The Ticking Nuclear Budget Time Bomb
In a little-noticed comment before his controversial July summit meeting with Vladimir Putin, President Donald Trump expressed a desire to talk to his Russian counterpart about their countries’ extensive nuclear modernization plans. Trump characterized his own government’s plan to spend hundreds of billions of dollars to upgrade the aging nuclear arsenal as “a very, very bad policy.” He seemed to express some hope that the two countries, which together possess over 90 percent of the planet’s nuclear warheads, could chart a different path and avert a new arms race.
Still, it’s not clear Trump is actually interested in a different path. He said on Monday, in the context of his decision to withdraw the United States from the 1987 Intermediate-Range Nuclear Forces (INF) Treaty, that “We have far more money than anybody else by far. We’ll build [the U.S. nuclear arsenal] up until” other nuclear-armed states such as Russia and China “come to their senses.”
Since the dawn of the nuclear age, there has been heated debate about the appropriate role and number of nuclear weapons in U.S. policy. What has largely been above debate, however, has been the need for a strong and credible arsenal so long as nuclear weapons exist — a top policy and budgetary priority of recent administrations of both parties.
But a reckoning is coming, the result of a massive disconnect between budgetary expectations and fiscal reality. Despite claims that nuclear weapons “don’t actually cost that much,” the simple fact is that unless the administration and its successors find a pot of gold at the end of the rainbow, spending to maintain the current arsenal — to say nothing of a buildup — will pose a significant affordability problem. Trying to recapitalize nearly the entire arsenal at roughly the same time means less money is likely to be spent on each individual modernization program, thereby increasing the time and cost required to complete each one. The absence of reasonable planning will also result in more suboptimal choices when hard decisions become inevitable. The current path is an irrational and costly recipe for sucking funding from other defense programs and/or buying fewer new nuclear delivery systems and reducing the size of the arsenal. The longer military and political leaders continue to deny this reality, the worse off America’s nuclear deterrent and armed forces will be.
The Third Wave of Nuclear Modernization Spending
During the Cold War, the United States upgraded its nuclear forces in two major waves. The first wave, which took place between 1951 and 1965, saw the Defense Department devote a high point of 17 percent of its annual budget to building and maintaining atomic arms, according to the Trump administration’s Nuclear Posture Review. President Ronald Reagan oversaw a second wave that lasted for over a decade and peaked at nearly 11 percent of department spending.
After the fall of the Soviet Union, nuclear spending dropped, as did security expenditures more generally. But while the defense budget at large climbed back up after 9/11, nuclear weapons spending remained relatively flat. Between 2001 and 2017, it comprised no more than 4 percent of Pentagon spending, as the Bush administration in particular deferred modernizing the nuclear arsenal amid the wars in Iraq and Afghanistan.
Sustaining the arsenal will require a third wave of major upgrades. The Obama administration committed to a major overhaul of the arsenal in 2010, part of its effort to win Republican support for the New Strategic Arms Reduction Treaty (New START) with Russia. The Congressional Budget Office (CBO) estimated last fall that the plans Trump inherited from his predecessor to maintain and upgrade the arsenal over the next 30 years would cost $1.2 trillion in today’s dollars. That CBO projection includes about $400 billion in modernization spending that falls largely in the mid-2020s to early 2030s, as well as relatively stable, though steadily increasing, operations and sustainment costs over the entire 30-year period. At its peak in the late 2020s and early 2030s, spending on nuclear weapons would consume about 8 percent of estimated total national defense spending.
The United States currently possesses approximately 3,800 nuclear warheads, down from a mid-1950s high of over 30,000. The CBO estimate captures spending on the triad of nuclear delivery systems (ballistic missile submarines, land-based intercontinental ballistic missiles, and long-range bombers), on command and control systems at the Defense Department, and on nuclear warheads and their supporting infrastructure at the Energy Department’s semiautonomous National Nuclear Security Administration (NNSA). Most of the programs to buy new systems are in the early stages, and a few others have yet to begin.
The CBO’s projection of $400 billion in nuclear modernization spending might be a best-case scenario. Because the Pentagon has not built intercontinental ballistic missiles or ballistic missile submarines in a long time, the department’s independent Cost Assessment and Program Evaluation office has acknowledged that the confidence levels for nuclear upgrade cost estimates are relatively low. This means that, even if the programs are managed perfectly, they could end up costing a lot more than the estimates project. The land- and sea-based missile programs, as well as the plan to build over 100 B-21 long-range bombers, could, by our count, each cost as much as $150 billion after including inflation, easily putting them among the top ten most expensive Pentagon acquisition programs.
On top of all of this, the Trump administration’s Nuclear Posture Review proposes expanding U.S. nuclear capabilities by calling for new warheads and new missiles to counter Russia, more bomb production infrastructure, and a greater emphasis on nuclear command and control. These proposals would likely add additional tens of billions to the $1.2 trillion price tag. So too could a U.S. withdrawal from the INF Treaty and failure to extend New START, which is slated to expire in 2021. In particular, the verifiable New START caps on Russian deployed nuclear forces aid U.S. military planning by reducing the need to make worst-case assessments that could prompt additional costly nuclear force investments.
Third Wave of Nuclear Modernization: Unique Challenges
Compared to the first two waves of nuclear modernization spending, several factors are poised to make the third recapitalization effort more challenging.
Whereas the first two waves lasted roughly a decade, the third appears likely to take at least two decades to complete. This is due in part to the fact that it now takes longer to buy new weapons systems than it did in the past. Today’s systems are typically more complex, and the Pentagon purchasing bureaucracy is more risk-averse.
In addition, the rising cost of the nuclear mission coincides with a major planned increase in conventional modernization spending confronting the armed forces, specifically the Air Force and Navy. Average annual spending to upgrade strategic nuclear forces during the third modernization wave is scheduled to initially overlap with large increases in projected spending on conventional weapon system modernization programs. These include the programs to purchase and develop the F-35A stealth fighter, the KC-46A aerial refueling tanker, a new generation of surface ships and submarines, and the Army’s replacement for the Humvee, Bradley, and its entire helicopter fleet.
The Trump administration is also pursuing new initiatives to maintain America’s dominant military position against Russia and China. The administration wants a bigger Navy, a bigger Air Force, hypersonic weapons, new types of missile defenses, and a new military department focused on space. But in most cases the administration has yet to budget for these.
The Pentagon’s own projected spending over the next five years barely keeps pace with inflation, which means real defense spending would flatline, not increase, in the years ahead. In fact, Trump recently suggested that his Fiscal Year 2020 defense budget request could be even lower than projected. These projections probably significantly underestimate the true amount of funding needed to implement the administration’s National Defense Strategy in the next five to 10 years. For example, CBO estimates that the Navy’s plan to purchase 301 new ships over the next 30 years will cost $170 billion more in today’s dollars than the service’s own estimate. The strategy proposes to find savings by calling for shedding weapons that don’t contribute to countering Russia and China and through a process of finding efficiencies. But it remains to be seen how big the funding shifts to counter Moscow and Beijing will be — to say nothing about whether Congress will approve cuts to legacy weapons systems ill-suited to great power conflict. And past efficiency proposals have rarely been realized, been too small, or only been accomplished after an upfront investment first.
Furthermore, a significant portion of the overall cost of nuclear weapons is fixed. Key components of the supporting infrastructure — such as the command and control systems and nuclear laboratories — remains about the same size whether one buys 10 nuclear weapons or 10,000. The CBO evaluated the pros and cons of several options to reduce spending on nuclear weapons, which range from blended reductions to each or several legs of the triad to moving to a dyad. These options do provide real cost savings, but they are small relative to the overall budget and won’t be enough to solve the conventional modernization challenge on their own.
The CBO’s most extreme option, deploying a 1,000-warhead dyad without ICBMs and with two fewer new ballistic missile submarines than the planned purchase of 12, would save $175 billion over 30 years, but only part of that would fall during the “bow wave” of conventional modernization spending. Moreover, the Pentagon will likely be reluctant to advocate any plan that could weaken both conventional and nuclear deterrence at the same time, namely delaying or cutting the B-21 bomber program (another option considered by the CBO). That said, reductions to the nuclear modernization program could improve the acquisition outcomes of the programs involved and ease some of the hard choices facing the overall defense enterprise. While each leg of the triad has entrenched bureaucratic and political constituencies, ignoring the gulf between current nuclear modernization plans and likely budgets will only result in even more suboptimal choices in the future.
To make matters worse, defense spending during the Cold War was under less pressure in general than it is today. The Pentagon now has to contend with new internal budgetary challenges like rapidly rising health care and compensation costs. According to one recent analysis, “just maintaining the size of the force will likely necessitate 2 to 3 percent growth above inflation in” the military personnel and operations and maintenance budget accounts.
Most importantly, the overall federal fiscal outlook is far direr. The most recent CBO estimates suggest that the United States will add somewhere between $12 to $13 trillion in new debt from spending over the next decade. Autopilot mandatory entitlement programs drive 89 percent of the spending growth leading to that new debt, with defense and non-defense discretionary spending splitting the last 10 percent. Net interest payments alone will surpass defense spending levels by 2023. The growth of mandatory spending in all categories, coupled with the recent tax cuts, will balloon the national debt to the highest level relative to GDP in the nation’s history. This will increase pressure to slash discretionary expenditures, including defense.
While Congress approved a major increase to defense spending in fiscal year 2018, the Budget Control Act caps return in 2020 and 2021. Without amendment, these could result in a $171 billion national defense spending decline, or 13 percent of the total planned for those two years. Absent a “grand bargain” that eluded lawmakers in 2011 and led to the Budget Control Act’s spending caps, sustaining real growth in the defense budget will be almost impossible. This will make it difficult to afford both conventional and nuclear modernization in tandem.
Additionally, bipartisan political support for increasing nuclear weapons spending is fragile and far from assured in the future. The elections in 2018 and 2020 could drastically change the composition of the legislative and executive branches and put in power leaders who are critical of excessive nuclear spending levels. Most immediately, a Democratic victory in the House of Representatives in the upcoming midterms would see Rep. Adam Smith (D-Wash.) take the gavel at the House Armed Services Committee. Smith has been quite critical of nuclear weapons specifically and overall defense spending more broadly. Combined with growing skepticism in the Senate among senior members, such as Patrick Leahy (D-Vt.) and Dianne Feinstein (D-Calif.), the return to a divided Congress does not bode well for the nuclear modernization effort.
Finally, support for nuclear modernization inside the Pentagon could wane. In recent years, both uniformed and civilian defense officials have repeatedly averred that the nuclear modernization plan is the number-one priority among all other competing modernization necessities. Officials and commanders often speak of the nuclear deterrent — and its modernization — in terms of its “fundamental” importance as a “bedrock” or “backstop” for all other defense activities.
However, such support is not assured moving forward. Over the past 18 months, the national security community has rapidly reoriented its thinking toward long-term competition with Russia and China, thereby elevating the relevance of conventional modernization. There would be precedent for such a shift — in the 1980s, defense officials acquiesced to reductions in planned nuclear modernization and expansion to keep the conventional forces modernization effort in full swing.
Disarmament by Default
Numerous Pentagon officials and outside experts have cautioned that the current nuclear upgrade plan cannot be sustained without significant and sustained increases to defense spending — which are unlikely to be forthcoming — or cuts to other military priorities.
The Nuclear Posture Review acknowledges that the cost to upgrade the nuclear arsenal is “substantial,” but claims the bill is affordable because the high point of spending on nuclear weapons will be no more than 6.4 percent of Pentagon spending, a lower percentage than during the Cold War. Or as Defense Secretary James Mattis frequently states, “We can afford survival.” And yet these statements obfuscate the severity of the nuclear budget problem facing the U.S. government.
Unlike the 2017 CBO projection, the administration’s estimate curiously does not include the major costs NNSA must incur to upgrade nuclear warheads and their supporting infrastructure. Congress approved over $11 billion for NNSA’s nuclear weapons activities for FY2019, an increase of nearly 20 percent above the Obama administration’s final (FY2017) budget request.
The Pentagon’s estimate also does not appear to account for the potential for significant cost growth, whether due to program mismanagement or upward revisions due to improved cost estimating methodology once more and better data are available. Unanticipated cost growth is a feature of most Pentagon acquisition programs, but because the key nuclear modernization programs are so large, variances in cost estimation can have especially significant effects.
At a service level, the opportunity costs of spending on nuclear weapons are particularly stark. The Navy has repeatedly warned that the projected $128 billion cost to develop and purchase 12 new Columbia-class ballistic missile submarines will crater its shipbuilding budget. Similarly, the Air Force’s new ICBM program will compete with other service priorities, such as the F-35 and new tanker programs. The CBO estimates that by the early 2030s, spending on nuclear weapons will peak at 15 percent of the Pentagon’s total projected acquisition costs, more than triple the current share.
The bottom line is that rebuilding the nuclear arsenal is unlikely to be executable. As Gen. Robert Kehler, the former head of U.S. Strategic Command, bluntly put it in November, “I am skeptical that we are capable of remaining committed to a long-term project like this without basically messing with it and screwing it up.”
Indeed, a possible, if not likely, outcome is that the current plans will collapse under their own weight, forcing reductions in U.S. nuclear forces based on fiscal and political pressure rather than on strategic decisions — but not before hundreds of millions or even billions of taxpayer dollars are squandered.
Options to Improve Affordability
While the third wave of nuclear modernization poses significant planning challenges, it need not prevent the United States from fielding a strong and credible deterrent. There are numerous steps that the Defense and Energy Departments and Congress could take to make the nuclear modernization program more affordable, improve understanding of the long-term budget challenges, and better articulate the strategic and programmatic risks built into the current program.
First, the Pentagon and Congress should start a dialogue about contingency plans for reducing the scale and scope of the nuclear modernization effort. Critics of the spending plans have argued that the United States has more nuclear weapons than it needs for its security and can safely pursue more cost-effective options to sustain the arsenal, such as scaling back the plans to replace the sea- and especially land-based legs of the triad, while still retaining a credible and devastating deterrent.
Of course, pressure on the defense budget cannot be relieved solely by reducing nuclear weapons spending. But adjusting the structure and/or trimming the size of the arsenal — either unilaterally or bilaterally with Russia — could yield significant savings.
Second, every dollar Washington spends to bolster its nuclear arsenal is a dollar that can’t be spent on non-nuclear military capabilities to counter Russia and China. Military planners and lawmakers must develop a better understanding of the mismatch between currently projected defense spending and the long list of defense projects the Pentagon and Congress would like to carry out, including nuclear modernization, force structure expansion, conventional modernization, research and development on new technologies, and continued investment in readiness and compensation growth.
Third, at the very least, Congress should require the Trump administration to explain how it proposes to pay for its growing wish list under different levels of projected defense spending, including scenarios in which planned “efficiencies” from reform do not materialize or defense spending drops back down to Budget Control Act levels. Congress should also require the Pentagon to provide more information about the acquisition risks facing nuclear and conventional modernization programs, including a more lucid explanation of the uncertainty inherent in cost estimating.
Lawmakers could also consider requiring modernization programs to include reserve funding to guard against major cost overruns and better account for developmental risk. Further, Congress could task the Government Accountability Office watchdog or a federally funded research and development center to more comprehensively assess the overall affordability of the spending plans and whether the Pentagon’s planning and budgeting processes are following best practices. Lastly, all involved should avoid gimmicks like the special fund Congress has legislated to pay for the Columbia-class program, which could counterproductively force the Air Force and Army to pay for the new boats. Navigating the disconnect between the scope of the nuclear modernization effort and expected defense spending requires serious choices, not bureaucratic kabuki dances.
The first step in solving a problem is recognizing that there is one. Whether one believes America’s nuclear weapons spending plans are good or bad policy, pursuing them poses a massive fiscal challenge that America’s military and political leaders can no longer afford to ignore.
Kingston Reif is the Director for Disarmament and Threat Reduction Policy at the Arms Control Association. Mackenzie Eaglen is a resident fellow at the American Enterprise Institute.