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1. Measuring the Impact of Sequestration and the Drawdown on the Defense Industrial Base

Author:
Rhys McCormick, Andrew Philip Hunter, and Gregory Sanders
Publication Date:
01-2018
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
The presence of a technologically superior defense industrial base has been a foundation of U.S. strategy since 1945. While the implementation of the budget cuts in the Budget Control Act of 2011 has caused concerns for the industrial base, the resulting debate has been lacking in empirical analysis. The purpose of this research is to measure the impact of the current defense drawdown across all the tiers of the industrial base. This report analyzes prime and subprime Defense Department contract data to measure the impacts of the drawdown by sector to better understand how prime and subprime contractors have responded to this external market shock.
Topic:
Science and Technology, Military Strategy, Budget, and Defense Industry
Political Geography:
United States

2. Trump’s 2019 Missile Defense Budget: Choosing Capacity over Capability

Author:
Tom Karako and Wes Rumbaugh
Publication Date:
02-2018
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
President Trump’s 2019 budget request includes $12.9 billion for missile defense programs, including $9.9 billion for the Missile Defense Agency and about $3 billion in modernization in the military services, building upon the acceleration initiated in the $323 million FY 2017 Above Threshold Reprogramming and the FY 2018 Budget Amendment of $2.0 billion. The proposed budget continues the recent trend of procurement consuming a greater portion of overall missile defense spending, reflecting a choice for prioritizing near-term capacity over longer-term capability. With the exception of two new Pacific radars and a modest effort for tracking hypersonic threats, the request includes strikingly few changes to the program of record. The submission fails to address past shortfalls for more research and development of new missile defense technologies and capabilities, most significantly with its lack of real movement toward a space-based sensor layer for tracking and discrimination, as opposed to merely missile warning. Pursuit of more advanced capabilities will require substantial programmatic changes in the 2020 budget, or with a budget amendment later this year, if such capabilities are recommended by the forthcoming Missile Defense Review. On February 12, the Department of Defense (DoD) released its budget request for FY 2019, which included a total of $12.9 billion for missile defense-related activities. The proposed topline for the Missile Defense Agency comes in at $9.9 billion, comprising $2.4 billion for procurement, $6.8 billion for research, development, test, and evaluation (RDT&E), $500 million for operations and maintenance (O&M), and $206 million for military construction (MILCON). The $9.9 billion request is a 26 percent increase from the FY 2018 budget request of $7.9 billion. Funding for ballistic missile defense within the services includes about $3 billion, largely for the procurement of Patriot Advanced Capability-3 Missile Segment Enhancement (PAC-3 MSE) and Standard Missile-6 (SM-6) interceptors. Overall, the budget reflects a near-term focus on capacity of existing programs, even at the expense of capability improvements. In its current form, the request boosts funding for all four families of interceptors. For homeland missile defense, this includes the continued improvements to the capacity and reliability of the Ground-based Midcourse Defense (GMD) system by continuing to deploy an additional 20 interceptors, several testing spares, and a new missile field at Fort Greely, Alaska. The request also deepens the magazines for Terminal High Altitude Area Defense (THAAD), Aegis, and Patriot interceptors, continuing a procurement-heavy trend from last year.1 The focus on capacity does not answer the question, however, how missile defense efforts will be adapted to the new reality of great power competition described by the National Security Strategy and the National Defense Strategy.2 One of the few new muscle movements in the entire budget is the addition of two radars in the Pacific for discriminating long-range missile threats to the homeland. The idea of a discrimination radar for Hawaii had been publicly floated over the past two years, and had previously been part of the yet-unpassed appropriations marks from the House and Senate appropriations committees. The Hawaii radar is scheduled for a 2023 deployment, with an additional radar deployed by 2024 at a yet-undisclosed location. The two radars will cost approximately $2.5 billion over the course of the Future Years Defense Program (FYDP). The inadequacy of the request lies not with the top line, but rather with the capabilities and strategy that the top line fails to prioritize. Although these radars would be useful to close the near-term Pacific midcourse gap against limited ballistic missile threats to the homeland, such funds must be weighed against the opportunity cost for larger improvements in capability provided by a space-based sensor layer that could provide substantially more capable birth-to-death tracking and discrimination on a more global scale and against a wider diversity of threats. The choice for capacity over capability reflects a near-term time horizon, but further delay in more advanced technologies will carry costs at a later time. In sum, the administration’s budget request for FY 2019 prioritizes near-term readiness against limited but growing ballistic missile threats from sources such as North Korea. This choice, however, falls short of connecting missile defense efforts to the reality of renewed great power competition as articulated in the National Defense Strategy. The inadequacy of the request lies not with the top line, but rather with the capabilities and strategy that the top line fails to prioritize. The 2019 request’s modesty of ambition is manifested by low funding for more advanced programs, such as boost-phase intercept, space-based sensors, and volume kill. Should the forthcoming Missile Defense Review address some of these issues and recommend programmatic changes, their implementation may have to wait until the 2020 budget, unless a budget amendment of some kind prioritizes them for the coming fiscal year.
Topic:
Security, Defense Policy, Military Strategy, Budget, and Missile Defense
Political Geography:
United States, Europe, Asia, and North America

3. Military Spending: The Other Side of Saudi Security

Author:
Anthony H. Cordesman
Publication Date:
03-2018
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
The shifts in Saudi Arabia's power structure that have taken place since King Salman came to power in January 2015 have created a new set of Saudi priorities for shaping Saudi Arabia's future. These new priorities have led to major changes in Saudi Arabia’s national security structure and leadership, and to calls for major social and economic reform. They have changed the leadership of the Saudi Ministry of Interior, National Guard, and Foreign Ministry. These new priorities have led to participation in a major war in Yemen, efforts to isolate Qatar that have broken up an already weak and divided Gulf Cooperation Council (GCC), and deeper tensions with Iran over its military build-up and efforts to expand its regional influence. Most of the earlier changes at top levels of the Saudi government and security structure were motivated by new King's desire to consolidate power at the top of the government and royal family. In the process they have made Mohammed bin Salman bin Abd al-Aziz Al Saud (normally referred to as Mohammed bin Salman or “MBS”) the Crown Prince, First Deputy Prime Minister, Minister of Defense, and President of the Council for Economic and Development Affair – combining the responsibilities for Saudi Arabia’s security, civil sector, and economic development to one man. The more recent changes to the Saudi national security sector and military command made in February 2018 are harder to interpret. There is no way­­—as of yet— to put the changes in the Saudi national security sector and military command structure into perspective. One can speculate that these changes were either a further effort to assert control by a new regime, or part of a serious effort by the Crown Prince to improve Saudi military planning, budgeting & fiscal management, and military operations. Mohammed bin Salman may have been reacting to the lack of progress in the war in Yemen, Saudi tensions with Qatar, and MBS's feelings that too much of the Kingdom's security spending has been wasteful, poorly planned, and involved some element of corruption. Speculation aside, there are no credible reports that provide a reliable "inside" picture of what is happening. What is clear, however, is that the Kingdom has been spending far too large a portion of its economy on security priorities that have yielded uncertain results. This spending on security is large enough to compete with Saudi Arabia's ability to fund its 2030 plan to reform and modernize its economy and social structure. Saudi Arabia must better balance its civil and national security spending by reducing its security spending and using its resources far more effectively.
Topic:
National Security, Military Strategy, Budget, Leadership, and Military Spending
Political Geography:
Middle East, Saudi Arabia, and Persian Gulf

4. The U.S. Defense Budget in FY2019: Underlying Trends

Author:
Anthony H. Cordesman
Publication Date:
08-2018
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
The report draws on a wide range of official sources and is designed to provide an overview of official reporting on major trends rather than make an independent analysis. The U.S. provides a vast amount of detail on its annual budget request for military and international affairs spending – much of it in graphic, tabular, and summary form. The material presented here is an attempt to pick the key materials to show where the U.S. is focusing its military spending, how it relates to its strategy, how major force improvements will affect U.S. capabilities, and how the U.S. is dealing with its strategic partners and potential threats. However, the user should be aware that much of the material presented is often uncertain and is not comparable from source to source. There also is no easy or single way to summarize the trends in the U.S. defense budget. The materials that go into just the unclassified portions of the Department of Defense’s annual submission of President’s budget request to Congress, and the subsequent Congressional review of that request, run well over several thousand pages. It is also critical for the reader to understand that only the portion of the report dealing with the National Defense Authorization Act (pages 24-43) represents the final result of Congressional action and the FY2019 budget signed by the President, and not all of the portions of reference action by the key Committees involved were approved in exactly the form shown in the final bill signed by the President. Much of the material is drawn from sources that precede the final Congressional markup because the Department never updates most of the tables and charts in the Department of Defense request until the following year and new budget submission. The material presented also shows that different sources define total defense spending in different ways, and include different expenditures and convert current to constant dollars in different ways. More importantly, most sources report in terms of “Budget Authority” (BA) – the total money the Congress authorizes in a given Fiscal Year that can be spent over a period of years. This is the best estimate of what the Congress is actually approving. However, some sources in terms of “Budget Outlays” (BO) – only the money that can be spent in 12-month period of that U.S. Fiscal Year. (Which begins on 1 October of the year the Congress acts upon, and ends on 30 September of the following year). This is the best way of assessing the impact of spending on how well the budget is balanced, the size of the deficit, and impact on the federal debt. Budget projections for future years present other problems. The Congressional Budget Office (CBO) provides detailed estimates of how the President’s budget request – and the final budgets the Congress authorizes – will impact over time. Many such estimates precede Congressional action on the budget, and it then takes several months for the CBO to estimate the probable future trends in the total federal budget and impact of the final Congressionally approved levels of U.S. defense spending on that total federal budget and the U.S. GDP. This often creates major lags in official estimates of the trends in every aspect of federal spending, the budget deficit, and the national debt. More broadly, the Department of Defense has effectively abandoned any serious effort to create a program budget, and to provide a realistic estimate of the cost of the Future Year Defense Program beyond the fiscal year directly under review. It essentially rolls forward current activities and plans to make estimates of the next four years that are based on the spending levels in the budget year under review. It bases such estimates largely on input categories such as personnel, O&M, RDT&E, and procurement. The Department of Defense does not report expenditures by major mission or command. The Department defines “strategy” largely in terms of broad concepts and goals. It does not tie its “strategy” to net assessments of the balance in terms of threats and strategic partners, to specific force plans, to specific actions and schedules, to specific costs, or to measures of success and effectiveness. Unclassified reporting in “PPB” – or planning, programming, and budgeting– form has become a functional oxymoron. The Congress does hold strategy hearings and directs studies of key strategic issues, but these efforts rarely address any of the practical details of any aspect of the nature and cost of U.S. strategy. Similarly, the outyear estimates of military spending by the Department of Defense, OMB, and the Congressional Budget Office (CBO) focus on a “baseline” that assumes the United States does not actually use its military forces in any operational form. The limited estimates provided for future Overseas Contingency Operations are “placeholders” and not actual estimates. This is partly inevitable given the inability to predict the future, but it creates a practical problem in a country whose civil plans call for major future increases in mandatory spending on retirement, medical case, and welfare. This means the official U.S. projections of civil spending rise relative to military spending in ways history indicates will be highly unrealistic.
Topic:
Defense Policy, Military Strategy, Military Affairs, and Budget
Political Geography:
United States, Europe, Middle East, and North America

5. European Defense Trends: Briefing Update

Author:
David J. Berteau, Gregory Sanders, T.J. Cipoletti, Meaghan Doherty, and Abby Fanlo
Publication Date:
01-2015
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
The European defense market, though impacted by lethargic economic growth and painful fiscal austerity measures, continues to be a driver in global defense. Five of the fifteen biggest military spenders worldwide in 2013 were European countries, and Europe remains a major market for international arms production and sales. Surges in military spending by Russia, China, and various Middle Eastern countries in recent years has augmented the defense landscape, especially as European countries in aggregate continue to spend less on defense and the United States embarks on a series of deep-striking budget cuts. This report analyzes overall trends in defense spending, troop numbers, collaboration, and the European defense and security industrial base across 37 countries. To remain consistent with previous reports, this briefing utilizes functional NATO categories (Equipment, Personnel, Operations and Maintenance, Infrastructure, and Research and Development) and reports figures in constant 2013 euros unless otherwise noted. Many of the trends identified within the 2012 CSIS European Defense Trends report continued into 2013, namely reductions in topline defense spending, further cuts to R spending, and steadily declining troop numbers. Though total European defense spending decreased from 2001-2013, with an accelerated decline between 2008 and 2010, select countries increased spending2 between 2011 and 2013. Collaboration among European countries has decreased in the R category; however, it has increased in the equipment category – indicating increased investment in collaborative procurement. Defense expenditure as a percentage of total government expenditure has decreased across Europe from 2001-2013 with the exceptions of Albania and Estonia. An updated CSIS European Security, Defense, and Space (ESDS) Index is included within this report and exhibits a shift in geographic revenue origin for leading European defense firms away from North America and Europe and towards other major markets between 2008 and 2013. Finally, a brief analysis of Russian defense spending is included in the final section of this report in order to comprehend more fully the size and scope of the European defense market within the global framework. In 2013, Russia replaced the United Kingdom as the third largest global defense spender, devoting 11.2 percent of total government expenditures to defense. This briefing report concludes with summarized observations concerning trends in European defense from 2001 to 2013. CSIS will continue to follow and evaluate themes in European defense, which will appear in subsequent briefings.
Topic:
Security, Defense Policy, Military Affairs, and Budget
Political Geography:
Russia, China, United Kingdom, America, and Europe

6. Institutional Foundations of Federated Defense

Author:
Stephanie Sanok Kostro and Rhys McCormick
Publication Date:
01-2015
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
While the united states has long acknowledged the value of working with partner nations to address shared security concerns, drawdowns in defense spending have underscored the importance of bilateral and multilateral cooperation to leverage capabilities and investments. the Center for strategic and International studies' multiyear Federated Defense Project aims to inform policymakers about global and regional security architectures and defense capabilities that support the achievement of common security goals, as well as ways to improve defense cooperation among nations to address those goals together. This report on institutional foundations of federated defense recognizes that successful cooperation in a budget-constrained environment often rests on the u.s. ability and willing-ness to provide assistance and/or equipment to partner nations. CSIS project staff drew on a literature review, workshops, and a public event (“the Future of the security Cooperation Enterprise”) to identify key findings in five areas: Priorities/Strategic Guidance: Proponents of federated defense should better articulate priorities. A proactive, interagency component that includes, at a minimum, officials from the Defense Department, State Department, and White House is necessary to effect a cultural shift and combat potential backsliding into unilateral approaches. Foreign Military Sales: In a federated approach, officials should identify capabilities that could most effectively support partner nations' contributions to federated defense. Toward that end, officials should also emphasize the establishment and maintenance of high-demand capabilities over time. other key issues related to potential difficulties in foreign sales include surcharges, overhead costs, and transparency in offsets. Export Controls: study participants noted that recent export control reform efforts have not yet resulted in significant change and have inadequately addressed industry concerns. Moreover, there appears to be a lack of appetite for these reforms in Congress. Technology Security and Foreign Disclosure: Improvements are needed to coordinate and speed technology transfer and foreign disclosure decisions. transparency across stovepipes within the executive branch is critical to create a common vision and objectives for federated defense, which is especially important when working with industry and foreign government partners. Acquisition and Requirements Processes: Within the Department of Defense, there is insufficient consideration of the export value and challenges of systems in early stages of the acquisition and requirements processes. Modifications during late stages of development are often far more expensive than building in exportability earlier. Having examined these key areas, the study team identified and analyzed three over-arching institutional challenges to and opportunities for federated defense. First, study participants remarked upon the lack of sufficient advocacy for federated defense among senior U.S. government officials. A second challenge was the cultural resistance to federated defense; experts noted that significant cultural change, such as that brought about by the Goldwater-Nichols Department of Defense Reorganization Act of 1986 (Pub.L. 99-433), may require top-down direction, years to implement, and decades to be accepted. A third challenge was the need for a perceived or actual budget crisis to drive change. The study team's recommendations resulting from this examination were five-fold. First, U.S. national strategies should address the grand strategy questions that could imperil implementation of a federated approach. Implementation of the u.s. National security strategy could impel a new effort to focus on partner capabilities and areas for sharing the common global security burden, as well as to prioritize interests and activities related to U.S. security cooperation, export controls, and technology security/foreign disclosure. Second, proactive U.S. leaders should articulate a vision, objectives, and priorities for a federated approach to defense. third, the Administration and Congress should work together to ensure completion of legal and regulatory reforms already under way (e.g., on export controls). Fourth, executive and legislative officials—perhaps through an interagency task force that works with committee staffs—should identify additional reforms to streamline or create authorities and to eliminate unhelpful directed spending on capabilities and systems that do not contribute to federated defense. Finally, the Department of Defense should start with incremental steps to create a culture that values federated defense; for example, the Defense Acquisition University and Defense Institute of Security Assistance Management could update coursework to institutionalize knowledge regarding federated approaches. This study made it clear that enduring changes in these five areas—from strategy to culture—are necessary to ensure the success of a federated approach to defense.
Topic:
Security, Science and Technology, and Budget
Political Geography:
United States

7. Taxes and Development

Author:
Conor M. Savoy and Christina M. Perkins
Publication Date:
12-2014
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
The ability of a state to mobilize its own resources to pay for vital social services is at the heart of a well-functioning government. As developing countries have grown wealthier over the past de cade, they have seen a corresponding rise in the amount of domestic revenue available. The numbers are truly staggering: in 2012 developing and emerging economies mobilized $7.7 trillion in domestic resources. Even in sub- Saharan Africa, where the pace of change has been slower, domestic resources topped $530 billion in 2012; official development assistance in contrast totaled approximately $54 billion. Some of this is driven by the commodities boom of the past several years, but much is organic growth that has seen gross domestic product (GDP) rise. These domestic numbers, plus the rapid growth in private capital flows to the developing world, radically change the calculus of development financing.
Topic:
Development, Governance, and Budget
Political Geography:
Africa