Pentagon Fails to Consider Large, Grim Option for Budget Cuts

This more sensitive section of the budget could account for billions in savings.

widemodern_hagel_080213.jpg

Defense Secretary Chuck Hagel says the Pentagon may have to order sharp reductions in the size of the Army and Marine Corps, but did not discuss reducing the size of the agency's non-military workforce.

By + More

The dire picture the Defense Department painted this week for the future of its budget doesn't touch upon one of the largest, and perhaps most grim, options for truly finding savings: civilians.

Absent from Secretary Chuck Hagel's Strategic Choices Management Review, which was released Thursday, was any consideration of cutting into the hundreds of thousands of civilian staffers employed by the Department of Defense already subject to at least 11 furlough days.

[READ: Hagel Cuts 20 Percent Funding From Top Brass Offices]

"[The SCMR] didn't impact two major areas: readiness and the behemoth known as the 800,000 person civilian workforce," said Mackenzie Eaglen of the American Enterprise Institute at a meeting with a small group of reporters Thursday evening.

Eaglen was among several think tank experts Pentagon brass invited to a meeting with defense officials to review of the document ahead of its release. Attendees of the on-background briefing said it was a candid and unprecedented exchange with their department counterparts to review the SCMR, which breaks down the financial woes embroiling the department.

Hagel called for the study as a way for the department to start charting its future course amid congressionally mandated budget cuts, Congress' inaction to pass a new budget for the department and the across-the-board cuts known as sequestration. Together, these could cull as much as half a trillion dollars throughout the next 10 years, Hagel announced Thursday. But so far, the Pentagon has not considered finding those savings in its non-military workforce, which falls under the Operation and Management portion of its budget. (Learn more about this section of the budget here.)

"They did not impact O and M accounts and say, 'What can we do better there?'" said Todd Harrison of the Center for Strategic and Budgetary Assessments at the Thursday evening meeting.

[DEBATE CLUB: Are Cuts to the Defense Budget Necessary?]

The defense budget experts expressed surprise and satisfaction at the Pentagon's decision to study their May "Strategic Choices Exercise." Scholars from the think tanks made predictions about where cuts could come from using an advanced budget simulator. They compared the results on Thursday evening with the two options the Pentagon put forth: A smaller, but newer and more advanced force known as the "Preserve Capability" option, or a larger but older force known as "Preserve Capacity."

The latter of these two options could include cancelling massive defense projects, such as the Joint Strike Fighter or the Air Force's Long Range Strike-B bomber.

The defense experts critiqued what they perceived as the Pentagon's choice to study its budget assuming Congress will find a solution for sequestration. It is a likely proposition that these cuts could remain through at least FY 2015 which will, as Hagel suggests, drastically affect the military's ability to do its job.

"It's a fantasy to think you're going to be able to maintain readiness" with sequestration in effect, said CSBA's Jim Thomas.

"Cutting capability means a hollow force 10 years from now," added Harrison, who also pointed to how the reality of the drawdown in Afghanistan could hurt the department.

[ALSO: Hagel May Cut Benefits For Veterans]

The Pentagon is currently leaning on its Overseas Contingency Operations fund, designed to provide money to the war effort in Afghanistan, to help pay for some shortfalls elsewhere. There were half as many troops under this category for FY 2014, yet the Defense Department's request for that funding grew slightly.

The potential for a "zero option" in Afghanistan would make it hard to justify such a large OCO request in the future, says Harrison, drying up yet another source of funds.

Yet the SCMR still has value for the department, operating under a newly minted secretary. It calibrated the second- and third-tier staffs under Hagel, said David Berteau with the Center for Strategic and International Studies, and tees up the choices before the Pentagon in a way that is rarely done publicly.