It is comfortable to say, “We are 5-10 yrs behind the Europeans when it comes to our budget challenges.” – I guess.

With the expansion of the budget deficit of the last few years and no move to make a serious effort to fix it, we are much closer to 5 years, if not inside that mark.

The now quaint Fleet number of 313 of just a few years ago was never taken seriously by anyone with a basic understanding of economics even before the latest budget issues, and the interesting accounting of the Fleet of 300 that we see today is also a non-starter.

Why make such a negative statement? Simple – budgetary gravity.

Back in 2008, European military budgets were sad in any event as a % of GDP. As demographics join with the inevitable default of the Western welfare state takes place in front of us, after a few years – we have this via our friends from DefenseNews.

Make no mistake – we have not even started to align our budget with reality, so what is the benchmark that we should plan for? Don’t turn away – defense is always the low hanging fruit.

Well – you can break these reduction in to three batches.
1. Doable at 5% or less: Norway, Sweden, or Germany.
1.a. Odds: minimal.
1.b. Reason for odds: We won’t be this lucky. Norway has averaged a budget surplus for over a dozen years; different planet. Sweden and Germany already made structural changes to their government systems – Sweden in the 1990s and Germany a little more than a decade ago. As a result – the budgetary stress on the defense budget is small to non-existent from the 2008 baseline. If we act soon to address larger budgetary issues though, odds of this taking place increase.

2. Painful but workable at 5% to 20%: yes, in order to protect the economic foundation that national survival requires – a 20% cut is workable. Netherlands, UK, Poland & France.
2.a. Odds: most likely.
2.b. Reason for odds: unlike Europe, we don’t have anyone we trust that we can point to and say, “Oh, they’ll take care of the international order.” These are serious nations with a serious dedication to military requirements – but they are doing what they feel them must – as shall we. Unlike those nations though, we still have a lot of inertia to maintain a global reach; close to 5% than 20% if we are lucky. More than 20% in the face of a climbing China is just hard to fathom for the USA unless ….

3. Budgetary POMageddon at 20% to 50%: if you wait too long to act on your structural budgetary challenges – the more difficult the fix. You will take on more national security risk in order to try to keep domestic tranquility. Italy, Spain, Greece, & Ireland.
3.a. Odds: small, but not minimal.
3.b. Reason for odds: Without a two-party consensus to make such a huge cut in defense, it is hard to see larger than 20% in the next half decade outside of a complete economic meltdown. With each year we delay having a budget (Senate over 1,130 days without a budget plan) and/or a view to a plan to fix present trends, the more the odds for this option grow.

So, what could POMageddon mean to the Navy? Well – let’s go to Group 3 above – Italy. Again from our friends at DefenseNews;

Italy is considering selling or donating up to one-third of its naval fleet in a bid to earn quick cash and slash maintenance costs.

The Italian Navy would be the first off the mark wit a plan to sell or donate up to 28 vessels over the next five or six years … (out of) 82 ships and six submarines. …

So, 28 out of 88 ~ 32%.

Let’s run with the fuzzy 300 ships. A 32% reduction would be a cut of 96 ships to a fleet of 204.

What was my worse case scenario a couple of years ago, 240? That would be a 20% reduction in five years. All of a sudden, doesn’t look all that out of control … if you consider what has happened to Europe.

Let’s be optimistic and cut that in half to a 10% reduction. 270 ships in 5-years. Let’s model and plan for that and consign 300 ships with 313 ships as they hang out with all those TQL books in the storage room.




Posted by CDRSalamander in Navy
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  • W.M. Truesdell

    But, based on my experience, there will not be a cut in mission. That is the real problem.

  • ewok40k

    notice how decrease in budgets is proportional to the distance from Russia… Poland gets bigger budget than Spain, and Germany bigger than France, both for the first time since end of cold war, probably…

  • TheMightyQ

    Mr. Truesdell is exactly accurate. It is completely acceptable to have a smaller fleet. What is inexcusable is the concept of senior military leaders acquiescing to a smaller fleet without a corresponding reduction in mission and responsibilities. Unfortunately we have senior political leadership in the Dept. of the Navy who enjoy insulting both our pride (USS Giffords) and our intelligence (No need for frigates), and senior military leadership who have been so cowed by their political masters that they will agree to anything (Diversity is our #1 priority). This disastrous combination will only lead to the unnecessary death of Sailors.

  • OldSchoolMC

    @W.M. Truesdell Says:
    But, based on my experience, there will not be a cut in mission. That is the real problem.
    ————————————————————-
    Good point. In fact, given the larger area and the “pivot” to an Asian-centric military/political policy, one might argue that the mission scope is expanding. I’m sure those on the deckplates will hear the typical “work smarter, not harder,” and the “tyranny of or” pablum from the FO/SES/OSD towers.

  • Adversus Omnes Dissident

    Well said, everyone. the fact that both the SECDEF and the Assistant SECNAV are advertising the current NMS, NDS, NOC and MARSTRAT as executable even in a POMageddon (+1 internets) scenario shows that they are completely devoid of any sense of reality. Meanwhile, as the fleet requirements continue to build, they are screaming at DC for more support with resources that don’t exist. Has anyone gotten the memo?!

  • Mike M.

    The question is really whether or not the resources will shift to follow the shift in emphasis.

    In principle, a shift to a Pacific-centric maritime emphasis should result in significantly larger cuts to land forces than to naval forces. In practice, Goldwater-Nichols cemented the late Cold War balance between the services in place. Until that is cracked, we’re likely to be stuck with a massive ground force whether or not those resources would be better employed on seapower.

  • UltimaRatioReg

    Gee. And to think NATO spokesmen dismissed the alliance of the Visegrad Group some years ago as “unnecessary and redundant”.

    Arrogance and foolishness.

  • virgil xenophon

    We’re circling the drain very near the “event horizon.” The Royal Navy couldn’t have the traditional Fleet Review for the Queen for only the 2nd Diamond Jubilee IN HISTORY because for all practical purposes the RN doesn’t exist any more..

  • Grandpa Bluewater

    VX: Yep. Piracy going through the roof, too.

    Try to imagine the Wiemar Republic, but Hans Seekt’s slot is filled by a homegrown Clemenceau (or Clouseau (?!))and Neville Chamberlin understanding of Defense at the top.

    What you call that? Better prospects than the USN this decade?

    Ozmandias move over for the USN.

  • RickWilmes

    This quote from Austrian Ludwig Von Mises is apt when considering the differences between Europe and the U. S.

    “To these people [who say follow the United States] one should answer first of all: “One of the privileges of a rich man is that he can afford to be foolish much longer than a poor man.” And this is the situation of the United States. The financial policy of the United States is very bad and is getting worse. Perhaps the United States can afford to be foolish a bit longer than some other countries.”

    http://www.theobjectivestandard.com/blog/index.php/2012/06/for-genuine-economic-recovery-ask-what-would-mises-do/

  • http://fareastcynic.com Skippy-san

    The situation of Europe and the United States are very different. Same with our economic situations. The various nations in Europe don’t have the same issues globally-and since they are being forced into austerity by the austerity fanatics, then its only proper they look at all of their areas of spending.

    At that however, there are nations that are still looking to invest in niche areas where they can make a contribution. The Dutch the Germans and the Danes are just three examples where discrete plus ups are being made in specific areas that make sense in terms of overall contributions to NATO.

    But to compare the US and Europe’s problems as the same is to miss the point.

  • RickWilmes

    “The various nations in Europe don’t have the same issues globally-and since they are being forced into austerity by the austerity fanatics, then its only proper they look at all of their areas of spending.”

    The individuals calling for austerity understand the problem and in fact are acting rationally.

    As economist Richard Salsman points out,

    “Boring as it sounds, ‘fiscal austerity’ has been a hot topic of debate among pundits and political economists in recent weeks, and  I for one think that’s terrific. This is an important debate, well worth having. First, it invites us all to look beyond the mindless histrionics of this year’s campaigning and legislating, and instead to examine a question far more relevant to our long-term security, prosperity and happiness, namely: What is the proper purpose, size, and scope of government? What is government’s nature and what should it be doing, or perhaps more crucially, not be doing? Second, the debate asks how we should be financing the government we have, and whether its spending, taxing, borrowing, and money-printing are moral or not, and practical or not. People should pay attention to this debate, as its outcome will surely affect them.”

    http://blogs.forbes.com/richardsalsman/

    And it will most definitely affect our national security.

  • RickWilmes

    Consider the following concerning Spain.

    ‘“The conditions will be applied to the banks, not Spanish society,” he added, arguing that the agreement showed the “absolute commitment” of member states to the future of the single currency. “It’s good for the Spanish economy and it’s good for the future of the euro.”
    Under such an EU bank rescue programme, bailout rules give EU authorities a strong hand over the ongoing reform of Spain’s financial sector but allow it to impose only “light” conditions on the government itself, allowing Madrid to avoid the intrusive EU-monitored austerity programmes now under way in Greece, Ireland and Portugal.’

    http://m.ft.com/cms/b4deeb3a-b256-11e1-99ff-00144feabdc0.html?catid=3

    How is Spain’s bank bailout any different than the US bank bailout of several years ago?

    Now consider what economist Richard Salsman says in the previously referenced article.

    ‘My third and last essay, “Fiscal Austerity and Economic Prosperity,” will cite both distant and more recent history to show that when “fiscal austerity” is imposed on government it’s bullish, but if imposed on markets, it’s bearish.’

    Looks like we can use Spain as a case study, in preparation for economist Richard Salsman’s future essay.

  • Phil

    I don’t see the logic. Do you have any empirical evidence that US defense budgets are linked to European defense budgets, that there is a lag time in that link, and that the lag time is shrinking? If so, I’d like to see it.

  • http://cdrsalamander.blogspot.com CDR Salamander

    Phil,
    This is a matter of economics and budgets. Look at relative debt ratios and other measures of non-defense budgetary pressures, short-falls, and unfunded mandates. The connections are clear if you look at it in that respect.

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