More Cost Overruns at Defense

November 6, 2009

Benjamin Franklin said: “In this world nothing can be said to be certain, except death and taxes.” I would add a third certainty: cost overruns at the Pentagon. The Government Accountability Office recently reported that the Pentagon’s space program is facing multi-billion dollar cost overruns and multi-year delays.

From the GAO report: 

The majority of major space acquisition programs in DOD’s space portfolio, however, have experienced problems during the past two decades that have delayed deployment and driven up cost. Many programs are experiencing significant schedule delays—as much as 7 years—resulting in potential capability gaps in areas such as positioning, navigation, and timing; missile warning; communications; and weather monitoring. We recently estimated that costs for major space acquisition programs have increased by about $11.0 billion from initial estimates of $11.4 billion for fiscal years 2008 through 2013. 
In an ideal world, Congress would exercise its oversight role and reign in the Pentagon’s financial recklessness. But in the real world, members of Congress are preoccupied with making sure that Pentagon programs supporting jobs in their districts continue to be funded, regardless of cost and need. As a Cato essay on government cost overruns points out, “defense contractors exploit this parochial self-interest of legislators, and they skillfully spread out research and production work across many states and districts to maximize congressional support.”
In an era of trillion-dollar deficits, we can’t let defense spending continue to spiral upward, especially the part that exists only to serve the parochial interests of Congress. In calling for the Pentagon’s budget to be halved, Cato defense expert, Ben Friedman notes: 
Our defense budget is almost half the world’s, even leaving out nuclear weapons, the wars, veterans, and homeland security. It is also more than we spent at any point during the cold war. 
Many observers seem to think that the size of the Pentagon’s budget is a mirror reflection of U.S. strength: increasing the Pentagon’s budget makes us safer while cutting it would leave us more vulnerable. However, Friedman dismisses this idea: 
To really keep us safe, we should slash defense spending. Americans should prepare for fewer wars, not different ones. Far from providing our defense, our military posture endangers us. It drags us into others’ conflicts, provokes animosity, and wastes resources. We need a defense budget worthy of the name. We need military restraint. And that would allow us to cut defense spending roughly in half. 

The amount of money the Pentagon spends each year is larger than the economic output of most countries. Shoddy financial management is inevitable in a government operation of this size. Therefore, reducing the Department of Defense’s budget by refocusing its efforts on realistic and high-priority needs would make it easier to reign in the cost overruns and other spending abuses that cost taxpayers billions of dollars each year.


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