Mar 10, 2014
Revisiting the Nuclear Budget
Dec 14, 2011
By Eli Jacobs
Discussion over the amount of money the United States spends on nuclear weapons has exploded recently. The controversy started with a Ploughshares report that pegs our 10-year nuclear weapons-related expenditures at $700 billion. A Washington Post article fact-checked this study, positing the Obama administration’s 1251 Report number of $215 billion as an alternative figure. Joe Cirincione, the head of Ploughshares, responded to this piece, defending the $700 billion number. Letters exchanged between pro-cuts Rep Edward Markey and pro-nukes Rep Mike Turner demonstrate the high stakes of this debate in the suddenly cost-conscious Congress, and a chorus of responses has erupted from the blogosphere.
The most definitive conclusion of the debate (thus far) is that there is tons of uncertainty. The DoD has never publically reported the particulars of their nuclear budget, and apparently was rather unaware of it until the recent (and still classified) 1251 Report. It should be no great shock, then, given this uncertainty, that most of this post focuses on the shortcomings of the Ploughshares figure. There are, more likely than not, significant problems with the 1251 Report number (which strikes me as being on the low side), but the government’s lack of transparency precludes anything more than a cursory enumeration of what these problems might be.
So, with the caveat that this is far from an exact science, what explains the vast disparity between these two estimates, and who’s right? Markey and Turner, using the Ploughshares and 1251 Report numbers, respectively, differ on three crucial points.
1) “Related Programs”
The Ploughshares study includes expenses that do not contribute to the fielding of a nuclear weapons capability. These expenses, which include missile defense, deferred environmental and health costs, and international nonproliferation efforts, broken down into nuclear threat reduction and nuclear incident management, cost a 10-year total of $270 billion, or almost 40% of Ploughshares’ $700 billion figure.
All of these additional expenses are undoubtedly connected to the nuclear enterprise. With the exception of environmental and health costs, they are all mentioned in the Obama administration’s Nuclear Posture Review. For this reason, most likely, even critics of the Ploughshares figure have settled on an “agree to disagree” approach to what fits in the nuclear weapons basket. Jeffrey Lewis, for example, states of this disagreement: “[l]et’s set that aside, since reasonable people can disagree, as long they are consistent and transparent about including those sorts of costs.” Even the Washington Post Fact Checker, one of the most strongly anti-Ploughshares pieces, adopts this tact.
With due respect, I find this approach to be the wrong one. The reason is simple: people are not academically interested in the costs of nuclear weapons at this time; they want to establish a baseline nuclear weapons budget from which they can argue for or against cuts. The forerunners of Ploughshares’ work did not face the high stakes of today’s climate of budgetary austerity. Stephen Schwartz and Deepti Choubey’s 2009 Carnegie study and Schwartz’s 1998 book Atomic Audit emerged into a climate whose response was geared towards long-term, systematic changes rather than short-term spending cuts.
[Edit: unnecessary and inaccurate speculation about the motivations for Stephen Schwartz's work has been eliminated from this paragraph.]
Ploughshares’ use of the enlarged figure, in this context, has the potential to severely skew debate on the nuclear weapons budget. The case in point is Rep Markey’s letter to the Supercommittee, which uses Ploughshares $700 billion number to argue for $20 billion in annual cuts. Although Ploughshares is up-front about what is included in their study, it’s impossible to expect others – particularly politically-motivated others – to be as exacting in their citations of the work. If you publish a piece intended to inform a debate about the nuclear weapons budget, it should focus narrowly on factors that are relevant to that debate. Since missile defense and nonproliferation are categorically distinct from nuclear weapons and environmental and health costs cannot be reduced in the short term, these variables should be excluded from accounts of the nuclear budget published in the near-term.
2) Calculating Overhead & Support
One major criticism of Ploughshares’ study is that it over-estimates support costs. For instance, the Washington Post Fact Checker argues: “[u]nder that formula, estimated support costs for fiscal year 2008--$10.9 billion—were higher than the direct costs of nuclear delivery systems--$10 billion. Is that reasonable?” In response, Cirincione claims that overhead and support can be quite pricey, isolating specifically the F-35 and nuclear submarines.
The formula under fire here is one derived by Stephen Schwartz in 1998: calculate what percentage strategic forces compose of the overall offensive forces budget, and multiply that figure by the DoD’s total expenditure on overhead and support. The result is to assign strategic forces an amount of overhead that matches their share of the offensive forces budget. This forms a math problem that looks like this:
The difficulty is determining what counts as “offensive forces” and what counts as “overhead and support” (O&S). The DoD divides its budget (see p. 73) into major force programs, or MFPs, which include components such as strategic forces, general purpose forces, central supply & management, and training & health. Strategic forces are, loosely, U.S. nuclear forces (although they also include missile defense and conventional bombers), and Schwartz uses this figure both as the baseline DoD budget and to extrapolate overhead and support costs. The 10 other MFPs are included either as offensive forces, O&S, or neither of these. Those that count as offensive forces are in the denominator, reducing overhead and support related to nuclear forces. Those that count as O&S are in the numerator, increasing this figure.
Schwartz fills in this figure in three different ways at various points in his work. The first is in his 1998 book, Atomic Audit, he writes:
Although most of the O&S costs that are directly related to maintaining U.S. offensive strategic forces are included within the strategic forces MFP, many indirect and overhead O&S costs are not. Rather, they are separated out by the DOD and allocated to the  central supply and maintenance,  training, medical, and other general personnel activities,  administration and associated activities, and  support of other nations MFPs. If the costs of these four overhead MFPs were allocated proportionally to the [a] strategic forces, [b] general-purpose forces, [c] mobility forces, [d] guard and reserve forces, [e] intelligence and communications, and [f] special operations MFPs, the share for the strategic forces MFP would be about $780 billion [since the end of WWII]. (110)
In this calculation, a relatively small number of MFPs count as O&S (the numbered components) and a relatively large number count as offensive forces (the lettered ones). Unsurprisingly, this results in a fairly low estimate of nuclear overhead and support costs; the Washington Post notes that, using this formula, the FY2008 overhead and support figure would be $4.2 billion—less than half of Schwartz’s ultimate 2009 estimate.
The second formulation of the variables in this formula is in Schwartz and Choubey’s 2009 paper:
[I]t is necessary to estimate the share of spending that might be devoted to nuclear forces within six other MFPs (MFP 3—Command, Control, Communications, Intelligence, and Space; MFP 6—Research and Development; MFP 7—Central Supply and Management; MFP 8—Training, Medical, and Other; MFP 9—Administrative and Associated Programs; and MFP 10—Support of Other Nations). This is accomplished by adding together the FY 2008 totals for MFPs 1, 2, and 11 (Strategic Forces, General Purpose Forces, and Special Operations Forces), dividing MFP 1 by this figure, and multiplying the remaining MFPs by the resulting amount, which indicates that MFP 1’s operating and support costs might be about $10.9 billion. (22)
In this formulation, mobility forces and guard and reserve forces are removed entirely from the offensive forces category, research and development is added to O&S, and intelligence and communications is moved from offensive forces to O&S. Using Ploughshares’ inflation estimates, this results in a larger estimate for nuclear overhead and support in FY2008: $8.97 billion.
The final formula is the one used to form the final estimate in the 2009 Carnegie paper:
[Overhead and support is c]alculated by adding MFPs 1, 2, and 11 (Strategic Forces, General Purpose Forces, and Special Operations Forces; $272,984), dividing MFP 1 by this total (0.0368400987) and multiplying all other MFPs by this amount ($10,900.211). (49)
Here, the bucket of offensive forces is the same as in the preceding formula, but O&S has been expanded to include the previously excluded variables: mobility forces and guard and reserve forces. Predictably, this results in a higher estimate than does the formula in the body of the article—almost $2 billion in one year.
Personally, the middle of these three estimates seems the best to me. The last one has clear flaws: mobility forces and guard and reserve forces play no role in supporting strategic forces. The first one is equally problematic. Intelligence and communications plays a supporting role for strategic forces—one that has been foregrounded and emphasized by the Obama administration’s Nuclear Posture Review—and is not itself an offensive force capability.
The consequences of this altered assessment of variables are not unsubstantial. Accounting for inflation, excluding mobility forces and guard and reserve forces from the calculation of overhead and support eliminates another $22.5 billion for Ploughshares’ $700 billion figure.
[Edit: as noted in the comments, mobility forces and guard and reserve forces do, in fact, play a role in supporting strategic forces. Thus, the conclusion that the $22.5 billion of the Ploughshares figure comes from non-existent O&S costs is incorrect.]
There are other, more difficult-to-quantify problems with this formula. For instance, a disproportionate amount of the both the supply and maintenance and training and health budgets likely went to supporting combat operations in Iraq and Afghanistan. Thus, it’s likely that even this revised figure is a bit on the high side. But, as I mentioned before, nuclear weapons spending is far from an exact science, and there’s far from enough information to quibble substantively with these details.
3) Double Counting?
The issue that (I think justifiably) has Ploughshares critics most up in arms is its alleged double-counting of an administration request for $125 billion dollars for nuclear weapons over 10 years. Ploughshares assesses this money to be designed exclusively for modernization of U.S. nuclear delivery vehicles – something not included in Schwartz’s baseline budget statistics – and simply adds this money to Schwartz’s inflation-adjusted 10-year projections. Michael Turner takes issue with this assessment, arguing that the $125 billion represents the entirety of the DoD’s nuclear weapons spending over the next 10 years. (There’s a consensus on the $88 billion NNSA budget, which produces the administration’s $215 billion number.)
It’s fairly clear that the $125 billion figure for DoD, which comes from the aforementioned 1251 Report, is intended to be exhaustive. Mike Turner writes that the number “includes research, development, testing, and engineering; procurement; operations and support; and personnel.” Further, Congressional testimony by administration officials indicates that this estimate is intended to be exhaustive. Deputy Undersecretary of Defense James Miller says that the 1251 Report includes “our best estimate of the total costs of sustaining and modernizing the nuclear enterprise and the delivery systems from fiscal year ’12 to fiscal year ‘21” (see video at 43:45). In the same hearing, General Kehler says “I too agree with the 1251 report and the 200 plus billion dollars that it documented for the need to both sustain and modernize, or begin the modernization of, the nuclear enterprise over the next ten years” (see video at 46:15).
Simply put, Ploughshares adds together two figures that are each intended to be exhaustive. That cannot be described as anything other than poor research practice. It does not necessarily mean that the results of their research are incorrect. Jeffrey Lewis speculates that the 1251 Report excludes escalating command and control costs and Kingston Reif identifies some other components it may have missed. Further, cost overruns seem extremely likely, given the history of nuclear weapons work. As a result, it’s possible that $700 billion may be quite close. But nothing about Ploughshares’ research technique makes that seem very likely.
I don’t think that Ploughshares was arguing in bad faith, though, as some recent literature implies. Administration word choice on this issue is a bit misleading. For example, Jim Miller’s initial testimony, cited by Ploughshares, states:
The Administration’s FY2012 budget reflects our commitment to the modernization of our nuclear arsenal for the long term, including some $125 billion over the next ten years to sustain our strategic delivery systems, and about $88 billion over the same period to sustain our nuclear arsenal and modernize infrastructure. (8)
As mentioned previously, everyone agrees on the size of the administration’s $88 billion request for NNSA funding to modernize U.S. warheads. This number is very clearly exhaustive of all warhead modernization efforts. It includes, for example, support operations such as facilities maintenance and repair and protection for weapons labs. And this is fairly uncontroversial, since these functions fall clearly within the NNSA budget.
The same cannot be said of the $125 billion. Within the labyrinthine DoD budget, it’s very tempting to think that there are overhead costs emerging from the need to keep weapons on alert that are not accounted for. So when Jim Miller says that we need $88 billion for the warheads and $125 billion for the delivery vehicles, we assume that the $88 billion pays for everything in the NNSA whereas the $125 billion pays for only the delivery vehicle hardware. The presumption is that there are lurking or unreported costs related to alerting that hardware that will drive up the price of the nuclear enterprise. And, as mentioned before, there probably are. But that does not validate Ploughshares’ approach to generating these numbers.
It’s hard to pinpoint a solution to these inaccuracies. It almost certainly should include some consideration of the CBO’s 1998 report on the cost of a nuclear arsenal under START, but figuring out how that number fits into the current budget debate seemed a little too ambitious. For those who think the administration is underestimating, a better approach would be to work from one of the two exhaustive accounts – applying Schwartz’s initial formula or attempting to calculate expenses missing from the 1251 Report. I stand behind the statement I made in an update to a previous post: a cogent answer to this question will be impossible without clearer figures being released by the government.
However, even if the administration’s $125 billion figure is an underestimation, that (along with the $88 billion for NNSA) forms the baseline from which Congress will make budgetary cuts. (Unless, of course, Congress decides it wants to cut missile defense and/or nonproliferation funding in addition to nuclear weapons funding.) In the context of the budget debate, arguments about overhead and support and what to include in “related programs” play no role in influencing the task at hand. Speculation about overall expenditure makes for good talking points, but it plays little role in shaping short-term budget debates.
Eli Jacobs is a research intern for the Project on Nuclear Issues. The views expressed above are his own and do not necessarily reflect those of the Center for Strategic and International Studies or the Project on Nuclear Issues.