The Bottom Line: Downsizing Devil is in the Details

Industry has been reacting to sequestration woes for some time, but now it appears the details of downsizing are finally making their way into the military sector. During a press conference late last month, Defense Secretary Chuck Hagel spoke about the Strategic Choices in Management Review and, as expected, the worse case scenario cuts deeper than reduced travel and reviewing weapon systems.

One move already is in the works: reducing the department’s major headquarters budgets by 20 percent. Cutting back on intelligence analysis and production at combatant commands (COCOMs) also is being considered. And, this may not be the only change the COCOMs experience; consolidation of the geographical COCOM structure could take place.

While these types of adjustments will no doubt have far-reaching effects, they are by far not the most disturbing changes being considered. One possibility is adjusting retirees’ health care benefits to increase the use of private-sector insurance when available. Another is altering how the basic housing allowance is calculated—requiring individuals to pay more—and reducing the overseas cost-of-living adjustment. Pay raises for military and civilian personnel also would continue to be limited.

Hagel emphasized that he was not announcing compensation changes at the press conference. However, he has tasked Gen. Martin E. Dempsey, USA, chairman, Joint Chiefs of Staff, to lead an effort to identify $50 billion in compensation savings over the next 10 years—not a minor mission when the general must find a way to accomplish it yet continue to enable the department to recruit and retain a high-quality force.

But the department’s options go beyond cutting dollars. Also under consideration is a strategic reduction in the size of U.S. ground and tactical forces. The size of the U.S. Army could be cut by as much as 40,000 active duty and 25,000 reservists, or nearly 10 percent across the board.

Hagel believes the department can continue to defend the United States and meet its global responsibilities with these changes to staffing, compensation and force structure. But at what cost? Yes, cuts such as these would meet the $150 billion in savings the president’s budget proposal requires, but when it comes to the military, global security and homeland security, is it possible to provide the same protection with less resources?

The bottom line is that the possible cuts go deeper than a financial bottom line. In the end, it will be the people who serve our country that will be asked to sacrifice even more than they already do … and that’s a lot. At the press conference, Hagel himself said, “No one in uniform is overpaid for what they do for this country.” When it comes to balancing a budget, it is this fact that should be foremost in U.S. military leaders’ minds.

For more insight into cuts in the Defense Department budget, listen to the question-and-answer session of the House Armed Services Committee in a five-minute video online.

If it was up to you, what cuts would you make to reduce defense spending in the coming years?