New Budgeting System Could Save Defense Department Billions: New NCPA Analysis

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Zero-Based Budgeting Would Cut Spending, Improve Efficiency of Armed Forces

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A zero-based budget has proven to save large corporations 10 percent to 25 percent, and could be first used to streamline the Pentagon’s bloated leadership.

Transitioning to zero-based budgeting would reduce government waste and refocus defense priorities, ensuring defense dollars are spent in areas that promote readiness, according to a new study by National Center for Policy Analysis Senior Fellow David Grantham.

“A zero-based budget has proven to save large corporations 10 percent to 25 percent, and could be first used to streamline the Pentagon’s bloated leadership,” says Grantham.

“Over the past 30 years, the military’s end-strength has decreased 38 percent, but the ratio of four-star officers to the overall force has increased by 65 percent,” adds Grantham, “and a 10 percent cut among general and flag officers and their staffs could save nearly $11.5 billion over 5 years.”

Grantham offers three ways the Department of Defense could modify the zero-based approach to better fit defense spending:

  • The Secretary of Defense could initiate a zero-based budgeting review on a two-year basis or in the middle of each presidential term. This approach could potentially avoid political problems and provide time for the Pentagon to grow accustomed to zero-based budgeting.
  • Certain departments within DOD could be required to adopt zero-based budgeting to identify wasteful and redundant programs.
  • Departments within the DOD could be allowed to rollover unspent funds at the end of the fiscal year. In other words, departments within the DOD would likely spend less money more wisely if they did not feel compelled to exhaust their “use it or lose it” money before the end of the fiscal year. Similar savings across the DOD would free up more than $68 billion in funds, based on the 2016 DOD budget.

“The traditional government budgeting system is simply not working. Defense spending, in constant dollars, is nearly the same as it was 30 years ago, but the U.S. armed forces has 35 percent fewer combat brigades, 53 percent fewer ships, and 63 percent fewer combat air squadrons,” says Grantham. “The DOD is the ideal organization within the federal government to test zero-based budgeting.”

A New Budgeting Approach for the Defense Department:

The National Center for Policy Analysis (NCPA) is a nonprofit, nonpartisan public policy research organization, established in 1983. We bring together the best and brightest minds to tackle the country's most difficult public policy problems — in health care, taxes, retirement, education, energy and the environment. Visit our website today for more information.

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Catherine Daniell
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