Monday, August 01, 2011
Joe Mazzafro

At  the time of the July edition of Mazz-INT Blog, the government was tied in a knot over coming to grips with how to get long term spending under control so there would be the political conditions to raise the debt ceiling on August 2nd; NATO forces  were engaged in a seeming stalemate in Libya to remove Gadhafi from power;  there was rising concern about corruption in the Karzai “government” in Afghanistan; near open confrontation between Islamabad and the Washington over continuing US unilateral drone attacks against Al Qaeda and Taliban leadership inside of Pakistan; and the US Intelligence Community (IC) was finishing a quiet but well deserved victory lap for taking out Osama bin Laden.  As August begins I am happy to report that Bin Laden remains dead ----- with increasingly negative impacts for Al Qaeda, but little else as changed.

So what to discuss with you that is worth your time?  As Eddie Layton,  Nimitz’s N2 throughout WWII, was famous for saying “the biggest alligator is the one closest to you” which means to me the debt crisis and its impact on the on the IC.  As I write this on 31 July, the Executive and Legislative branches are struggling to figure out how to raise the debt ceiling so the US government will not be in default on August 3rd when you are likely to be seeing these ramblings.  So let’s focus on how debt crisis will likely impact the IC.

In the short run the ideological debate about whether to use spending cuts or tax increases to reduce the US debt has hamstrung the IC from spending FY 11 money that came available after the Continuing Resolution (CR) was lifted on April 8th as there is the very real possibility that some of that money will be taken back as a down payment on debt reduction.  Making the situation worse is the continuing debt ceiling goat rope that all but insures FY 12 will commence with another CR on October 1st.  What this nets out to is the IC (as well as other parts of the government) effectively operating at or about FY10 funding levels  - - - -  without anybody in the White House having to recommend a cut or the Congress needing to take a vote on budget cuts.  Sounds like risk free politics to me!

If not in the next 48 hours, the US government will eventually take action to raise the debt ceiling so at least interest on money already borrowed can be paid, but until that happens the IC along with all other branches of government needs to brace for direction from the Secretary of the Treasury to provide funds from current accounts to pay for immediate bills vice any new spending.  At this point there is serious concern about salary payments being deferred.  This makes it difficult, I would think, to seriously consider execution options for FY 11 funds beyond war needs and essential sustainment costs.

Presumably the threat of the equity markets tanking in combination with citizen outrage will cause both houses of the Congress and the White House to see the need to compromise so the debt ceiling can be raised before time runs out on Augusts 2nd, but this will result in at least a trillion dollars (not so long ago a billion dollars was real money) of cuts over the next decade with more to follow.  Undoubtedly this means double digit percentage cuts for the IC in FY 13 if not FY 12 and going forward for several years (The size of which is a matter of considerable debate between the Office of the Director of National Intelligence (ODNI) and the Office of Management and Budget (OMB)).  The extraction of the peace dividend in the early 1990s resulted IC budget reductions of approximately 26% according to DNI Clapper in an era when the economy was expanding, unemployment was less than 6%, oil cost were under $40 a barrel and the national debt was less than 50% of GDP.  Given today’s poor economic conditions and the deficit being at more than 90% of GDP, the “guesstimated” range of cuts to the overall IC budget of $80 billion are between 10 and 30% a year over perhaps as long as a decade, which raises the question of how can the IC best deal with funding reductions that will inevitably be deep and sustained?

Several studies, including INSA’s publicly available “Smart Change,” ( along with comments from the ODNI in various forums show general agreement on the following:

Ø  All elements of the IC are not equal so  spreading cuts equally across the entire IC will result in the serious degradation of important capabilities, i.e.,  avoid incremental “salami slicing” to reach budget reduction goals

Ø  Painful cuts are not like wine  ----- they do not go down better with time, so taking them sooner than later at least leads to stability

Ø  Target personal cuts on management staffs that add little in the way of capabilities; avoid buy outs as these encourage the best people to leave government service

Ø  Look for redundancies caused by rapid expansion of the IC since 2003

Ø  Husband resources for the future (e.g. Research and Development (R&D); targeted new hires; infrastructure recapitalization, etc)

Ø  Community reorganizations usually lead to institutional and personnel churn not to efficiency and dollar savings

As with slashing the federal deficit, everybody is for a list like the above until you start identifying what to actually cut, so let’s put some specifics on the table to consider:

Ø  Suspend all investment in new ISR platforms until analytical capacity is able to examine at  least 75% of what is being collected today

Ø  Fence 5% of the IC budget for R&D and another 5% for infrastructure modernization and have IC agencies compete for access to this funding

Ø  Reduce security costs by shifting from a manpower intensive (and apparently ineffective) compliance based model to an information technology centric behavior based approach

Ø  Within the next five years consolidate all service GDIP funded intelligence production centers (ONI, NGIC, NASIC, MCIA) under DIA leaving the services to manage MIP resources only

Ø  Under the MIP, terminate service specific instances of the Distributed Common Ground System (DCGS) in favor of a single DCGS program for all of DoD run by a Defense IC Executive Agent

Ø  Within three years close the Joint Intelligence Task Force --- Counter Terrorism (JITF-CT) run under DIA executive agency and move its functional responsibilities to the National Counter Terrorism Center (NCTC)

Ø  Starting with headquarters and oversight staffs cut IC personnel end strength by 20% over the next five years in a way that will preserve generational diversity across the IC while insuring that IC contractors are reduced by an equal or greater amount

Ø  Identify major acquisition programs for termination that will result in at least $10 billion of savings over the next five years

Of course to get real savings without “salami slicing I could also recommend shuttering a large national intelligence agency that I see as increasingly anachronistic, but that would lurch the IC to close to organizational change  that most see as counterproductive and unlikely to be considered, in the near term at least

I am under no illusion that cuts like these go well beyond fat and probably into IC muscle sinew,  but even a 30% cut of the IC budget means a top line of $56 billion dollars, which is larger than the defense expenditures of all but two or three nations.  Properly allocated and managed an IC budget of more than $50 billion should be sufficient for providing for the security of our Nation - - - - and some of our allies.

That’s what I think; what do you think?







Share Your Thoughts:

Mazz, you're the first commentator I've seen with both intelligence and integrity engaged. Cross-posting this to Phi Beta Iota. The Open Source Agency (OSA) is now officially in play. Jim Clapper refused to heed my pleading (and the recommendations of other seniors) that he sponsor the OSA under diplomatic auspices so as to create a baseline against which all classified collection and analysis could be measured. We all know this would lead to a 60% cut in classified collection, hence I confess to being real disappointed that Jim Clapper was not willing to bite the bullet years ago. Reality bats last. OSA is coming whether the IC likes it or not. IMHO.

Robert I appreciate your feedback and kind thoughts joemaz

Even though I think this bloodlust for cuts is misguided and dangerous, there can be no doubt they're coming. Even if we come back around in a few years, it's going to be painful until then. And this (both the ODNI posture it opens with AND joemaz's COA) looks like an effective and prudent response. The one thing that I would add is that we must temper our enthusiasm for cutting "overhead" to ensure that there remain enough senior-grade positions to provide a viable career path for the best and brightest the IC identifies as its future leadership.

Agree but with the caveat that the only senior I think is worth saving is Charlie Allen, with a few others useful as $90K a year consultant prohibited to work for vendors. The 70% we spend on vendors is what has to go first, with best in class vendor worker-bees absorbed into the government workforce. Am delighted to see my first book, which was published by AFCEA back when Al Campen had the book publishing initiative, is now popular again. ON INTELLIGENCE: Spies and Secrecy in an Open World, a decade or two ahead of its time, is now mainstream common sense. Free online and also on sale at Amazon. If AFCEA ever wants me to speak on intelligence reform, everything I briefed in the 1990's is still valid and on tap.

Having a balanced work force with viable career path is important, but nobody stays unless the work is truly meaningful and relevant. Relevance is something I see the IC all to often assuming about itself vice seeking to be joemaz

In the words (paraphrasing, quote is someplace) of General Tony Zinni, USMC (Ret), then recently retired from CINCCENT: The IC provided "at best" 4% of what I needed to know--I got 80% from open sources on my own, and if I knew where to look or who to ask, the other 16% via others (eg CCC).

$80 billion a year for 4%? Not even close to reasonable.

I'm already excommunicated (but will come back when it all needs to be dismantled responsibly), you are well on your way to being a heretic first class (this is a good thing).

Until you get the truth on the table, no matter how ugly, you cannot deal with it. A CEO said that. I agree.