New CBO Report Points Way to Possible Trillion-Dollar Cut in Defense Budget

A new report from the nonpartisan Congressional Budget Office (CBO) offers a number of interesting perspectives on how the U.S. defense budget could sustain a $1 trillion budget cut over the course of 10 years. Further, the CBO report makes clear that national defense programs could absorb a well-structured $1 trillion cut while still protecting the homeland and America’s allies from foreign adversaries.

The CBO report also does the important work of putting a potential cut in historical perspective. While significant and challenging to execute, a $1 trillion cut over a decade would, at 15 percent less spending over 10 years, pale in comparison to America’s military spending drawdown from 1988 to 1997 (30 percent) and from 2010-2015 (25 percent). A 15-percent cut from fiscal years (FYs) 2022 to 2031 would also still leave annual defense spending at more than it was at any point from 1948 through 2002.

The analysis from CBO has some major limitations. First, it only accounts for reductions to active-duty personnel (and associated costs), operation and maintenance (O&M) costs, procurement, and research. It does not include or consider potential cuts to reserve personnel.[1] It also does not include any potential cuts to nuclear forces, which CBO previously projected would cost taxpayers $634 billion from FY 2021 through 2030. It also does not contemplate any cuts to the multi billion-dollar new Space Force branch.

However, the lengthy CBO report is a helpful exercise in how the Department of Defense (DoD) and the military’s service branches could absorb a $1 trillion cut while still defending U.S. interests at home and abroad.

CBO contemplates three options for military force reduction:

  • Maintain the existing national security strategy but with fewer personnel;
  • Change the existing national security strategy to focus more on countering adversaries with international allies and coalitions; and
  • Change the existing national security strategy to focus more on protecting America’s access to sea, land, and air and space.

The second strategy in particular seems to recognize that America’s decades-old expectation of “overmatch against all opponents” may be impractical when it comes to great power opponents like China and Russia. As CBO puts it:

“The objective would be to increase the cost of aggression rather than to mount a full-scale defense or immediate counterattack.”

CBO adds that history “has proven the value of U.S.-led coalitions in defeating aggression” (emphasis ours), but points out that one legitimate risk is the quality of coalition forces that would effectively replace U.S.-only military forces in countering aggression.

Needless to say, where matters concern military or national security strategy they may fall outside of our areas of expertise as a taxpayer advocacy organization. Where we do have expertise is in assessing federal budgets and federal agencies’ efforts to reduce waste. And what we know from our research and from the work of government and non-government watchdogs is that America’s debt and deficit outlook is grim and DoD is failing to achieve bold cost-cutting reforms on its own.

On the latter front, an effort from lawmakers to organize department-wide business management improvements lasted all of a few years before Congress decided to scrap the Chief Management Officer position tasked with overseeing such improvements. That was a disappointing development that makes it all the more likely DoD will identify a pittance of business reform savings in the coming years -- rather than the bold cost reductions needed to maintain the existing security strategy with the same or fewer taxpayer dollars.

And on debt and deficits, NTU has certainly spent plenty of ink on the need for DoD and its advocates in Congress to contribute to urgently needed deficit reduction solutions. We disagree strongly with those who would reduce DoD budgets and immediately spend the savings on non-defense federal programs, rather than making long overdue down payments on the federal debt. But if this CBO report demonstrates anything, it is that defense hawks and doves alike can find agreeable cuts to the defense budget regardless of disagreements over the nation’s security strategy.

[1] Reserve personnel made up more than a third (37.3 percent) of total military personnel in FY 2021, and 6.7 percent of total personnel obligational authority ($10.3 billion) in FY 2021, according to the Department of Defense.