Hagel’s proposal to cut the military spells trouble for the stock market, right? Actually, no. The headlines about plans to reduce the size of the Army by 6 percent obscured the news that, over the coming years, the actual level of defense spending is set to rise slowly, from $535 billion in 2016 to $559 billion in 2019. And that’s before members of Congress move to shelter their districts’ pet projects.
In fact, what most analysts have missed is that the reduction is strictly in the number of active personnel, not overall military expenditures.
Joyner supports the cuts:
Hagel and the Joint Chiefs have repeatedly emphasized—correctly, in my judgment—that it’s far preferable to take the risks associated with a small but highly trained and well equipped force than those associated with a larger but “hollow” force that is unprepared for the fight. Accordingly, they “chose further reductions in troop strength and force structure in every military service—active and reserve—in order to sustain our readiness and technological superiority, and to protect critical capabilities like special operations forces and cyber resources.” That’s a difficult but necessary trade-off.
But Lindsay Cohn thinks the Pentagon is going about personnel reductions in the wrong way:
It is a mistake to believe that reducing numbers automatically introduces efficiency. In a normal American firm, cutting personnel is an efficient means of reducing costs because a firm can choose whom it wants to fire and can engage in lateral hiring when its need for personnel increases again. In the military, however, one cannot simply fire the lowest-performing people and replace them with new hires, nor can one engage in lateral hiring for certain specialties when a sudden need arises (e.g. combat medics, artillerymen, military lawyers). While it is possible to pass over low-performing officers and deny re-enlistment requests from below-average enlisted personnel, the military has little control over the timing of such actions, and may face budgetary time limits that force out higher performers. In general, the forces will achieve personnel cuts by reducing recruiting and relying on voluntary attrition. This is an inefficient means of managing personnel.
Michael Krepon considers the fate of our nuclear arsenal:
So far, Hagel has been silent about reductions in nuclear forces, promising to preserve all three legs of the so-called triad — missiles, bombers and submarines — while making “important investments to preserve a safe, secure, reliable and effective nuclear force.” But reductions in nuclear forces are coming: It’s not a question of whether, but when — and how deep.