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Defense One - July 31, 2013, By Stephanie Gaskell

With the results of a months-long blue ribbon strategy review in hand, Defense Secretary Chuck Hagel offered up a defense budget scenario that he claimed lies somewhere "in between" President Obama's fiscal 2014 request and sequestration by cutting $250 billion over the next 10 years. But Hagel warned that any solvent budget will require Congress and the White House to come up with a compromise on how to align the department's national security strategy with a tighter fiscal outlook.

Hagel's much-anticipated Strategic Choices and Management Review offered no decisions on the way forward, as Defense One previously reported, just options -- all of them portrayed as grim -- on how to find billions of dollars in savings without jeopardizing national security.

After a breakfast briefing with lawmakers, Hagel put the onus firmly on Congress either to accept hard-to-swallow cuts in military pay, benefits and bases, or change the law requiring sequestration. "Opposition to these proposals must be engaged and overcome, or we will be forced to take even more draconian steps in the future," the secretary said during a Pentagon briefing.

Hagel and his top staff said there are several cost-cutting measures "that should be pursued regardless of fiscal circumstances," including cutting his top staff by 20 percent, decreasing the number of direct reports to his office and consolidating some functions and positions, and reducing intelligence analysis and production at the combatant commands. Those cuts would result in about $40 billion in savings over the next 10 years, he said, but that is still far from sequestration's required $500 billion cut over that time.

The review also laid out options to severely cut the size of the active Army, possibly down to as few as 380,000 troops, finding $50 billion in savings from compensation reforms, reducing Air Force tactical squadrons by as many as five and cutting the size of the C-130 fleet -- all areas in which DOD has proposed reductions since last year but that Congress has rejected.

Savings from these changes, Hagel warned, would take several years to materialize. "The reality is that cuts to overhead, compensation and forces generate savings slowly. With dramatic reductions in each area, we do reach sequester-level savings but only towards the end of a 10-year timeframe. Every scenario the review examined showed shortfalls in the early years of $30 billion to $35 billion," Hagel said. "Making cuts strategically is only possible if they are 'backloaded.'"

The review, or SCMR, laid out two options for finding some middle ground but both come at a cost to either capacity or capability, Hagel said. In the first option to reach $250 billion in cuts over 10 years, Hagel claimed the Pentagon can "trade away size for high-end capability." Under this scenario, the active Army would shrink to between 380,000 and 450,000 troops, the number of carrier strike groups would drop from 11 to 8 or 9, the Marine Corps would be trimmed to 150,000 to 175,000 and old Air Force bombers would be retired.

The second option would "trade away high-end capability for size." There would be fewer cuts to the size and shape of the force but the department "would cancel or curtail many modernization programs, slow the growth of cyber enhancements and reduce special operations forces."

"The basic trade-off is between capacity -- measured in the number of Army brigades, Navy ships, Air force squadrons and Marine battalions -- and capability, our ability to modernize weapons systems to maintain our military's technological edge," Hagel said.

No matter what scenario becomes reality, Hagel said he understands that the military is in a transformative period after fighting two long wars. "The balance we strike between capability, capacity and readiness will determine the composition and size of the force for years to come," he said.

Even if the Pentagon enacts all of the options laid out in the SCMR, Hagel said, "the savings fall short of meeting sequester-level cuts, particularly during the first five years of these steep, decade-long reductions.

While the review doesn't change anything -- it's merely a guide to help navigate uncertain fiscal times -- many see it as yet another sounding of the alarm over how devastating sequestration is to the nation's military. But Hagel said he was not "crying wolf."

"What we're trying to project here is not crying wolf or not trying to overstate or overhype, and I said in every word I said here and in everything that our people have been talking about, every time they talk to the press, I have said, said it again this afternoon, 'Don't put a word anywhere that's exaggerated. I don't want any of us to have to come back and say "Well, but you overstated that Mr. Secretary. I don't want you to understate it, but everything we say has to be factual and you'll draw your own conclusions."

To view this article at the source publication, go to http://www.defenseone.com/management/2013/07/hagel-presses-congress-grim-alternatives-sequestration/67853/?oref=dropdown.

The information above is for general awareness only and does not necessarily reflect the views of the Office of Economic Adjustment or the Department of Defense as a whole.

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