WILLIAM COHEN, Secretary of Defense:"And now for the moment you've all been waiting for..."

NARRATOR: On May 19, 1997, the Pentagon released its long-awaited report, the Quadrennial Defense Review.

Secretary COHEN:

"Last December the department began one of the most comprehensive reviews ever conducted of our defense establishment."

NARRATOR: In an era of shrinking federal budgets and shifting threats to US national security, the Pentagon is attempting to reshape itself to meet the challenges of the 21st Century. 

Has the Pentagon succeeded with its latest attempt?

MARCUS CORBIN: I think this is a shocking failure to do a good job of really standing back, looking at what we can do now in the post-Cold War world.

NARRATOR: Today, the Pentagon is asked to take on a wide variety of roles: fighting regional wars, providing humanitarian relief, peacekeeping operations, combating terrorism. But is our military ready to meet the challenges of the new world order or is it still preparing to fight yesterday's battles?

ADM JOHN SHANAHAN: I'm Vice Admiral Jack Shanahan, director of the Center for Defense Information. Last year, when Congress mandated the Quadrennial Defense Review, there was applause at the Center for Defense Information. We were told that the QDR would provide a realistic assessment of future threats to our national interests, provide a new strategy to neutralize that threat and shape our force structure to implement the strategy. And thus, the United States would be ready to enter the next millennium.

Is this what we got? Or, is it a Cold War force structure without the Cold War? For you and I, the American taxpayer, that is "The $265 Billion Question."

NARRATOR: In the last decade, the international situation has changed dramatically and in ways few would have predicted. These changes make it necessary for the United States to reexamine its role as a world leader and how to meet the challenges presented by the new security environment.

Since 1991, the Pentagon has undertaken four studies designed to redefine America's national security needs. The most recent, the Quadrennial Defense Review, or QDR, was completed in May 1997. It is to be the blueprint for US military strategy through the years 2005. 

To fully understand the issues that the QDR had to address, it is important to examine first the most significant of the earlier studies, the 1993 Bottom-Up Review. The Bottom-Up Review was conducted by then-Secretary of Defense Les Aspin, who described the factors motivating the study.

Secretary LES ASPIN:
"Let me start, first of all, by talking about the foundation for the Bottom-Up Review. Those of who have been following this topic know that for decades this building has focussed almost all of its planning -- budgets, force structures, the way we organize our forces -- everything has been focussed against the Soviet threat, even to the extent of the way we designed our weapons. We designed our tanks, our planes, our ships with war with the Soviet Union in mind."

NARRATOR: In attempting to meet the security challenges of the post-Cold War world, the Bottom-Up Review recognized the complexities of shifting from a strategy targeted at fighting a war against an identified adversary, the Soviet Union, and meeting the less well-defined challenges to US national interests which might arise. In order to defend against existing or emerging threats, the Bottom-Up Review recommended that US forces be large enough to fight and win two major wars, "Major Regional Contingencies," at virtually the same time. This quickly became known as the "Two MRC Strategy."

COLIN POWELL, Chairman, Joint Chiefs of Staff:
"So, this is a fundamental underlying principle of President Clinton and Secretary Aspin and the Joint Chiefs of Staff strategy statement for the Bottom-Up Review, being able to deal with two major regional contingencies or conflicts near simultaneously."

NARRATOR: The Bottom-Up Review also recommended that the United States be capable of fighting both wars without any assistance from its allies. 

The Bottom-Up Review had a profound impact on US military spending. Defense Secretary Aspin recognized the linkage between Pentagon planning and the size of the military budget.

Secretary ASPIN:
"We now face a time and this building is in a brand new era. We face a time when that has gone. There is no more Warsaw Pact. There is no more Soviet Union. So, how do we size and shape our defense budgets now? How do you know whether you need a $100 billion defense budget, or a $300 billion, or what kind of a defense budget?"

NARRATOR: It was thought by many Americans that absent the Soviet threat, Pentagon spending could be dramatically reduced. A "peace dividend" was envisioned, where money no longer needed to fund the military could be reallocated toward reducing the federal deficit and other important federal programs.

The funding required to pay for the two MRC capability, however, effectively consumed the peace dividend. Adjusted for inflation, US military spending today is roughly equal to what it was in the early 1980s. And there are those in Congress who argue that even at $265 billion a year, the two MRC strategy is underfunded.

Rep. FLOYD SPENCE, Chairman, House National Security Committee:

"In one form of another, the wide-ranging criticism has focussed on the mismatches between resources and strategy. The administration defense budgets do not support the recommended military force structure and even if it did, the force structure's inadequate for the execution of the two MRC strategy."

NARRATOR: There were concerns in Congress about the growing mismatch between Pentagon resources and the demands placed on US military resources. As a result, Congress mandated a new study, the Quadrennial Defense Review, of QDR. 

When the QDR was released in May 1997, Secretary of Defense Cohen described its role:

Secretary COHEN:
"The first task of the QDR was to develop a defense strategy to meet these threats and opportunities. And as I've indicated to many of you before, it can be summed up in three words: shape, respond and prepare."

NARRATOR: The United States would shape the international environment in ways to promote its interests and prepare to respond to a broad range of threats. And it would retain its ability to fight and win two wars.

Congress had argued that the QDR needed to be based on strategy, not the budget. But is retaining the two MRC requirement in the QDR valid recognition of actual military threats or merely an effort to maintain the status quo? 

In 1994, then-Secretary of Defense William Perry, in testimony before Congress, had this to say:

WILLIAM PERRY, Former Secretary of Defense:

"Nothing in our planning, nowhere in our planning do we believe we are going to have to fight two wars at once. I think it is an entirely implausible scenario that we would ever have to fight two wars."

NARRATOR: By maintaining the requirement for a US capability to fight two major wars, the QDR effectively mandates that the military retain a powerful force structure. This has clear budgetary implications because the current force structure is widely viewed as underfunded. But the essential question of whether US national security actually requires a capability to fight and win two wars may never have been given serious consideration during the QDR review.

Elaine Grossman, senior editor for Inside the Pentagon, an independent investigative journal, closely followed the QDR process.

ELAINE GROSSMAN: The two-war strategy is something that going into the QDR, just about everyone who is a leader in the Pentagon, from the military leadership to the civilian leadership, felt was something they wanted to maintain. So, I would say there was no serious contemplation of ditching this two MRC strategy during the QDR.

NARRATOR: Marcus Corbin is the defense program coordinator at the Project on Government Oversight, an independent watchdog group.

MR. CORBIN: I don't think there was much serious consideration of scrapping the two MRC strategy. This strategy is focussed around fighting two wars at the same time, essentially, overseas. They instead focussed much more on the so-called "revolution in military affairs," which consists of bringing in a lot of very high-tech weaponry to assist the forces in fighting however many wars. So, there was much more focus on the revolution in military affairs than the specific wars they might have to fight.

NARRATOR: The Pentagon's review actually goes beyond simply maintaining the two-war requirement. It recommends broadening the US security strategy to focus additional attention on the types of operations in which the US military has become increasingly involved.

Further, the Quadrennial Defense Review also sought increased funding for modernizing its weapons inventory. Where will this money come from?

MS. GROSSMAN: In the QDR, the Pentagon is looking to find about $15 billion a year in additional funds to invest in replacing and modernizing its aging weapons systems. The United States has been hardpressed, thus far, to find those additional funds and there's a consensus in the Pentagon, as well as on Capitol Hill, that not much more additional dollars can be spent on defense. Which means that if the Pentagon wants to spend more on modernization, it needs to find savings elsewhere in its budget.

NARRATOR: This need to find additional funds drove critical scrutiny of other areas of the Pentagon's operations. The QDR recommended reductions in several major areas: infrastructure, the numbers of troops and civilian employees, streamlining Pentagon business practices, and cutting some weapons purchases. 

In deference to congressional opinion, Defense Secretary Cohen made attempts early in the process to assure Congress that strategic thinking rather than the budget would drive the QDR.

Secretary COHEN:
"I am very serious about the QDR process. I've spent a good deal of time already meeting with the individual panels. This is not simply a repetition of the status quo. I really want each one to look at this from a -- not a budget-driven point of view, but a strategic point of view."

NARRATOR: But the former senator later acknowledged the effect that budgetary forces had on the Pentagon's planning.

Secretary COHEN:

"I want to be real on my side, as well. I don't want to conduct this exercise and say let's not be concerned about budgets, let's operate in a budget-constrained environment, because that's the reality on Capitol Hill. I just left, I know what the sentiment is."

NARRATOR: To what extent did the linkage between the Pentagon's budget and military planning shape the outcome of the QDR?

MR. CORBIN: I think it's clear that the QDR was driven from the beginning by budgets. In fact, if you look closely at some of the statements made in press conferences, they admitted that they were given a going-in figure and, lo and behold, they met that figure in coming up with their conclusions.

NARRATOR: Corbin and other critics of the QDR feel that Pentagon assumptions about future military funding levels drove the planning done in the Quadrennial Defense Review. They assert that the Pentagon's belief that it would continue to receive relatively the same funding as in the current military budget shaped their planning more than did strategic concerns.

Secretary COHEN:
"And frankly, I don't see strong support on a bipartisan basis for increasing defense spending in the absence of a major conflict in the foreseeable future. I think that we will be fortunate if we can hold it at roughly 250 billion, where it is today, in constant dollars. 

"And I wanted the military to operate with that assumption in the background: Look at the strategy first and let's go through the analysis, but also, we have to be real ourselves."

NARRATOR: Ironically, many critics, such as Republican Congressman Duncan Hunter, fault the QDR for being a budget-driven exercise and feel that it, like the earlier Bottom-Up Review, is underfunded.

Rep. DUNCAN HUNTER (R-CA):
"Having said that, let me just say that I'm disappointed in the QDR and what I want to do is help you and General Shalikashvili give something to the American people that I don't think you've given at this point, and that's this: 

"The American people and this Congress need to know what we need to do and how much we need to spend to defend America. To go to the chairman's initial comments: What do we have to do to protect the country? And then give us a price tag for it."

NARRATOR: And although Marcus Corbin believes that the QDR fails to correctly address America's needs, he agrees that the recommended plan is underfunded.

MR. CORBIN: I don't think the QDR is affordable unless something else gives in the budget. This is a recipe for budgetary disaster. As weapons increase with cost overruns in the future, there's just not going to be enough room even in this budget for all the things they want to buy and all the things they want to do.

NARRATOR: Apparently, the Pentagon also agrees.

Secretary COHEN:
"We're about $15 billion short in terms of procurement as far as modernizing at the pace we want to."

NARRATOR: The perceived failure of the QDR to reconcile budgets and strategy has generated renewed concern in Congress, whose members will ultimately be responsible for finding most of the savings suggested by the QDR to fund weapons modernization.

But can we afford an extra $15 billion a year for weapons, especially in light of the reduced threats to the United States?

MS. GROSSMAN: As you might imagine, there has been quite a bit of criticism leveled at the Pentagon on the reductions and the defense strategy it proposes under the QDR. There are some liberals in Congress who say that the QDR did not go far enough in taking cuts and there are some conservatives in Congress who say it went too far. And the general feeling at the Pentagon is that it must have been just about right.

NARRATOR: Yet Congress will have to reach agreement on cost-saving measures if additional funds for weapons are to be made available.

MS. GROSSMAN: One of the criticisms leveled at the Pentagon for the QDR is that the bulk of the savings that it seeks to achieve are tied up in initiatives that require acts of Congress, and these are acts of Congress that may not come to pass.

NARRATOR: The methods recommended by the QDR for realizing these savings are politically sensitive.

MR. CORBIN: There's been a very clever marketing strategy on the Quadrennial Defense Review, I think. What the Pentagon has done is gone to Congress and say, 'Look, cut bases, cut the National Guard and Reserves, and give us all the things we want.' So, when Congress says, 'No, we don't want to cut the National Guard, we don't want to cut those bases in our district,' they look like the bad guys. Meanwhile, the Pentagon has failed to make the tough choices that it should have made to cut weapons or forces where necessary, in order that the overall program could be afforded.

NARRATOR: Senator Richard Kempthorne, a member of the Senate Armed Services Committee, expressed similar concerns:

SEN RICHARD KEMPTHORNE (R-ID):
"The QDR seems to put pressure on the Congress to reduce the size of the National Guard, solve the depot maintenance issues, enact two more rounds of base closures, while the services were not asked to, for example, terminate a major weapons system, tackle roles and mission redundancy, address some of the force structure. Does this review share the political pain?"

NARRATOR: Congressional critics fault the QDR for its failure to adequately fund the strategy it recommended and for the politically sensitive proposals to free funds for the Pentagon's new weapons modernization programs. The military services themselves, however, seem pleased with the report's findings. 

Each service was able to preserve its highest priorities: The Navy, its 12 aircraft carrier groups. The Army, its 10 active divisions. The Marine Corps, its three expeditionary forces. And the Air Force, its sweeping program to modernize its fleet of fighter aircraft. But is their satisfaction with the QDR on the part of the services justified?

MR. CORBIN: The services feel that they're winners under the QDR. And they should, in the short run, because they neither had to face large force cuts, they didn't lose many people, didn't lose many units, nor did they have to give up the expensive new weapons that they all want to buy. 

When they're actually asked to go out and intervene somewhere, then there are going to be problems and there's just not going to be enough room in their budgets in the future to keep both all the troops they want at the readiness levels they should have and the weapons, and aircraft, and so on that they want.

NARRATOR: But in many ways, the issues of whether the QDR was budget or strategy-driven, or whether the savings recommended by the Pentagon can be achieved, are secondary concerns. The central issue is whether the QDR adequately considered and responded to the real threats to American national interests.

Congressman Ron Dellums, the ranking Democrat on the House National Security Committee, focussed on the repercussions of failing to address these threats.

REP. RON DELLUMS (D-CA):
"Failure to secure those opportunities will result in hundreds of billions of dollars in misdirected, scarce budgetary resources. And it could well condemn future generations to an avoidable arms race that might lead to needless military competition and instability among major powers.

"Achieving a proper balance between military spending, investments in foreign policy programs calculated to promote stability, and key domestic accounts that enhance our national security, what I consider the triad of our national security accounts, is critical."

NARRATOR: Marcus Corbin believes that the QDR failed to perform this critical task.

MR. CORBIN: I don't think they really stood back and looked at this from a blank slate. They didn't explore seriously what we can do more with our allies, rather than just going it alone ourselves. They didn't really look at alternative international security systems that might help to prevent wars rather than just waiting for them to occur.

NARRATOR: Even before the QDR process began, there were concerns in Congress that Pentagon planners would focus on how to justify our current but outdated strategy and war-fighting doctrine without considering new options. Moreover, because the QDR was a study done by the military for the military about the military, Congress created the National Defense Panel, or NDP. Thus, unlike the Bottom-Up Review, the QDR included a mechanism for a formal critique of the Pentagon's recommendations.

What exactly is the National Defense Panel? 

Senator Joseph Lieberman, a Democratic member of the Senate Armed Services Committee and sponsor of the legislation which created the NDP, explains the need for the additional studies:

SEN JOSEPH LIEBERMAN (D-CT): This grew out of a feeling of some of us on the Armed Services Committee that we were not really looking out over the horizon, that we were too much focussed on the day-to-day. And secondly, that some major changes had occurred which were already beginning to affect the way we defend ourselves as a country and would have even more effect in the future. And that's what the QDR is supposed to do. It's within the Pentagon. It's in-house. 

But then because we understand that the Pentagon can be a political place in the same way that any organization could be political, that it may not be able to present the boldest recommendations for change, and that's why we created the National Defense Panel.

NARRATOR: Philip Odeen, a long-time Pentagon and defense industry official, chairs the National Defense Panel. He described to Congress the panel's dual role in assessing US national security needs.

PHILIP ODEEN:
"Specifically, the legislation assigns the National Defense Panel two tasks: To review and comment on the year 2005-focussed Quadrennial Defense Review being discussed by the Department of Defense. And secondly, to conduct an independent assessment of alternative force structures through the year 2010 and beyond."

NARRATOR: Mr. Odeen was also quite clear that he and the National Defense Panel understood that their work would not be budget-driven.

MR. ODEEN:
"We also make it clear that we do not see our mission as either one to balance the federal budget, nor one which is automatically budget-driven. Instead, our analyses must be guided by the needs of the future and the strategies that best get us there."

NARRATOR: On May 19th, as the Pentagon released the QDR to the public, the National Defense Panel issued its eight-page analysis of the report. The NDP raised three serious points about the QDR.

MS. GROSSMAN: The NDP said that the Pentagon had done a good job in the QDR at broadening the defense strategy, but it did raise some questions about whether the Pentagon had established a clear enough link between the broadened defense strategy and the reductions that the Pentagon went on to take in the QDR. 

Another thing that the NDP mentioned was that the cuts to troop strength, or end strength in the QDR, was good, but that the Pentagon seemed to gloss over potential cuts that could be taken, mostly to civilian strength, in the defense agencies and the Office of the Secretary of Defense. 

The NDP also said that the cuts to infrastructure that the Pentagon proposed in the QDR were good, but that these would require acts of Congress, and that it might be good if the Pentagon could propose more near-term reductions in infrastructure, realigning and consolidating bases, that it could take in the near-term.

NARRATOR: The NDP was also critical of assumptions made by the Pentagon in finding additional funds to purchase new weapons. Republican Senator Dan Coats, another sponsor of the legislation which created the NDP, conveyed the panel's concerns during Senate hearings on the report.

SEN DAN COATS (R-IN):
"The NDP goes on to conclude, 'The panel considers each of these assumptions to be somewhat tenuous.' And the most disturbing statement, 'Collectively, they represent a budget risk which could potentially undermine the entire defense strategy.'"

NARRATOR: On virtually every count, the QDR failed to take on the tough issues which confront the United States as we move towards the next century: An unrealistic assessment of US security requirements, a failure to rectify the imbalance between requirements and resources, and a modernization program funded through a set of potentially disastrous assumptions.

But as Senator Lieberman points out, the conclusion of the Quadrennial Defense Review and the work of the National Defense Panel are not the end of efforts to redefine America's security needs. 

SEN. LIEBERMAN: I make an analogy which is inexact, but I think it's helpful. Which is that in the private sector, in all the great companies, they're continually asking themselves 'What are we going to need to do to change to be successful next year?' And that's the way the Pentagon and all of us who are its trustees here in Washington are going to have to be.

NARRATOR: But even as part of an ongoing process, Senator Lieberman sees the critical importance of the QDR and NDP.

SEN LIEBERMAN: If they're done wrong, it's going to be a real lost opportunity.

NARRATOR: Some feel that the chance for significant change through the QDR has already been lost and that it will be the American taxpayer who will have to foot the bill for this missed opportunity.

MR. CORBIN: The QDR has best been described as a fight between those who wanted more toys and those who wanted more boys, and the toys won. And so, we're slated to buy a whole bunch of extremely expensive new weaponry, particularly aircraft, which will bust up our federal budgets in the next century.

NARRATOR: After six years and four major studies, Congress and the Pentagon have failed to bring a fresh approach to addressing our country's national security needs. It may be too much to expect that individuals too closely associated with the military can perform an impartial review of Pentagon planning. Ultimately, it seems the American people must bear the brunt of this failure in the waste of tax dollars for unneeded military weapons and a military force ill-prepared to meet the challenges of the next century.

ADM SHANAHAN: This October, Congress will authorize the Pentagon to spend $269 billion in the next fiscal year. This number will go up $2.5 billion the following year, and keep going up each successive year. But 2002, Congress plans to spend $290 billion on the military. 

There's no guarantee that the budget agreement between the administration and Congress won't fall apart, given the pressure this spending plan will put on efforts to balance the federal budget. And the Pentagon's spending plan will not help us to address the predicted future threats by terrorism, missile proliferation, weapons of mass destruction, and refugee flow resulting from intrastate conflicts.

If you would like to receive more information on the subject of military spending, just call us at 1-800-CDI-0004. We'll send you our Defense Monitor Report on military spending and a list of resources you can use to learn more about this important issue.

For "AMERICA'S DEFENSE MONITOR," I am Jack Shanahan.

Produced by the Center for Defense Information 
Scriptwriter: Chris Hellman 
Segment Producer: Steve Sapienza 
Show Number: 1044