Statement of

Michael O'Hanlon,

Brookings Institution

The Quadrennial Defense Review's recommended cuts of 45,000 Army reservists appear appropriate for the current security environment and constitute an important aspect of reducing the $20 billion or greater annual budget shortfall that the Pentagon will acutely feel starting in the next decade. Indeed, even if all of the QDR's recommendations are adopted, the Pentagon will still face a significant budget problem. The onus is therefore on those who would not make these cuts to argue for a larger defense spending "topline" or suggest other specific cuts in the Pentagon's budget.

This presentation is in four parts. The first explains why my testimony focuses on the Army reserve component, and also places its drawdown in comparative perspective. The second shows that, even if the Congress adopts all the economies suggested by the QDR, a significant funding shortfall will still loom for the Pentagon in the next decade. The third section provides specific reasons for why Army National Guard combat units should be reduced, and in fact argues for a further reduction of about 50,000 personnel in Army National Guard combat divisions. But notwithstanding those arguments, the fourth and final part of my testimony acknowledges that there are good reasons to keep a significant number of Guard combat units into the future. Specifically, I advocate keeping all of the enhanced separate brigades and six additional combat brigades even though the latter have no explicit role in the QDR war plan. The Army National Guard and Reserve would together retain about 480,000 reserve personnel--down about 35 percent from the 1990 level, as is the case with the active-duty Army.

THE ARMY RESERVE COMPONENT IN PERSPECTIVE

In today's U.S. military, Army reservists are larger than the active force. That fact is in stark contrast to the situation in the other services, where the reserve component is in all cases less than half as big as the active component. Army Reserve and National Guard personnel represent almost two-thirds of all reservists, and elicit the most debate in current defense policy. For that reason, my testimony focuses primarily on these Army forces. They are made up of nearly 370,000 National Guard personnel (mostly in combat units) and 215,000 Army Reserve personnel (mostly in support units for functions like logistics and military police). Their total annual budget of about $9 billion is nearly equal to that of the Marine Corps. Most specifically, this testimony focuses on the National Guard's combat units, which today include more total brigade equivalents than the active Army.

Although the Army reserve component is being asked to accept a relatively burdensome additional cut under the QDR, it is not suffering unduly over the whole 1990-2002 time frame. Moreover, if one takes a longer perspective, say 1980-2002, the reserve component is making out much better than the active forces.

Specifically, the QDR calls for a further 8 percent reduction in Army personnel in the Reserve and National Guard, taking their aggregate size down from about 575,000 to 530,000. That is larger than the QDR's 4 percent cut in active-duty forces, but smaller than its 11 percent planned reduction in civilian DoD employees (see Table 1). If completed as recommended, it will bring the total size of the Army reserve component down by 28 percent since 1990--still considerably less than the 36 percent cut in active Army forces since that same year.

In addition to becoming smaller, Army reservists are reorienting their mix of missions. Specifically, six Guard brigades and two divisions will be converted to much-needed support capability, reducing the Army's estimated shortfall in that area from 58,000 individuals to roughly 16,000. That will leave the Guard with 30 brigade-equivalents of combat units--down about 40 percent from the 1990 level (the active-duty Army reduced its divisional strength by 45 percent over the same period).

To round out the comparative historical perspective, it is important to note that the Army Guard and Reserves grew greatly in the 1980s. In contrast, the active duty Army grew little during that time. Thus, Army reserve component end-strength will remain roughly at its 1978 level under the QDR, if the Pentagon's recommendations are accepted by Congress, whereas active-duty strength will be down more than one-third compared to that time period.

BUDGET SHORTFALLS, PRESSURES, AND FUTURE REQUIREMENTS

Under the recent budget deal between the President and the Congress, defense spending will go from its 1997 level of $268 billion to $267 billion in 1998 and then rise gently to $273 billion in 2002. But due to expected aggregate inflation of about 14 percent over the period, that modest increase masks a decrease in the annual real spending level of about 10 percent.

Unfortunately, that resulting spending level will not be sufficient to sustain the QDR force. My estimates, based on CBO data and historical Pentagon budget shares, suggest that procurement outlays next decade will have to average at least $65 billion as expressed in 1998 dollars--well above their expected 2002 level of $52 billion. In other words, the QDR's official goal to get nominal-dollar procurement funding up to $60 billion by 2001 is not nearly high enough, as shown in Figure 1.

Another way to see the coming budget crunch is to estimate the steady-state cost of the QDR force, assuming all of its recommended economies such as base closures. One can start with CBO's 1995 estimate of the long-term cost of the BUR force of at least $265 billion a year. Relative to that plan, the QDR force will achieve a net savings of about $5 billion a year by reducing the full-time DoD payroll by 140,000. (That should yield gross savings of about $7 billion, but some of the cuts are to be implemented by outsourcing support activities to the private sector--meaning that contracting costs for DoD will have to go up). About $0.75 billion would be freed up through smaller Guard and Reserve forces and $3 billion in a smaller base infrastructure. Another $3 billion to $4 billion would be cut in procurement accounts, largely by virtue of purchasing 24 fewer fighter airplanes per year (F-22s and F/A-18 E/Fs, with average unit procurement cost expected to be about $80 million). That implies a steady-state QDR funding level of $255 billion or more--at least $10 billion above the planned 2002 level, as shown in Table 2.

Although none of us can foresee the likely politics of defense spending in the year 2002 and beyond, expecting such a real increase after more than 15 years of sustained real cuts seems highly optimistic. At that time, policymakers will be striving to retain fiscal balance in the face of the continued upward pressure of federal entitlement spending (see Table 3), and discretionary programs will arguably do very well just to hold their own in real terms.

In the short term, defense spending appears to be safe from cuts beyond those already scheduled. Also, it should be roughly sufficient, given current plans and forces, to keep the military working well through 2002 (though I have some concerns about a gradual erosion in real readiness spending per troop, displayed in Table 4). But there may even be pressure to cut defense spending again before 2002. Perhaps the most plausible scenario is that proponents of domestic discretionary spending will seek to soften cuts to their preferred programs via funds now in the DoD budget, as a large number of House Democrats already attempted to do this year in the context of the balanced-budget deal. These domestic discretionary programs are to undergo a 10 percent real reduction in annual spending levels between 1997 and 2002; those who believe such cuts can be made easily will do well to remember that the deficit-conscious 104th Congress cut real spending on domestic discretionary programs by only 3.5 percent.

REASONS TO CUT THE NATIONAL GUARD COMBAT UNITS

It is unfair to criticize Guard combat brigades and divisions for the fact that they were not sent to Desert Storm, since that decision was based not on their readiness for combat but on the desire of national leaders to limit the total magnitude of the reserve callup. However, the weight of evidence still argues that the QDR was right not to factor most National Guard combat units into current war plans, and that today's U.S. military has considerably more than it needs.

First, some common arguments in favor of Guard combat units deserve rebuttal. It is often said that the reserves play an important role linking the American people to its armed forces. That is true to an extent. But as Army Lt. Col. Michael Meese and Captain James Schenck of West Point recently argued in The Washington Times, the bond with the public "will not be enhanced if the National Guard and Army Reserve are seen as welfare entitlements that serve little national purpose." It is also often claimed that National Guard combat units cost just 25 percent as much as active-duty troops. That figure, however, relates only to operations and support costs--about 60 percent of the total for active-duty forces. To be truly as good as their active counterparts, Guard forces would need just as good equipment (otherwise, why does the country spend its money on high-calibre gear for any forces?). With that approach, they would be over 50 percent as expensive as active-duty troops. Still a large savings, but less than frequently advertised.

The best argument against depending heavily on reserve component forces, however, is that the entire post-Vietnam history of the U.S. armed forces underscores the importance of high readiness. Warfighting and other military operations are difficult, and require diligent training and preparation, as emphasized in the Army's history of the Gulf War, Certain Victory.

When conducting their training, reservists may well be as diligent and dedicated as active-duty forces. Also, they may often be as qualified at their own specific technical tasks, especially in cases where their civilian jobs or other activities help keep them practiced on related skills. It is for this reason that the U.S. military total force concept makes such good sense.

But several weeks of total time per year does not appear sufficient to keep a combat unit sharp, particularly a large unit like a division. Some smaller units such as those employed with the Marine Corps force structure do appear able to quickly get up to speed in the event of a national emergency, as evidenced in Desert Storm. But in the case of the Marines, that philosophy translates into a reserve component only one-fourth the size of the active force.

Because of the need to minimize the amount of territory lost early in any future war against a regional foe, current U.S. war plans correctly call for deploying all ground forces to a major theater war quickly. Specifically, they call for a five-division force to be fully in place within roughly 75 days of a decision to deploy, and for roughly half that force to arrive in theater within the first month of the crisis. That means, in turn, that the last units would set sail for their destination after some 50 days. My own view is that the goal should be to deploy even faster, and that DoD should purchase more fast sealift to do so.

There is good reason to think that DoD cannot meet its own goal today. But it already has several remedial programs in place. In any case, the proper way to solve this problem is not to lower the goalpost (potentially allowing Guard units to be ready by the time lift would be available to carry them) but to buy more lift.

That type of emphasis on speed, which is likely to increase further in the future under most DoD long-term vision statements, spells trouble for a high dependence on reserve combat units. Various estimates claim that the Army National Guard's enhanced separate brigades would take 30 to 90 days to get ready, and that divisions could take two months to a year. The Army's official position is at the higher end of those ranges.

A recent study by the Institute for Defense Analyses, though apparently not publicly available, reportedly argued that the 49th Armored Division of the Texas Army National Guard could validate its readiness 94 days after callup, and be deployed to its destination by day 132 (presumably including about 30 days of sailing time and 7 to 10 days to reach its port of debarkation). Even if the relatively optimistic IDA estimate is correct, that would have the reserve division arriving in theater two months behind the schedule called for in current war plans for the main fighting force. Worse yet, due to the need to rotate units through the national training centers prior to validation of their readiness, the second and subsequent divisions would arrive much slower than that. A recent RAND study, for example, suggested that it would take 70 additional days to prepare six enhance separate brigades than to prepare just one.

It is precisely because keeping forces combat-ready is difficult that the Congress has rightfully kept a careful watch on the strains and disruptions that operations other than war cause active-duty troops. Although generally a supporter of such OOTW, I fully concur with the need to ensure that the combat readiness of most U.S. units is not measurably impaired in the process. There is a legitimate debate over whether troops that have been on OOTW need three months, four months, or even longer to recover from the operation and regain full combat competence. But no one of whom I am aware claims that they can be restored to combat readiness in less than three months. Common sense suggests that reservists would require at least as much training time after a mobilization, and probably more.

In this light, the case for increasing the nation's warfighting dependence on Army National Guard combat units appears weak. Some wish to keep all the Guard combat units as insurance anyway. It is impossible to dismiss their arguments. But the 15 enhanced separate brigades already have the role of providing insurance. The Total Army Analysis 2003 assumes that only 30,000 of the 175,000 Guard combat forces would participate in a "two-MRC" scenario, meaning that only six of the enhanced brigades would be needed for the "standard" war plan and the other nine would remain as backup in case things went very badly.

Moreover, in my view the QDR overestimates somewhat the threats posed by Iraq and North Korea, and understates the strength of our South Korean ally as well as of U.S. airpower and U.S. equipment already prepositioned in Northeast and Southwest Asia. Under these circumstances, even more insurance against MRCs seems a poor use of the nation's defense dollar. Paying for more combat-oriented reservists than war plans require will worsen what is already a serious DoD budget problem, and detract from the nation's ability to purchase needed equipment and ensure troop readiness in the future.

REASONS NOT TO CUT TOO MUCH

Having said all of these things, which might lead one to wonder why the nation should in my view keep any Guard combat units, I hasten to add several reasons to retain the 15 enhanced separate brigades and at least a half dozen additional brigades.

-- As the Marine Corps experience in Desert Storm demonstrates, smaller ground-combat reserve units can be highly effective after a short post-mobilization training. The evidence seems best for units at the company and battalion level, but may apply to brigades as well, as a comprehensive 1992 CBO study noted.

-- If and when the nation is able to relax its vigilance vis-a-vis Northeast or Southwest Asia, the need for current numbers of active-duty forces may no longer exist. At that point, faced with budget constraints and a generally peaceful but still potentially dangerous international environment, the nation may elect to give the National Guard proportionately more of the nation's ground-combat responsibilities. That would allow the Pentagon to save money, using scarce funds to maintain high readiness for a smaller active force, fund operations other than war when needed, and develop new technologies and new capabilities such as missile defenses.

-- In the short term, if the Army National Guard's 15 enhanced separate brigades prove their mettle, there could be an argument for increasing their role in the nation's formal war plans and even increasing their number slightly while decreasing slightly the size of the active Army.

I do not believe these arguments should be pushed too far, however. Future demands on U.S. forces are likely to be high even without, for example, an acute North Korean threat. An active-duty force of well over 1 million will probably be needed simply to maintain global presence, conduct joint exercises, deter at least one "MRC" conflict, and be prepared for the unexpected. The Army will probably need well over 300,000 active-duty troops even in such a more peaceful world.

Also, as new technologies and tactics are developed in the future, a large Guard with generally obsolescent weaponry will do the nation little good. Factoring in the costs of equipment, the Guard is hardly cheap, as noted earlier, and should not be thought of as some great repository of latent national might. That latent national might will exist much more in the form of the nation's technology and industrial base, and in the calibre of its active-duty forces that would serve as the nucleus of any major defense buildup and mobilization.

In short, the Army National Guard combat forces constitute a valuable national asset, but one that is not great enough to justify even the QDR-recommended force of roughly 30 brigade equivalents. In an era of considerable fiscal stringency, a massive Guard combat structure is a luxury the Pentagon cannot afford. Thank you Mr. Chairman.