appropriate, such as highly-skilled technicians with much 

more remunerative job opportunities in the private sector, or those 
11

reservists called up to active duty for extended periods who sacrifice 

large amounts of income as a result.23

 Several other areas offer some hope of savings. Greater use of 

relatively inexpensive high technology computers and electronics 

can allow rapid improvements in military capabilities at modest 

cost. Defense efficiencies through privatization and other reforms 

may save at least modest sums. And greater assistance from allies 

may reduce overall demands on American forces, especially over a 

10-year period like that being considered here.

More Burdensharing?

Today the United States outspends its major allies by about 2 to 1, 

but outdistances them in military force that can be projected overseas 

and sustained there by a ratio of at least 5 to 1. Most American 

allies spent the Cold War preparing to defend their own or nearby 

territories against a Soviet threat. American forces focused on how 

to deploy and operate forces many thousands of miles from home. 

Most U.S. allies have gotten serious about this effort only since the 

Cold War ended (if then).

 Shifting defense responsibilities to our allies is an idea that is 

attractive in the United States. Unfortunately, near-term prospects 

for doing so to any significant degree are not good, even though 

many U.S. allies have good militaries, strong military traditions, and 

a high-tech industrial base. The problem is largely political. It is not 

that Europeans are as force-averse as some argue. The phrase that 

“Americans are from Mars, Europeans from Venus,” meaning that 

the former are inclined to use force and the latter to use more peaceful 

inducements in their foreign policy, is overstated as evidenced by 

European military action in Bosnia, Kosovo, Afghanistan, and, to 

some extent, even Iraq. However, it is probably true that Europeans 

do not believe the world to be quite as dangerous a place as Americans 

typically do. And even if Europeans are far from pacifist, on average 

they are not quite as inclined to use force as is the United States. 

Several European countries face fiscal deficits that, combined with 

their political priorities and their voters’ threat perceptions, probably 

preclude big defense buildups. They also have strong incentives to 

free-ride on U.S. commitments. European nations also often cite their 
12

substantial contributions to peacekeeping missions as evidence that 

they are already bearing a considerable share of the defense burden. 

Germany and Japan are disinclined to remilitarize, and their former 

adversaries, including Americans, who remember World War II, 

hesitate to urge them to abandon this reticence.24

 Some progress has been made. European defense budgets 

have gone up about 25 percent in this decade. Their militaries are 

developing the combined capacity to deploy up to 60,000 troops at 

a considerable geographic distance and to sustain them there for a 

year. Japan is slowly enlarging its interpretation of which military 

missions are consistent with its post–World War II constitution. U.S., 

British, and French programs are slowly helping African militaries 

improve their skills. And the transatlantic quarrel over Iraq may help 

motivate European countries to develop more military capability to 

gain greater influence in decisions on the use of force. Reallocations 

of about 10 percent of current major allied military spending could 

in theory give other Organization for Economic Cooperation and 

Development (OECD) countries fully half as much deployable 

military capability as the United States within a decade.25 That, in 

turn, could allow modest reductions in American troop strength, if 

not right away, then eventually.

Emphasizing Advanced Electronics and Computers 

in Defense Modernization.

 One reason the Pentagon budget is slated to grow so much in 

coming years―with real increases of closer to 2 percent a year than 

the 1 percent targeted here―has to do with buying weaponry. Some 

of the upward pressure arises from high-profile issues such as 

missile defense. But most comes from the main combat systems of 

the military services, which are generally wearing out. Living off 

the fruits of the Reagan military buildup, the Clinton administration 

spent an average of $50 billion a year on equipment, only about 15 

percent of the defense budget in contrast to a historical norm of about 

25 percent. This “procurement holiday” must end, and is ending. 

 But the Pentagon’s weapons-modernization plan is excessive. 

Despite Bush’s presidential election campaign promise to “skip a 

generation” of weaponry, his Pentagon has canceled only three major 
13

weapon systems―the Navy’s lower-altitude missile defense program, 

the Army’s Crusader howitzer (which was not even particularly 

expensive), and more recently the Army’s Comanche helicopter. 

Although procurement budgets must continue rising, the rapid 

increases envisioned in current plans are not essential. Economies 

can almost certainly be found through expanded applications of 

modestly priced technologies, such as the precision weapons and 

communications systems used so effectively in Afghanistan and 

Iraq.

 The Bush plan lacks clear priorities. It proposes to replace major 

combat systems throughout the force structure with systems typically 

costing twice as much. Even though procurement budgets have 

not yet risen dramatically, the current plan will soon oblige them 

to do so―and it has already led to historic increases in the research, 

development, test and evaluation (RDT&E) budget for advanced 

systems development.26 A more discriminating and economy-minded 

modernization strategy would equip only part―not all―of the armed 

forces with the most sophisticated and expensive weaponry. That 

high-end component would hedge against new exigencies, such as 

an unexpectedly rapid modernizing of the Chinese military. The 

rest of the military establishment would be equipped primarily with 

relatively inexpensive upgrades of existing weaponry, including 

better sensors, munitions, computers, and communications systems. 

Such an approach would not keep the procurement budget in the 

range of $70 billion to $75 billion, but it might hold it to $80 billion 

to $90 billion a year, instead of $100 billion or more. The Bush 

administration’s 2006 budget request moved somewhat in this 

direction, with the announcement of plans to scale back weapons 

purchases for systems such as the F-22, C-130J, missile defense, and 

aircraft carrier fleet. But a pruning knife might still be taken to the 

Joint Strike Fighter (JSF), the Army’s future combat systems (FCS) 

program, the V-22 Osprey, and several other programs.

Privatization and Reform.

 All defense planners would love to save money in the relatively 

low-profile parts of the Pentagon budget known as operations and 

maintenance. These accounts, which pay for a wide range of activities 
14

including training, overseas deployments, upkeep of equipment, 

military base operations, and health care costs―in short, for nearterm military readiness― have been rising fast in recent years, and it 

will be hard to stop the upward trend.27

 Some savings are already in the works. Congress has agreed to 

authorize another round of base closures in 2005.28 Since the Cold 

War ended, U.S. military forces have shrunk by more than onethird, yet domestic base capacity has fallen only 20 percent. Once 

completed, retrenchment of base capacity will save at least $5 billion 

annually. Overhauling military health care services by merging the 

independent health plans of each military service and introducing 

a small copayment for military personnel and their families could 

save $2 billion or more per year.29 Other savings in operations and 

maintenance are possible. For example, encouraging local base 

commanders to economize by letting them keep some of the resulting 

savings for their base activities could save a billion dollars a year or 

more within a decade.30

 All that said, these accounts are crucial to national security and 

have proved tough to cap or contain. Privatization is no panacea; 

it takes time, sometimes raises various complicated issues about 

deploying civilians to wartime environments, and generally saves 

much less than its warmest advocates attest.31 But if operating costs 

can be held to a 1 percent real rise instead of the historical norm 

exceeding 2 percent, a slower pace of defense budget growth may 

someday be within reach.

 These cost-saving ideas all require serious consideration because 

the case for increased expenditure in one part of the defense budget―

the size and cost of ground forces―also needs to be made. Enormous 

strain is now being imposed on U.S. Soldiers and Marines by the Iraq 

mission and other responsibilities. Alas, there is little prospect these 

strains will fade away anytime soon. The top priority for defense 

planners today is thus to avoid breaking the American ground forces 

by driving out good people who decide they are no longer willing to 

endure the excessive pace of deployment after deployment.

ENDNOTES

 1. Peter A. Diamond and Peter R. Orszag, Saving Social Security: A Balanced 

Approach, Washington, DC: Brookings, 2004, pp. 27-38.
15

 2. Alice M. Rivlin and Isabel Sawhill, eds., Restoring Fiscal Sanity: How to 

Balance the Budget, Washington, DC: Brookings, 2004, pp. 5-7.

 3. See Jared Diamond, Guns, Germs, and Steel, New York: W. W. Norton and 

Co., 1997.

 4. Barry Posen, “Command of the Commons: The Military Foundation of U.S. 

Hegemony,” International Security, Vol. 28, No. 1, Summer 2003, pp. 5-46. For a 

related argument, see Michael O’Hanlon, Technological Change and the Future of 

Warfare, Washington, DC: Brookings, 2000, pp. 106-167.

 5. On the importance of America’s transparent system, see G. John Ikenberry, 

“Institutions, Strategic Restraint, and the Persistence of American Postwar Order,” 

International Security, Vol. 23, No. 3, Winter 1998/99, pp. 43-78.

 6. Department of Defense News Release, “National Guard and Reserve 

Mobilized as of February 25, 2004,” February 25, 2004, available at www.defenselink.

mil/releases/2004/nr20040225-0366.html. At that time, mobilized Army reservists 

totaled approximately 155,000; Air Force, 18,400; Marine Corps, 5,400; Navy, 2,300; 

and Coast Guard, 1,600.

 7. President George W. Bush, The National Security Strategy of the United States, 

Washington, DC: White House, September 2002, pp. 13-17. For a critique, see 

Michael O’Hanlon, Susan Rice, and James Steinberg, The New National Security 

Strategy and Preemption, Policy Brief No. 113, January 2003.

 8. See Posture Statement of General Richard B. Myers, Chairman of the Joint Chiefs 

of Staff, before the Senate Armed Services Committee, 108th Congress, February 3, 

2004; and Secretary of Defense Donald H. Rumsfeld, Quadrennial Defense Review 

Report, Washington, DC: Department of Defense, September 30, 2001.

 9. Myers, Posture Statement, p. 24; and Adam J. Hebert, “A Plague of Accidents,” 

Air Force Magazine, February 2004, p. 59.

 10. Jason Forrester, Michael O’Hanlon, and Micah Zenko, “Measuring U.S. 

Military Readiness,” National Security Studies Quarterly, Vol. 7, No. 2, Spring 2001, 

pp. 100-101.

 11. Richard K. Betts, Military Readiness: Concepts, Choices, Consequences, 

Washington, DC: Brookings, 1995, pp. 87-114.

 12. Testimony of General John P. Abizaid, Commander, U.S. Central Command, 

before the Senate Committee on Armed Services, March 4, 2004, pp. 1, 7-8, available 

at www.senate.gov/~armed_services/testimony.cfm?wit_id=2312&id=1043.

 13. As General Richard Myers put it, “During the FY 2004 budget cycle, 

Congress voiced concern over the Department’s overseas basing plans. Since then, 

our global posture strategy has matured. We are now in the process of detailed 

consultation with our allies and members of Congress.” See Myers, Posture 

Statement, p. 33.
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 14. Michael E. O’Hanlon, Expanding Global Military Capacity for Humanitarian 

Intervention, Washington, DC: Brookings, 2003, pp. 56-57.

 15. The total 050 budget for 2003 was $456 billion, and for 2004 it was $461 

billion. But those figures include supplemental appropriations for military 

operations of approximately $73 billion and $65 billion, respectively, for the wars in 

Iraq and Afghanistan and certain homeland security emergency efforts. See House 

Committee on the Budget, “Fiscal Year 2004 Defense and Iraq and Afghanistan 

Reconstruction Emergency Supplemental Appropriations,” November 5, 2003, 

available at www.budget.house.gov; House Resolution 1559, “Making Emergency 

Wartime Supplemental Appropriations for the Fiscal Year 2003,” January 7, 2003, 

available at thomas.loc.gov/cgi-bin/query/C?c108:.temp; Jonathan Weisman, “Military 

Operations in Iraq Cost Nearly $4 Billion a Month,” Washington Post, July 10, 2003, 

p. A24; and David Firestone, “The Struggle for Iraq: Senate Sends Spending Bill 

for War Costs to President,” New York Times, November 4, 2003, p. A11.

 16. R. L. Brownlee and General Peter J. Schoomaker, Posture of the United States 

Army, 2004, February 5, 2004, pp. 8-10.

 17. Steven M. Kosiak, “Funding for Defense, Military Operations, Homeland 

Security, and Related Activities Since 9/11,” CSBA Backgrounder, Washington, DC: 

Center for Strategic and Budgetary Assessments, January 21, 2004.

 18. The estimate comes from former Central Intelligence Agency (CIA) official 

John MacGaffin; see James Risen, “How to Improve Domestic Intelligence,” New 

York Times, April 18, 2004, p. WK5.

 19. Testimony of General Bryan D. Brown, Commander, U.S. Special 

Operations Command, before the Subcommittee on Terrorism, Unconventional 

Threats, and Capabilities of the Committee on Armed Services of the U.S. House of 

Representatives, March 11, 2004, p. 8, available at www.house.gov/hasc; International 

Institute for Strategic Studies, The Military Balance 2003/2004, London: Oxford 

University Press, 2003, pp. 24-25; International Institute for Strategic Studies, The 

Military Balance 2000/2001, London: Oxford University Press, 2000, p. 31; and 

Department of Defense, “Special Operations Forces Posture Statement 2000,” 

available at www.defenselink.mil/pubs/sof.

 20. Adam Talaber, The Long-Term Implications of Current Defense Plans: Summary 

Update for Fiscal Year 2004, Washington, DC: Congressional Budget Office, July 

2003, p. 2.

 21. Allison Percy, Growth in Medical Spending by the Department of Defense, 

Washington, DC: Congressional Budget Office, 2003, pp. 1-2.

 22. See Amy Belasco, Paying for Military Readiness and Upkeep: Trends in Operation 

and Maintenance Spending, Washington, DC: Congressional Budget Office, 1997, p. 

5; and Lane Pierrot, Budgeting for Defense: Maintaining Today’s Forces, Washington, 

DC: Congressional Budget Office, 2000, pp. 18-23.

 23. Tom Lantos, “Military Hardship Duty: Fill the ‘Pay Gap’ for National 

Guard and Reserves,” San Francisco Chronicle, June 10, 2003, p. 23.
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 24. For more on the debate about Europe versus America, see Robert Kagan, 

“Power and Weakness,” Policy Review, June 2002; and Philip H. Gordon and Jeremy 

Shapiro, Allies at War, New York: McGraw Hill, 2004.

 25. For backup on those estimates, see John E. Peters and Howard Deshong, 

Out of Area or Out of Reach? European Military Support for Operations in Southwest 

Asia, Santa Monica, CA: RAND, 1995; Michael O’Hanlon, “Transforming NATO: 

The Role of European Forces,” Survival, Vol. 39, No. 3, Autumn 1997, pp. 5–15; 

NATO Burdensharing after Enlargement, Washington, DC: Congressional Budget 

Office, 2001.

 26. Steven M. Kosiak, Analysis of the FY 2005 Defense Budget Request, Washington, 

DC: Center for Strategic and Budgetary Assessments, 2004, pp. 15-23.

 27. Gregory T. Kiley, The Effects of Aging on the Costs of Operating and Maintaining 

Military Equipment, Washington, Congressional Budget Office, 2001. Congressional 

Budget Office, Paying for Military Readiness and Upkeep: Trends in Operation and 

Maintenance Spending, Washington, DC: Congressional Budget Office, 1997.

 28. Some optimists tend to exaggerate the savings from possible base closings, 

however. Wayne Glass, Closing Military Bases: An Interim Assessment, Washington, 

DC: Congressional Budget Office, 1996.

 29. See Ellen Breslin-Davidson, Restructuring Military Medical Care, Washington, 

DC: Congressional Budget Office, 1995; Russell Beland, Accrual Budgeting for 

Military Retirees’ Health Care, Washington, DC: Congressional Budget Office, 

2002.

 30. Robert F. Hale, Promoting Efficiency in the Department of Defense: Keep Trying, 

but Be Realistic, Washington, DC: Center for Strategic and Budgetary Assessments, 

2002.

 31. P. W. Singer, Corporate Warriors: The Rise of the Privatized Military Industry, 

Ithaca, NY: Cornell University Press, 2003.
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