Contents

Foreword
Edwin J. Feulner, Ph.D.

Introduction
Mackenzie M. Eaglen

Chapter 1: More: The Crying Need for a Bigger U.S. Military
James Talent

Chapter 2: Defense FY 2008 Budget Analysis: Four Percent for Freedom
Baker Spring

Chapter 3: Four Percent for Freedom: Maintaining Robust National Security Spending
James Jay Carafano, Ph.D., Baker Spring, and Mackenzie M. Eaglen

Chapter 4: Four Percent for Freedom: Spend More on National Defense
Baker Spring

Chapter 5: Ten Myths About the Defense Budget
Baker Spring

Chapter 6: Bush's Budget: Protecting Homeland Security and Defense by Reining in Entitlements
Baker Spring, James Jay Carafano, Ph.D., Alison Acosta Fraser, Brian M. Riedl, and Will Packer

Foreword
Edwin J. Feulner, Ph.D

Today, America’s military is not in crisis. That could change, unless the nation commits to sustained and adequate levels of defense spending over the long term. Four Percent for Freedom: The Need to Invest More in Defense makes the case for a bipartisan consensus to maintain annual defense appropriations at 4 percent of Gross Domestic Product—GDP (the total measure of goods and services produced by the U.S. economy). Bringing together cuttingedge research and commentary by Heritage scholars this collection:

• Argues that measuring defense spending as a percentage of GDP is the most appropriate and realistic means to gauge America’s commitment to ensuring an adequate national defense;
• Warns that without maintaining annual defense budgets at 4 percent of GDP America’s military will become a “hollow” force placing the lives of our young men and women in uniform at risk and jeopardizing the Pentagon’s ability to defend the nation’s vital national interests;
• Demonstrates that a 4 percent level of spending is achievable and fiscally responsible, encouraging the military to prudently use its resources while not limiting the capacity of the U.S. economy to grow and prosper;
• Cautions that the nation won’t be able to meet its obligations to our military without a bipartisan consensus in Washington committed to both maintaining adequate defense spending and addressing the pressing challenge of the historically unprecedented and unsustainable growth in Social Security, Medicare, and Medicaid which are consuming ever larger portions of the federal budget.

In short, Four Percent for Freedom makes a compelling case that Congress must put the need for robust defense budgets and addressing current fiscal challenges at the front of its agenda—and then keep those priorities throughout the decades ahead. The reason is simple. To do anything less will put our men and women in uniform in harm’s way without the equipment, training, and support they need to protect America.

U.S. history is replete with cautionary tales of the cost of playing politics with American security. After World War II, America’s military was sadly neglected. When the Korean War broke out soldiers were thrown into battle with weapons that did not work, wearing sneakers instead of combat boots. Lives were lost needlessly, and the U.S. effort in Korea almost faltered because the nation was unprepared. After the Vietnam War, defense spending once again plummeted, leaving the Pentagon with a “hollow force” lacking in training and readiness and without enough money to fix its equipment or modernize for the future. After a decade of neglect, the cost of rebuilding the military during the Reagan years cost far more than if Washington had simply sustained a responsible level of defense spending year in and year out. These are lessons worth learning.

As America looks beyond the first years of the long war against terrorism and combat in Iraq and Afghanistan, the nation’s military could well become “hollow” again—and it will unless Congress and future administrations commit to responsible levels of defense spending. The United States is a global power with global interests, and even with the support and cooperation of friends and allies around the world, America must have the capacity to secure its vital national interests. Sustained, robust defense budgets are a prerequisite for that effort.

Four Percent for Freedom: The Need to Invest More in Defense provides the rationale for sensible spending on defense; illustrates the dire consequences of inadequate funding for supporting our troops and promoting America’s national interests; and lays out the policy challenges that have to be overcome to achieve the bipartisan consensus that will be needed in the next decade. It is a call to action to Congress and future administrations that they must heed in order to keep America safe, free, and prosperous in the 21st century.

Introduction
Mackenzie M. Eaglen

provides the rationale for sensible spending on defense; illustrates the dire consequences of inadequate funding for supporting our troops and promoting America’s national interests; and lays out the policy challenges that have to be overcome to achieve the bipartisan consensus that will be needed in the next decade. It is a call to action to Congress and future administrations that they must heed in order to keep America safe, free, and prosperous in the 21st century.

The United States military has reached a crossroads. In many respects, America's armed forces are better off than ever before. The all-volunteer force is a proven, mature, and successful model. America is protected by the finest ser­vicemen and women in history who employ the most advanced arsenal on the planet.

Yet the number, size, and duration of military deployments have increased dramatically since the end of the Cold War, while defense spending has remained at an historical low. The military will likely face further calls for reduced spending when, at some point, the pace of operations in Iraq slows down and Congress begins searching for yet another "peace dividend" to help pay exploding Social Security, Medicare, and Medicaid costs. If a clearly delineated policy is not established now to ensure stable funding, the military risks becoming a hollow force.

The term "hollow force" describes the situation when readiness declines because the military does not have enough funding to provide trained and ready forces, support ongoing operations, and modernize simultaneously. Like a freshly painted house with no plumbing or wiring inside, the military may appear functional but in reality is too poorly trained and equipped to be reliable without incurring excessive and unnecessary risk.

The last time America's military truly went hollow was in the aftermath of the Vietnam War. Recruitment plum­meted, equipment modernization slowed substantially, and training funds were unavailable. The cracks became vis­ible in 1979 when the captain of the USS Canisteo refused to certify his ship as seaworthy because his men had not been adequately trained. When this was followed in 1980 by the Desert One debacle in Iran, it became clear that years of underfunding had left America's military hollow.

Upon assuming office in 1981, President Ronald Reagan immediately rectified the situation by securing two double-digit increases in the defense budget, followed by substantial increases for several years thereafter. The results resounded throughout the military where morale skyrocketed, training improved significantly, and the Pen­tagon was able to develop a new generation of vehicles, ships, and aircraft using the latest technologies.

The Soviet Union, which a few years earlier had dreamed of building a blue-water navy to compete with the United States, then realized it could no longer compete-a realization that was a significant factor in its eventual demise. This strategic buildup also provided the overwhelming force behind Operation Desert Storm and made pos­sible the peace that America enjoyed throughout the 1990s.

The military is now showing many of the same signs, however, that were evident in the post-Vietnam era. Despite the intense pace of repeated military deployments over the past 15 years, today's force is roughly half the size it was in the early 1990s. The Army has been reduced from 18 divisions during Desert Storm to 10, the Air Force from 37 tactical air wings to 20, and the Navy from 568 ships in the late 1980s to a fleet of only 276 today.

Moreover, modernization and procurement budgets were cut substantially throughout the 1990s. As a result, along with manpower shortages, much of the military's equipment is too old and increasingly unreliable. For example:

• The Pentagon purchased an average of 78 scout and attack helicopters each year from 1975 to 1990 but only seven each year from 1991 to 2000.
  
  
• An average of 238 Air Force fighters and five tanker aircraft were purchased from 1975-1990, compared to 28 and one per year, respectively, from 1991 to 2000.
  
  
• The average age of Air Force aircraft in 1973 was just nine years. The average aircraft today is 24 years old, while aircraft modernization funding has dropped by nearly 20 percent.

As in the aftermath of the Vietnam War, the Army National Guard was the first to show signs of being hollow. In 2005, the Army National Guard contributed nearly half of all troops on the ground in Iraq and has assumed an increased role in homeland defense missions over the past six years. Yet the Guard faces severe equipment shortages while relying extensively on a policy of cross-leveling to fill units. The equipment that is available is typically much older, more difficult and expensive to maintain, and not easily deployable or useful in its missions. Chief of the National Guard Bureau Lieutenant General Steven Blum confirmed that the Guard's equipment readiness has fallen from 75 percent in 2001 to only 35 percent today.

Without maintaining a robust defense budget of 4 percent of gross domestic product (GDP) over the next five to 10 years, the U.S. will be unable to equip and modernize its forces to preserve America's security. The military is in a vital phase of mandatory recapitalization. With the current and future budget projections, the services are sched­uled to field new platforms that will anchor American security for the next generation.

Robust and consistent funding of the military is fully within America's capability. Currently, the U.S. spends only 3.8 percent of GDP on the core defense budget. That is far lower than during the Cold War and almost a full percentage point lower than the hollow force era after Vietnam. The budget is expected to drop even further in the coming years, falling to just 3.2 percent of GDP by 2012.

America's economy is so powerful, however, after years of underfunding military procurement that the U.S. could recapitalize and sustain military strength by increasing and maintaining defense spending at 4 percent of GDP. This policy, called the "Four Percent for Freedom" solution, would ensure that America's military remains capable and ready.

A policy of Four Percent for Freedom would also have a positive impact by focusing the national debate about the deficit where it belongs: on entitlement programs. These mandatory programs-not defense spending-pose the real long-term threat to solvency.

In addition, sufficient funding would promote more efficient use of defense dollars. Service chiefs would not have to maneuver funding each budget cycle to keep programs alive but could instead focus on long-term planning.

Finally, American power is an important stabilizing force in the world. The Four Percent for Freedom solution would help to reassure financial markets about American strength, reduce risk within the international community, and promote economic growth both at home and abroad.