What Color Is Your Money?

The Defense Department has a spending problem and must be reined in. The solution, however, goes far beyond simplistic budget cutting efforts such as across-the-board sequestration. It involves a fundamental cultural shift from both our appropriators and our subordinate-level commanders.

The past 10 years have been a financial boon for the military. This was true even as the rest of the U.S. economy was beset by recession and increasing unemployment. In 2001, the Defense Department base budget was $290.5 billion (in fiscal year 2012 dollars). By 2011, this amount had risen to $526.1 billion, excluding the funding required to sustain the Iraq and Afghan wars.

Beyond the rapid increase in the overall budget, a more pervasive and concerning trend exists: the incredible waste and inefficiency brought by established interests more concerned with keeping the spigot of money flowing than with winning wars.

Part of this is because of the ease with which the military has received unfettered access to our nation’s treasure. Because it is politically unpatriotic to question the military—and by extension, the appropriations it requests—Congress has acquiesced in pouring money into anything earmarked defense. Ironically, many of the same politicians who decry throwing money at education to improve schools hardly bat an eye when doing the same for defense.

Additionally, the constancy and security of military funding psychologically insulates the recipients of such largess from the realities of a constrained resource environment. This can lead to indifference when managing resources, especially those funded by “other people’s money”—in this case, the U.S. taxpayer.

Fortunately, this has begun to change as fiscal reality sets in; but entrenched players with literally billions of dollars at stake continue to fight for their short-term interests. As any behavioral economist will tell you, it is much harder to give up money you already have than to forgo it in the first place.

This mindset has trickled down to the lowest levels. One of the consistent and disconcerting trends I’ve seen is the burning of whatever funds remain at the end of the fiscal year. Because future budgets are determined by past use, any unused funds are deemed unnecessary and thus removed. Therefore, in the perverse incentive structure we have, it behooves a commander to spend everything he or she has.

Some recent examples stand out. Once, I was tasked with procuring $60,000 worth of unneeded furniture so that higher headquarters could use their remaining dollars. Another squadron bought multiple, unneeded plasma screen televisions to display a rotating four-slide PowerPoint in the maintenance division. That same squadron spent $2,000 per unit to buy multiple 1980s-vintage tape players for its aging jets—while stuck in bureaucratic limbo trying to get a modern, already procured, revolutionary debriefing tool.

In the grand scheme of a $500 billion defense budget, these examples are peanuts. However, a former commanding officer reports that these practices have been endemic over the past 30 years. Multiplied over decades and across the services, this culturally accepted waste quickly adds up.

Unfortunately, this is rational behavior on the part of the commanders expending these resources. Their performance is evaluated on how much of a line item they use rather than being rewarded for finding efficiencies while still being combat capable. Furthermore, the system incentivizes penny-wise, pound foolish behavior because of the “colors of money” in various pots.

It is not uncommon for a squadron to be unable to send an aviator to a mission-critical school because of limited temporary assigned duty funding, yet also reach the end of a fiscal year with too many flight hours remaining. In a rational world, a commanding officer would be able to divert the $10,000 it costs for an hour of flight time and send the subordinate to joint tactical air controller training. Obviously, this is not the world in which we live.

So how do we tackle this? We must reward leaders at the squadron and battalion levels for saving taxpayer money. Absurdly, the military entrusts commanders to lead their forces into battle, but not to adapt their funds to meet these goals. This is wrongheaded and antithetical to the military’s ethos of allowing decisions to be made at the lowest possible level. Permitting adaptable funding to address real-time needs, with appropriate oversight, will lead to a much more combat-effective and fiscally responsible force.

Finally, we must inculcate a culture of economic prudence that encourages the return of unnecessary and unused money. The current fiscal reality allows an incredible opportunity for the military to reexamine how we view and spend money. We should not waste it, bemoaning the loss of a blank check.

Lt. Ben Kohlmann, USN, is an F/A-18 instructor pilot based out of MCAS Miramar, California. He is the founder of Disruptive Thinkers, an organization devoted to bringing innovative military personnel together with civilian entrepreneurs. The views expressed in this column are his own and not necessarily those of the U.S. Navy or of SIGNAL Magazine. We welcome your comments on this column below or via email at signalnews@afcea.org.