Tag Archives: Defense Budget

Coast Guard Budget Battles Revisited

Post by Chuck Hill

Why does the Coast Guard seem to be losing the budget battle within the Department of Homeland Security (DHS)? While funding for the Department has grown, the Coast Guard budget has in fact declined in real terms. I suspect it has a lot to do with perceptions of a miss-match between DHS missions and Coast Guard missions.

Congress attempted to address this perceived mismatch in the Homeland Security Act of 2002 by requiring an annual report of resources allocated to DHS missions and non-DHS missions, to ensure non-DHS missions are not ignored. I will refer to this “Annual Review of  the  United States Coast  Guard’s  Mission  Performance” (pdf) as the Performance Report.

It is an interesting report, but it does have significant weaknesses, largely stemming from the use of undifferentiated and undefined “resource hours” as a measure of effort. I reviewed a report back in 2010 and offered my criticisms, which have not changed herehere, and here.

Unfortunately, I think this report may be part of the problem, in that it defines several Coast Guard missions as “non-DHS,” and it gives the impression, erroneously I believe, that roughly half of the Coast Guard’s budget goes for things outside the DHS charter.

Of the eleven Coast Guard missions, six were regarded as Non-Homeland Security missions: SAR, AtoN, Living Marine Resources, Marine Environmental Protection, Marine Safety, and Ice Operations.

The five Homeland Security missions are Ports, waterways, and coastal security, Drug Interdiction, Undocumented Migrant Interdiction, Defense Readiness, and Other Law Enforcement (primarily Foreign Fisheries Enforcement).

But these distinctions are fallacious.

The Department views its own missions as:

  1. Preventing Terrorism and Enhancing Security
  2. Securing and managing our borders
  3. Enforcing and administering our Immigration laws
  4. Safeguarding and securing cyberspace
  5. Ensuring resilience to Disaster

NON-DHS MISSIONS: All these missions, at least in some respects, support DHS missions.

SAR: A robust SAR organization is clearly a necessary foundation for “Ensuring resilience to Disaster.” What were Katrina and Sandy but huge SAR cases? SAR command posts and communications are the skeletal structure upon which Disaster Response is based. After all, every SAR case is really a response to a disaster of some dimension. If the 3,000 plus people the CG saves every year had died in a single incident, it would have been a disaster on the order of 9/11.

AtoN: Most of the population lives near the coast or inland waterways. Most depend heavily on marine transportation and in many cases fishing. When there is a disaster, restoring safe navigation is a high priority both for bringing in assistance and for recovery.

Marine Environmental Protection (MEP):  The Deepwater Horizon was a disaster. MEP regulation attempts head off disasters and mitigate its effects, that is “ensuring resilience to disaster” plus offshore and port-side energy infrastructure are potential terrorists targets.

Marine Safety: Marine Safety is designed to prevent marine disasters. A sunken cruise ship could be a disaster on the order of 9/11. Marine Safety standards tends to mitigate the effects of a terrorist attack on marine targets

Living Marine Resources: Destruction of valuable marine resources can actually be as disaster for the economy of some communities.

Ice Operations: Domestic icebreakers can prevent flooding. We recently had a case where a community in Alaska would have been left without fuel, if an icebreaker had not opened a path for delivery.

THE UNLISTED COAST GUARD MISSION:

Safeguarding and securing cyberspace: It is not one of the Coast Guard’s eleven statutory missions, but this is in fact one of the Commandant’s key priorities. Still it is not addressed in the Coast Guard’s annual Performance Report.

THE NON-DHS DHS MISSIONS: Two missions listed as DHS missions in fact are of little interest to the department, and performance goals (which are themselves perhaps inadequate) in these two areas are not being met.

Defense Readiness: Apparently the Coast Guard is doing more for Defense Readiness now than it was before 9/11, but really little has been done in terms of adapting resources for wartime roles. Additionally, a potentially major Coast Guard contribution to defense readiness, the major cutters, are being replaced at such a slow rate, the fleet continues to age, making it less reliable.

Other Law Enforcement (primarily foreign fisheries): DHS probably has little interest in this. This mission also suffers from the aging of the cutter fleet, and additionally the very large US EEZ in the Western Pacific has been largely ignored.

Problems in DHS: I do think the Departments placement of priority on counter-terrorism over more general disaster response is misplaced,  and this is another source of problems.

CONCLUSION:

I will quote my closing paragraph from my 2010 post,

When it comes time to decide the Coast Guard budget, I would suggest Congress take a different approach. Consider return on investment. If you like the return you are getting from the Coast Guard now, invest more.  Don’t say, “Agency ‘X’ isn’t working, we need to put more money into that.” “The Coast Guard, is doing a good job with their current budget so we don’t need to give them any more.” I don’t quote scripture very often. I’m not religious, but there is some wisdom there. Check out the story of the “good and faithful servant” Matthew 25:14-30.

 

This article can be found in its original form on Chuck Hill’s CG blog.  Chuck retired from the Coast Guard after 22 years service. Assignments included four ships, Rescue Coordination Center New Orleans, CG HQ, Fleet Training Group San Diego, Naval War College, and Maritime Defense Zone Pacific/Pacific Area Ops/Readiness/Plans. Along the way he became the first Coast Guard officer to complete the Tactical Action Officer (TAO) course and also completed the Naval Control of Shipping course. He has had a life-long interest in naval ships and history.

LCS Versus the Danish Strawman

nils juel 2Many critics have assailed the Littoral Combatant Ship (LCS) program for its high cost in comparison with foreign, supposedly better armed and equipped equivalents. The Danish Iver Huitfeldt and Absalon class frigates are often cited as examples of cheaper, more capable small combatants in comparison with LCS. These claims are not well researched and are based on isolated points of data rather than any systemic analysis. Other nations may be able to build relatively cheap warships, but hidden factors not discussed by critics, rather than U.S. shipbuilding and general acquisition deficiencies make this possible. The Danish Navy, in conjunction with corporate giant A.P. Moeller have produced an outstanding series of warships, but a direct comparison between them with the LCS is one of apples verses oranges. It’s time to stop using this inaccurate strawman argument against LCS.

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The direct comparison of the Danish frigates to LCS is highly misleading due to significant differences in Danish shipbuilding practice and financial accounting. The Danish “StanFlex” system of “plug and play” weapons, sensors and equipment (including cranes!) officially separates these components from the advertised cost of the ship. A 2006 RAND report on the rise in warship costs specifically identified such systems as the principal drivers of warship cost inflation. The Danish concept of separating these more costly systems from their hull gives the appearance of a much less expensive warship. The ships were often accepted by the Danish Navy in an incomplete condition. The Danish Nils Juel, for example, was delivered in 2014 with 76mm guns scavenged from decommissioned ships. Danish figures suggest that the Iver Huitfeldt program used $209 million in reused equipment from scrapped vessels. Reuse, however, could not meet all system requirements. The planned 127mm (5 inch) gun system was deemed too expensive at $50 million a copy. The ship’s close-in weapon system mount was actually a dummy, wooden weapon due to a lack of certification. While equipped with a MK 41 vertical launch missile system (VLS), the ship deployed to the fall 2014 U.S. Bold Alligator exercise without the system certified for use or weapons purchased for eventual outfitting. That same reporting indicated that the ship was delivered with its damage control system incomplete and lacking a secondary steering control center. Much of the ship is built to merchant ship standards which are not as robust as those traditionally provided to warships. In addition, the Danish ship was forced to take on nearly 20 extra crew members when the lean 100 person complement was found insufficient for operational needs.

The Absalon class is more akin to a heavily armed, limited load amphibious ship rather than a surface combatant. It combines a number of warfare and expeditionary capabilities on a single hull, but excels at none of them. It is also significantly slower (at 24 knots maximum speed) than most other surface combatants. Both Absalon and her sister Esbern Snare were also delivered without their full installation of weapons and sensors. In the case of Absalon, this process took over three years. The Danish Navy has been open in regards to these conditions. U.S. advocates of adopting the Absalon or Iver Huitfeldt classes almost always overlook them.

The LCS, by contrast is delivered with significant systems such as its 57mm gun and point defense missile system incorporated into the overall cost. Scavenging of weapons from previous U.S. ships is extremely difficult due to a constant process of upgrades over time. Weapon systems, like ships also have service lives and U.S. ships being decommissioned often have equally aged weapons and supporting electrical, hydraulic and mechanical systems that make a re-installation not cost effective. Unlike the Absalon class which is not equipped to master any one warfare area in any of its configurations, the LCS can be exclusively equipped to master one such discipline. It is purposely designed to operate in tailored flotillas designed to mitigate the risks incurred by one ship like Absalon. Critics often fail to note that both Iver Huitfeldt and Absalon are nearly twice the size of LCS.  Neither has the speed requirements that drove initial LCS design considerations. The size difference alone may explain the Danish ships’ much longer endurance. These differences in Danish and U.S. practices make comparisons difficult at best.

Finally, the Danish Navy contracted the building of both the Iver Huitfeldt and Absalon classes to a single firm, the A.P. Moeller Corporation. This multinational giant derives the vast bulk of its earnings from the more stable commercial market and its warship business is not dependent on government orders, which causes instability and cost overruns in its production process. By contrast, U.S. LCS shipbuilders Lockheed Martin and Austal serve government interests much more than private ones and are more dependent on government contracts to maintain stability in their operations. The 2006 RAND report also identified this process of divided warship construction as another factor in the increased cost of surface combatants.

The LCS program has been beset with a number of technological and systemic problems since its inception that have slowed the program’s progress and likely contributed to some cost overruns. On the surface, the Iver Huitfeldt and Absalon class frigates would appear to be cost effective alternatives to the LCS. Deeper investigation, however, reveals how the Danes achieved these substantially lower figures by separating higher cost equipment from that of the platform, scavenging weapons from decommissioned ships, accepting incomplete warships for service, and purchasing these vessels from a single, robust commercial shipbuilder not dependent on or affected by unstable government ship acquisition processes. In summary, these classes meet Denmark’s needs, but are an unsuitable substitute for U.S. Navy small combatants. LCS critics, however, should not use the Danish ships as strawman LCS substitutes. It is a most unequal comparison.

Steve Wills is a retired surface warfare officer and a PhD student in military history at Ohio University. His focus areas are modern U.S. naval and military reorganization efforts and British naval strategy and policy from 1889-1941. 

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More Than Meets the Eye in Asian Naval Race

(NoteThis article appeared at RealClearDefense and is cross-posted by permission.)

In previous writing about the ongoing East Asian naval race shortly after the launching of the Japanese helicopter destroyer Izumo (DDH-183), I noted that the feverish naval race may be rooted in historical grievances, fierce competition for scarce resources, and the recent sequestration cuts within the Department of Defense, which may make it more difficult for theUnited States to “manage its alliances and strategic partnerships in the region.”

Izumo

As some of my readers have pointed out, I may have appeared somewhat biased against Japan because I did not fully account for other dynamics of the regional naval competition. However, it is not my intention in any way to accuse Japan or its neighbors of espousing expansionist tendencies.  I should, therefore, point out that the factors behind the ongoing naval race may be more complex than they appear at first.

First, it should be noted that Japan’s 4.68 trillion yen  budget ($46.4 billion) pales incomparison to China’s raw defense budget of $166 billion. Though Japan’s recent 40 billion yen ($410 million) increase in its defense budget has been construed by some in neighboring states as part of Prime Minister Shinzo Abe’s hawkish agenda, Japan’s defense budget is relatively modestwhen compared to that of China’s,  and  hence, insufficient to tip the regional security balance in their favor.

That said, the launching of Japan’s newest ship has provoked controversy over what kind of ship the Izumo really is. Whether the Izumo is a STOBAR (Short-Take-Off But Arrested Recovery), VSTOL (Vertical Short Take-Off and Landing), or CATOBAR (Catapult-Assisted Take-Off But Arrested Recovery) type “aircraft carrier” hardly matters. The reason why some of Japan’s neighbors are upset about the Izumo is the fear that Japan may eventually field an F-35B squadron on the ship. In short, it is not Japan’s current capabilities that are provoking uneasiness, but its future naval might.

Indeed, Beijing and Seoul have accused Abe of attempting to repeal the war-renunciation clause within the existing constitution in favor of the “establishment of an army, navy and air force in name.” But both China and South Korea (the Republic of Korea or ROK) share blame for upping the ante for the ongoing naval race.

As Robert Farley, an assistant professor of the Patterson School, noted a few days ago, the Izumo was “hardly the only naval aviation news to emerge over the past week [since]photographic evidence seems to indicate that China is well on its way to a second, indigenous carrier, this one sporting full catapults.”

Not to be left out, the ROK Navy has become a great regional naval power in itself. Like the Japanese Maritime Self-Defense Force, the ROKN also fields an amphibious assault ship, the Dokdo, with a 653 feet-long (199 meters) flight deck. It should be noted that the ship, whichcan supposedly deploy a Marine infantry battalion for any contingencies as they arise, is named after disputed islands claimed by both the ROK and Japan. Moreover, the ROKN hassteadily increased its submarine fleet in response to the growing asymmetric threats emanating from North Korea and Japan’s alleged expansionist tendencies.

ROKS Kim Jwa-jin

While it may be easy to suppose the three East Asian naval powers may be harboring expansionist tendencies, it may also be the case that each is looking to defend its own interests. Indeed, if we trace the origins of this naval race, we can discern that defense budget increases—or  for that matter, acquisition of improved capabilities—by the three East Asian countries were reactions to perceived threats posed by their rivals’ attempts to rearm themselves. Thus, the three states can and should adopt “trust building” diplomatic measures to avert a disastrous regional war.

But the bases for mutual trust remain flimsy at best. Contrary to Trefor Moss’s assertion that neither Japan nor China will go to war because of economic interdependence, economic interdependence does not necessarily translate to trust and cooperation. Furthermore, as Taylor Washburn argues, “major powers have often clashed without escalation.”

Considering the obvious distrust that pervades among the three East Asian naval powers, it is not difficult to understand why I have previously argued that taming the East Asian naval race may require America’s continued diplomatic presence as a disinterested mediator. The United States can no longer afford to appear inflexible in the face of fluid geostrategic dynamics and unrelenting sequestration cuts. Nor can it afford to alienate China by implementing “pivot to Asia” strategy. Not only that, but “leading from behind” to tame the ongoing East Asian naval race just may be the most cost effective way in which to exercise influence in the region.

But most importantly, through this newfound role as peacemaker, the United States can set an example as a peace-loving democratic nation committed to promoting good will within East Asia and to the rest of the world.

China’s Defense Budget Getting Fatter on the Big Mac Index

“Show me the money” is the mantra of those analyzing Chinese defense budgets, searching for every defense dollar hidden behind state-owned defense enterprises and construction projects. But perhaps what they should be asking is, “where’s the beef?”

Every traveler knows that money is only as good as what it can buy. What you find on the dollar menu on one side of the border may cost $2.05 on the other. A lack of this purchasing-power-parity perspective is a major flaw in standard comparisons of annual defense spending. Analysis of the U.S. and Chinese defense budgets should not concentrate on dollar-vs-dollar, but rather the meat of what those budgets can buy.

For a quick non-scientific assessment of defense budgets weighted by purchasing-power, we look to the Big Mac Index (BMI, no pun intended). In 1986, the Economist developed the BMI as a humorous way of gauging the accuracy of currency valuations world-wide. What started out as educational humor became a serious academic endeavor. The BMI is so effective that the infamous currency manipulating government of Argentina’s Cristina Fernández de Kirchner has passed laws regulating the sale and marketing of the Big Mac. Although the Economist has produced a “gourmet” version controlling for local factors such as differences in labor costs, it is those local market defects that make the raw BMI appropriate for defense budget analysis – the analysis is not of currency on the exchange floor, but on the shop floor.

According to the Stockholm International Peace Research Institute, China‘s raw defense budget of $166 billion is a mere 24% of the American defense budget at $682 billion (including so-called OCO funds for the Iraq and Afghanistan wars). In order to gain the purchasing power perspective, we can compare the budgets using the respective countries’ Big Mac Index prices – $2.61 in China and $4.56 in the United States. Weighted with the BMI, China’s defense budget value is 42% of its American rival, the equivalent of $287 billion. chinabudgetchart1

Depending on what source you use, the comparison worsens. A raw dollar-to-dollar comparison of DOD’s maximum assessment of China’s defense budget ($215 billion) and the U.S. budget without war funding ($593 billion) shows China at 35% of the U.S. level. Once you weight the budgets with the BMI index, the Chinese defense budget emerges at a robust 63% of the U.S., the equivalent of $376 billion.

chinabudgetchart2

The BMI is by no means a perfect method of showing the value-for-money comparison of Chinese and U.S. defense budgets. After all, burgers aren’t bombers, and fries aren’t frigates.

But using such purchasing power parity measures provides a useful perspective as the dirge of sequestration starts to play. The BMI illustrates how the value-for-money calculation tilts toward China. So, too, are the missions and challenges to which the value is applied. Because of its extensive cyber program and other means of industrial espionage, China must spend far less on R&D as it steals and copies designs and doctrines from its more advanced competitors. China’s anti-access/area denial (A2/AD) focus provides a financial asymmetry as well as a technological one. After all, a DF-21 “carrier killer” missile is far cheaper than the U.S. supercarrier it’s designed to strike.

Secretary Hagel has noted that half of U.S. defense spending is obligated to pay, benefits, and retirement – not training, supplies, capital investment, procurement, or R&D as many assume. China does not treat their personnel nearly so well. Moreover, these “people costs” are consuming an increasing share of the defense dollar. Army Chief of Staff Ray Odierno recently predicted that compensation would consume 80% of the Army’s budget by 2023.

The BMI does hold out one glimmer of hope: the McDonald’s Theory of International Relations holds that no two nations hosting a McDonald’s franchise will ever go to war. But in the Asia-Pacific of the 21st Century, the United States cannot afford to rely on Mayor McCheese to guarantee the peace.

LT Matthew Hipple is the Executive Officer of PC Crew INDIA and the Director of the NEXTWAR blog. He is also a member of the U.S. Naval Institute and a contributor to Proceedings. While his opinions may not reflect those of the United States Navy, Department of Defense, or US Government.
Twitter: @AmericaHipple

This article was originally posted at Real Clear Defense.