Think Tank's Radical Idea to Cut Defense Budget: Fire 'Slacker' Soldiers

What is the best way for America to maintain its military in an era of declining spending and the sequester? A new report out of the nonpartisan Stimson Center think tank in Washington, D.C., has one surprising proposal: Get rid of all the slacker soldiers.

According to Stimson, only about 16 percent of servicemen and servicewomen in the American military today actually "fight." These are the proverbial "tip of the spear" that go into combat, and are essential to the nation's security.

But that leaves 84 percent of America's 1.2 million-man military as a potential place to trim fat, and save money.

Shooters Versus Paper-Pushers

In one sense at least, this argument seems spurious. It doesn't take a degree from West Point to realize that you need a lot of people trucking bullets from Point A if you want your shooters at Point B to have ammo to shoot with.

Similarly, it takes highly trained mechanics to keep the tanks running and the fighter jets flying. Nuclear technicians to keep the submarines and aircraft carriers from melting down -- and so on and so on. As Napoleon Bonaparte reportedly said, "An army marches on its stomach." A more modern equivalent might be "It takes a village to drop a smart bomb on a Qaida cell."

Making Cuts That Will Cause the Least Blood Loss

So in other words, even soldiers who aren't technically "fighting" are still necessary to win wars. That said, the Stimson does make a few good points.

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For example, the $42 billion in defense cuts planned at the Pentagon for this year thanks to the sequester are a mere prelude to much more significant reductions in spending over the decade to come. In all, Congress looks likely to reduce defense spending by $500 billion or more over the next 10 years -- so cuts are going to come somewhere, and it's high time we figure out which cuts will cause the least blood loss.

Stimson thinks there are several places where defense spending can be rolled back with minimal harm. In all, the report outlines some $900 billion in cuts that could be made, a number equivalent to 20 percent of the projected base Defense budget over the next 10 years -- and nearly twice what Congressional cost-cutters are calling for.

Demanding "Free Return Shipping"

Roughly $500 billion of the think tank's proposed cuts fall upon gross levels of military manpower. As for the balance, they consist largely of applying market principles to military spending.

Stimson thinks $100 billion can be shaved off the defense acquisitions process, for example, by improving the efficiency of how weapons systems are bought and paid for. The paper points out that when, say, United Technologies (UTX) sells someone in private industry a faulty engine, the customer will complain, and UTC will pay to have the engine shipped back to its factory, repaired, and returned to the customer. When the U.S. Navy gets stuck with a bum engine, however, it gets stuck with the bills for repair and shipping (both ways).

The think tank also has a few choice words to say about how slowly the Pentagon moves from ordering a new weapons system to getting it developed and delivered and putting it into service -- and how it piles on new requirements (and costs) all along the way. A glance at a Defense Acquisition University flowchart of the current procedure suffices to tell you there might be some merit to the criticisms.

Correcting Compensation Inefficiencies

Stimson's final set of cost-cutting suggestions focuses on how servicepeople are compensated. Among the suggestions here are rolling back some of the multitude of "fringe benefits" -- pensions, medical care, low-cost supplies at the PX, and so on -- accorded to servicemen.

The think tank makes the observation, already accepted in the private sector, that employers and employees both do a better job of managing their money when "work" is compensated in cash rather than in kind.

Accordingly, the recommendation here is to pay higher wages to servicemen and -women, and let them decide for themselves where to buy their health care, groceries, and so on.

Will It Work?

The prospect of cutting $900 billion worth of government spending sounds appealing in principle. Still, it's hard to miss the fact that Stimson's proposals basically boil down to $8 out of every $9 saved coming out of the benefits packages and paychecks of U.S. soldiers, sailors, Marines, and airmen, while saving only one dollar in nine by building fewer unwanted Abrams tanks and redundant fighter jet engines.

When you consider that the soldiers, sailors, Marines, and airmen all have the right to vote, while the tanks and engines don't ... it's hard to see Stimson's suggestions passing muster in Congress.

Motley Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.