The Marine Corps and the Coming Fiscal Reality

MajGen Richard C. Schulze Memorial Essay

“There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the law.”

—Machiavelli

The MajGen Richard C. Schulze Memorial Essay honors the memory of the Marine Corps general officer for whom it is named. MajGen Schulze, a native of Oakland, CA, died in November 1983, 2 years after his retirement. An enlisted Marine at the time of his commissioning in 1951, he earned his B.A. in Far East history from Stanford University in 1954 and later earned an M.S. in public administration from George Washington University (1971).

He was a mortar section leader with the 1st Marines in Korea and commanded 3d Battalion, 3d Ma-rines in Vietnam. MajGen Schulze served as director of three different divisions within the Manpower Department at Headquarters. He also served as Inspector General of the Marine Corps and as Commanding General, Marine Corps Recruit Depot San Diego. He was a frequent contributor to the Gazette and wrote with philosophical insight on many of the intractable problems confronting the Armed Forces—thus the naming of this annual essay in his honor is singularly appropriate.

The Schulze Memorial Essays have been published each year since 1984. They are made possible by the earnings of an endowment fund established by friends of MajGen Schulze. Authors of the essays are chosen by the Editorial Board of the Gazette.

“Our nation is on an unsustainable fiscal path” reads the opening sentence in the 2010 National Commission on Fiscal Responsibility and Reform report titled, The Moment of Truth. This commission recommended swift and steep cuts to the national budget in order to avert a pending budget crisis. This position was seconded a year later by the Congressional Budget Office in its 2011 report titled, The Budget and Economic Outlook: Fiscal Years 2011 to 2021, that said, “The United States faces daunting economic and budgetary challenges.”

The fiscal house of the United States is a mess. Public debt is $14.3 trillion, nearly 70 percent of the gross domestic product, and the interest paid on the debt is around 15 percent of the Federal budget. Spending exceeds revenues, and programmed future spending will drive the debt ceiling even higher. The economy is slowly recovering from the 2008 housing crash, banking crisis, and recession. Unemployment is hovering around 10 percent (higher if you factor in those who have left the workplace permanently). Underemployment, persons earning less than they did prior to the recession, is nearly 20 percent. Housing prices continue to decline with home mortgage foreclosures at an alltime high. Ten percent of the households in Virginia use high-interest credit cards to pay for basic needs, such as food, medicine, and electricity. “Facts,” as President Ronald Reagan once said, “are stubborn things.”

ADM Mike Mullen, Chairman of the Joint Chiefs of Staff, has stated that “the most significant threat to our national security is our debt.” The significance of debt is magnified by the ongoing struggle of Greece to meet its financial obligations. In July it was reported that Portugal and China may be the next countries to face serious problems. Budgets and economies are inextricably linked. As politicians debate a range of solutions that may include spending cuts, raising taxes, entitlement reform, and/or balancing the Federal budget, the economy hesitates to recover as employers are hesitant to hire new workers, according to William Dunkelberg, President, National Federation of Independent Businesses, a trade association representing small businesses. While experts do not agree at what point debt becomes a real problem, most will agree that any solution to the Federal budget problem will require planned reductions in both domestic and defense spending. The purpose of this Schulze essay is to discuss the impact of reduced defense spending on the Marine Corps and offer recommendations for dealing with a smaller budget. Welcome to the new fiscal reality.

The Defense Budget Problem

Defense budget reductions are nothing new. They have happened most recently after the Korean War, Vietnam War, late Cold War, and now during the global war on terrorism. Defense budget reductions of 30 percent occurred during the previous drawdowns that lasted on average 6 years. This defense drawdown, however, is different from previous defense budget reductions in three significant respects. First, this defense drawdown will occur while we have troops in combat. Our condition-based withdrawal from Afghanistan will not end until 2014, and the defense budget reductions began in 2010. Second, the voting record of congressional members is shifting. Many Congressmen, former defense hawks who would never have voted to reduce defense spending, have become fiscal hawks prepared to reduce defense spending to rein in debt. Along with debt payments, defense and entitlement spending are the major discretionary elements of the budget. It is hard to imagine a solution that does not include all three. Third, this defense drawdown may last for two decades. The Congressional Budget Office 2011 Mid-Year Budget Report stated, “. . . the budget outlook for both the coming decade and beyond, is daunting.”

America’s budget crisis is prompting tough discussions about defense spending, which is nearly $700 billion per annum. Beyond just numbers, the Department of Defense faces some extremely expensive acquisitions over the next two decades, such as new aerial refuelers and new-generation fighter/attack aircraft, recapitalization of the ground equipment for general-purpose forces, construction of new ships, and replacement of the ballistic missile submarine fleet. Maintaining force balance, preparing for most likely future threats, and divesting of expensive niche programs, all with a reduced budget, are the central challenges for the Department of Defense.

The Deputy Secretary of Defense, William Lynn III, in a 17 March speech, identified four lessons that have been learned from previous drawdowns. First, make hard decisions early. If something cannot be afforded today, it will not be affordable in the future. It may be many years before we see real budget growth. Second, efficiencies will not generate enough savings. The low-hanging fruit has already been plucked, and although we have generated some $70 billion savings in fiscal year 2012 (FY12), it is not enough to offset anticipated budget reductions. Third, reductions must be made in a balanced way. We cannot afford to mortgage personnel, investment, or training accounts exclusively to find required savings. We cannot afford a “procurement holiday” as we experienced in the 1980s or creating a hollow force by divesting of operations and maintenance dollars. Fourth, don’t cut too much too fast. We must find the courage to maintain capability in core mission areas and aggressively divest or reduce capacity in lesser mission areas.

The Impact of the New Fiscal Reality

The Department of Defense has already begun to feel the impact of a declining budget. Seventy billion dollars in programs have been cancelled and another $100 billion in savings achieved through efficiency initiatives, such as the divestment of Joint Forces Command. The force sizing construct of “two near simultaneous major regional contingencies” has been replaced by a “one major contingency at a time” construct. There is discussion of a new quadrennial defense review to identify a more limited defense strategy as well as to identify other areas of defense that are not core mission areas. Former Defense Secretary Robert M. Gates said, “A smaller military, no matter how capable, will go fewer places and do fewer things.” Quietly, some Defense Department officials are discussing “tiered readiness” with part of the force at high readiness and part of the force at lower readiness levels. President Barack Obama’s recent announcement to bring 30,000 troops home from Afghanistan over the next year sets the stage for further troop reductions in both the Army and the Marine Corps.

Defense budget reductions will have an enormous effect on the Navy and the size and composition of the future fleet. Some analysts believe the Navy is facing a “perfect storm” scenario as a result of a fiscally unsupportable 30-year shipbuilding plan, pending defense reductions, and the future requirement to replace the aging ballistic missile submarine fleet. Two prominent naval budget analysts, Ron O’Rourke, from the Congressional Research Service, and Robert Work, formerly from the Center for Strategic and Budgetary Assessments and now Under Secretary of the Navy, have both concluded that the present shipbuilding plan is unsustainable at present funding levels of $15.9 billion annually. A May 2010 Congressional Budget Office report estimates that the plan would require an average of $19 billion per year in constant FY10 dollars, or about 19 percent more than the Navy estimates. This report states:

If the Navy receives the same amount of funding for ship construction in the next 30 years as it has over the past three decades—an average of about $15 billion a year in 2010 dollars—it will not be able to afford all of the purchases in the 2011 plan.

The current fiscally unsupportable 30-year shipbuilding plan calls for 33 amphibious ships. The impact of a $1 or $2 billion annual reduction in the shipbuilding account will likely drive the Navy to a 260-ship fleet with 17 amphibious ships in 2035. Out of the question, you say. The Navy submitted just such a shipbuilding plan to Congress in 2005. Add to that reduction the anticipated cost of $5 to $7 billion for each ballistic missile submarine beginning in 2019 and you have a serious shipbuilding budget shortfall. Additionally, one of the three maritime prepositioning squadrons is being scrutinized for possible placement in stateside reduced operating status. A reduction in the number of amphibious ships further erodes the national amphibious forcible entry capability and will impact future amphibious ready group deployments. It does, however, reduce the Navy’s requirement to provide mine clearing and naval surface fire support. Fewer amphibious ships and a smaller maritime prepositioning capability will lessen the distinction between the Army and the Marine Corps. Navy operations and maintenance accounts will undoubtedly be leveraged to help offset the shipbuilding shortfall and will result in reduced steaming hours for ships and sortie and flight hour training for Navy and Marine aviators. Clearly these potential reductions to expeditionary capability will have a dramatic effect on the Marine Corps.

Marine Corps

The Marine Corps FY12 baseline budget totals $25.9 billion and is roughly 16 percent of the Department of the Navy’s baseline budget and just 4.7 percent of the Department of Defense baseline budget. This budget provides $15.5 billion (60 percent) for personnel, $6.2 billion (24 percent) for operations and maintenance, $2.7 billion (11 percent) for investment, and $1.4 billion (5 percent) for military construction and family housing. The Marine Corps will advance well-crafted arguments to either defend or increase current budget levels. Unfortunately, all Services will make similar arguments; in the end, each military department will continue to get its slice of the defense budget pie. The Marine Corps is not immune to the pending budget cuts. Using history as a guide, the Marine Corps should anticipate cuts in the vicinity of 30 percent of current levels, or over $7 billion annually, over the next two decades. Speaking in May to a conference at Brookings Institution, Gen James F. Amos said:

These are different times. I mean I’ve been in the Marine Corps for 41 years and I’ve seen this ebb and flow and I’ve seen the budget cycle go up and down in its typical 10-year cycles. I’m probably more concerned now than I ever have been before.

Balancing the requirements for personnel, equipment, and operations and maintenance in the new fiscal reality is the premier challenge for the leadership of the Corps. The battle is not about what is best for the ground, aviation, or logistics communities; it is what is best for the Marine Corps. Some capabilities will be downsized, some moved into the Marine Corps Reserve, and others divested. New programs may be downsized, delayed, or cancelled.

The Marine Corps will continue to have limited budgeting options going forward as long as it spends nearly 60 percent of its money for personnel. Willie Sutton, a famous bank robber, when asked why he robbed banks, responded by saying, “Because that is where the money is.” The same is true for our manpower account. It is where the money is. In order to expand budgeting options to meet the demands of the new fiscal reality the Marine Corps will need to drive down manpower costs. In the new fiscal reality, the Marine Corps cannot afford to spend 60 percent of its budget on manpower. As a comparison, the U.S. Army FY12 budget allocates 42 percent for personnel. A new manpower model is needed.

The proposed structure of 186,800 should be viewed as a personnel ceiling vice a floor. Based on FY12 manpower costs, each $1 billion spent for manpower buys approximately 12,000 personnel. Reducing manpower costs results in immediate savings that accumulate year over year. Reducing end strength by 12,000 in FY14 will save $10 billion from then until 2024. A reduction to 175,000 personnel is likely with additional reductions to 150,000 or 130,000 as possible alternatives. The future force will be smaller than the force of today. Significant structure reductions may require a comprehensive organizational makeover. The requirement as the Nation’s “expeditionary force-in-readiness” limits funding options and places additional pressure on the personnel budget.

The Marine Corps faces serious challenges in recapitalizing its equipment portfolio. Even after the cancellation of the expeditionary fighting vehicle (EFV), the Marine Corps ground tactical vehicle portfolio is unaffordable at current levels and will become increasingly unaffordable with a reduced budget. The Senate Appropriations Committee 2012 Report states:
The fact is that the data that the Marine Corps presents shows that the Marine Corps’ ground vehicle portfolio is unaffordable by the Corps’ metrics even if a new amphibious tractor is removed altogether . . . . The Marine Corps is going to have to come to grips with the fact that it will have to spend significantly more money on ground vehicles in the future. In view of the coming austerity, the Marine Corps will have to make difficult tradeoffs in multiple areas. The Marine Corps cannot escape this predicament by terminating the EFV alone. The Marine Corps also cannot make acquisition decisions on a vehicle-by-vehicle basis, but rather must always consider the portfolio as a whole.

Swollen approved acquisition objectives and escalating vehicle costs are the primary reasons for an unaffordable ground tactical vehicle portfolio. Since 11 September 2001 (9/11), the approved acquisition objective for the high-mobility multipurpose wheeled vehicle increased from 17,532 to 27,554 (up 57 percent), the medium tactical vehicle replacement increased from 7,360 to 10,761 (up 46 percent), and the logistics vehicle system and replacement increased from 1,699 to 2,252 (up 33 percent). Along with swollen inventories is the challenge of escalating costs per vehicle. In the light tactical vehicle category, a jeep once cost $8,000, the next-generation high-mobility multipurpose vehicle cost $60,000, and the anticipated cost of the future joint light tactical vehicle is as high as $450,000.

Operations and maintenance is the training and education slice of the budget. The Marine Corps force-in-readiness mission, along with “other duties as the President may direct,” will prevent significant reductions to this appropriation. Nonetheless, it will be closely scrutinized. A declining amphibious ship inventory will prevent the Marine Corps from conducting brigade-level exercises. Large-scale combined arms exercises will be held less frequently and will be the bill payer for costs to maintain distance-learning initiatives, computer-based simulations, and other training and education initiatives. Maintaining a high level of readiness with less frequent training opportunities is yet another challenge of the new fiscal reality.

Way Ahead

The challenge of the future fiscal environment demands that the Marine Corps change its manpower model, its organizational structure, and its equipment portfolio. In challenge there is opportunity, but there is also risk. How the Marine Corps adapts to the new fiscal reality will determine the utility of the Marine Corps for the next 50 years. The following recommendations are offered to help steer the Marine Corps through the rocky shoals of the new fiscal reality.

Reenergize doctrine. Doctrine serves as the Service’s intellectual basis by providing a coherent operating philosophy. Since the mid-1980s maneuver warfare served as the Marine Corps’ central operating philosophy and was codified in the late 1990s in a series of white books known as Marine Corps doctrinal publications (MCDPs). Significant world events have occurred since then, and it is time to relook and revise those base doctrinal publications to ensure continued relevance. Is the maneuver warfare philosophy relevant in a world in which significant national security threats include cyberattacks, individual terrorists armed with weapons of mass destruction, and the growing number of failed and failing states?

Moreover, it is time to admit that the 15-year experiment with doctrinal proponency has failed. While there have been some notable proponents (e.g., MAGTF Staff Training Program and Marine Corps Combat Development Command G–3/5 (operations, plans)), most Marine Corps doctrine has languished under the present system. Only one MCDP has been revised over the past 15 years, and that publication, MCDP 1–0, Marine Corps Operations, required 2 years to revise, or about the amount of time required to produce the original publication. Most publications developed over this same period are Army publications that were dual designated as Marine Corps publications. Fundamental doctrinal differences exist between the Marine Corps and the Army, and the process of dual designation obscures those doctrinal distinctions making the Marine Corps appear more like a second land army. Many Marines view the dual designation process as a lazy man’s approach to doctrine. The next structure review group must find a way to reestablish a doctrine division within the Marine Corps. Organizationally, this division should report directly to the Director, Capabilities Development Directorate within Headquarters Marine Corps, Combat Development and Integration.

Reorient the force. There will be more force structure reviews over the next decade. The principal challenge will be to downsize the force and best position the Marine Corps for future contingencies. Unlike previous structure reviews with definitive structure targets (e.g., 202,000 in 2003 or 186,800 in 2010), future structure reviews will likely not be given a structure target. Nor will all budget cuts come at one time; rather, they will likely come incrementally over a number of years, complicating immensely the force structure challenge.

It is time to give our current organizational framework a fresh look. Previous structure reviews added some irregular warfare enablers (e.g., Center for Irregular Warfare, Center for Advanced Operational Culture Learning, and Marine Corps Information Operations Center) and deleted a headquarters or two but left the basic structure of division, regiment, battalion, company, and platoon unchanged. At the same time, America’s general-purpose forces have been directed to establish closer linkages to the special operations community. An idea receiving some favorable consideration among many Marines that moves the Marine Corps in this direction is to accept the 6-year Marine Special Operations Command experiment as a success and begin to evolve the entire Marine Corps toward a limited special operations capability. Other options include mainstreaming irregular warfare capabilities into the Operating Forces and migrating traditional capabilities, such as tanks, rocket artillery, and fixed-wing fighter attack aircraft, to the Marine Corps Reserve or divesting of those capabilities entirely. Force reorientation has the added benefit of sharpening the distinction between the Marine Corps and the Army. While there is no current consensus on the organizational way ahead, salami slicing the status quo organizational construct is a long-term recipe for disaster because it fails to address the fundamental issue of the new fiscal reality—the Marine Corps cannot afford the organizational construct it has, let alone the one it wants. The Marine Corps needs to examine from the fire team up its structure, rank, and mission.

Adopt a new force structure model. The Marine Corps needs a new force structure model that costs less than 60 percent of its budget. To do so, the Marine Corps will need to reduce manpower requirements. Reducing personnel to 150,000 will provide an immediate savings of some $3 billion annually. This is a hard pill for the Marine Corps to swallow, but the future budget reality demands it. Perhaps it is time to age the force, focusing attention on retention vice recruiting. Most Marines will agree that a smaller, well-equipped force is superior in every respect to a larger, poorly equipped and trained force.

Revise all tables of equipment. All tables of equipment must be aggressively scrubbed to remove excess and unnecessary inventory and revised accordingly. All ground combat tactical vehicles (wheeled and tracked) must be closely scrutinized and reduced to at least pre-9/11 inventories. Personnel reductions reduce vehicle demand and provide additional savings. Based on a 2010 ground combat tactical vehicle assessment conducted by the Marine Corps Combat Development Command, a 30 percent reduction in all tactical vehicle categories would not present significant operational risk to the Operating Forces.

In order to drive down procurement costs, the Marine Corps should look to off-the-shelf solutions. The light tactical vehicle is the classic example. Instead of a joint light tactical vehicle that costs around $450,000, why not buy a Ford F–250 four-door, four-wheel drive pickup. At $40,000 a copy, armor and electronics can be added at a total cost of less than $100,000. Buying in bulk (over 20,000 vehicles) will drive down unit cost. The vehicles are reliable, easy to maintain, and easy to drive. Another commercial off-the-shelf alternative is to look closely at the wheeled vehicle needs of the aviation and logistics combat elements and replace much of their rolling stock with commercial vehicles. While a percentage of the vehicle fleet must retain an offroad capability, airfield and line haul operations are normally conducted on paved surfaces. Unconventional vehicle solutions offer promise of a dependable vehicle at a reasonable price.

Aggressive use of an administrative deadline program can be used to offset reduction in operations and maintenance funding. Placing 25 percent of an organization’s table of equipment on administrative deadline saves maintenance costs and preserves the equipment for contingency purposes. It is time to reinvent and reinvigorate the Combat Ready Storage Program.

Overhaul combat development. The development of a ground combat tactical vehicle portfolio not supported by fiscal reality is a clear signal that the Marine Corps combat development directorate needs an overhaul. Presently, capabilities are developed via integration divisions aligned with the warfighting functions of command and control, intelligence, fire and maneuver, logistics, and force protection. These integration divisions develop ever-expanding numbers of validated requirements all without any budgetary considerations. War‑fighting functions are a useful planning construct but obviously an ineffective combat development construct. Instead of the present arrangement, divisions should be arranged based on the slice of the investment budget they consume. Historically, the Marine Corps’ annual procurement (investment) budget spends approximately 33 percent on command and control- and intelligence-related capabilities, 35 to 40 percent on ground combat tactical vehicles, 12 to 15 percent on weapon systems (lethal and non-lethal), and the remainder on all else. Four equipment divisions—command and control/intelligence, ground tactical vehicles, weapons systems, and a miscellaneous equipment division—each with a working budget based on historical norms, are all that is required. Such an organization would provide needed focus, allow for trades within each division and the combat development directorate, force development of integrated capabilities, and reduce structure requirements.

Renew experimentation. As the drawdown from Afghanistan unfolds over the next several years, the Marine Corps must reenergize its experimentation efforts focused on a new body of concepts. As was done in the 1930s, an experimental battalion should be designated on each coast. Unless the Marine Corps experiments with new organizational constructs and a variety of nontraditional platforms (e.g., commercial ships, maritime prepositioning ships), it will continue to be hesitant to adopt a new organizational construct or use different mixes of seagoing vessels that may provide useful capability at reduced expense with acceptable risk.

Strengthen concept development. Concepts drive combat development, and the new fiscal reality must become the driving force behind future Marine Corps concept development efforts. Forward-looking concepts keep a Service ahead of the bow wave of change. What is needed are concepts that discuss how current capabilities can be made more effective vice concepts that require expensive equipment systems to achieve new capabilities. For example, what organizational alternatives exist that will provide needed capability at less cost? How will the Marine Corps be able to accomplish its amphibious mission with much fewer ships? How can maritime prepositioning and commercial platforms be used to expand the “from the sea” capability? How can a one- or two-ship amphibious ready group be supported by tethered capabilities from other vessels? How can the Marine Corps adapt its organizational construct to be more effective in its most likely missions as well as leaner, lighter, and more expeditionary? Can we routinely deploy units smaller than a MEU, and what would be the mission sets that they could accomplish?

Conclusion

When the father of America’s nuclear program, Ernest Rutherford, learned that his laboratory budget had been slashed he remarked to his colleagues, “Gentlemen we have no money; therefore we must think.” Today, his statement applies in spades to the Marine Corps. The fiscal storm gathering on the horizon will be perhaps the Corps’ biggest noncombat challenge since the unification battles of the late 1940s. That challenge is to develop a new force structure model that allows budgetary flexibility to replace or modernize worn equipment and to prepare the force for future threats, all with reduced fiscal resources. Defense budget cuts are coming, they may continue for two decades, and at times the cuts will likely be severe.

Adjusting to the new fiscal reality will challenge all Marines, most who have never experienced a downward-sloping defense budget. A declining defense budget will require the Marine Corps to make tough choices. Structure and capabilities will be divested to pay for the replacement of worn equipment. However, the new fiscal reality does offer an opportunity to reshape the Corps into a leaner, lighter, middleweight force ever able to answer the call as America’s expeditionary force-in-readiness. How the Marine Corps navigates through the pending fiscal storm will in large measure determine its future.

“We want to keep the country safe and secure, but I don’t think the country can afford to spend more on national defense than the next 14 countries combined.”

—Erskine Bowles, Cochairman, 2010 National Commission on Fiscal Responsibility and Reform

“He who will not apply new remedies must expect new evils.”

—Sir Francis Bacon