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Research Questions

  1. If the Department of Defense is called upon to make further budget cuts, how should those cuts be made?
  2. How can cuts be achieved without hollowing out the force?

RAND analysts examined how the Department of Defense (DoD) might execute deeper reductions in the defense budget, deep enough that stated defense strategy could not be fully resourced. The cuts examined go beyond the $487 billion announced in January 2012 by Secretary of Defense Leon Panetta. The authors posit that the ongoing pressure to reduce the federal budget deficit may result in further reductions in the DoD budget. In this context, researchers suggest determining reductions through a strategy-based approach that prioritizes challenges and risks instead of pursuing more across the board cuts that can produce more indiscriminate risks. The paper demonstrates this method with three illustrative strategic directions that are based upon different priorities and that would produce different risks: prepare for persistent conflict; cede more responsibility to allies and partners; and shift focus to the West Pacific.

Key Findings

Pressure to Reduce the Federal Budget Deficit may Mean Further Cuts in the Defense Budget.

  • In January 2012, Secretary of Defense Leon Panetta issued a new strategic guidance, Sustaining U.S. Global Leadership: Priorities for 21st Century Defense, which captures the results of a strategy review to accommodate $487 billion in reductions that the Department of Defense had been directed to make over the next decade.
  • The June 2011 Budget Control Act calls for sequestration of $1.2 trillion from the discretionary accounts of the federal budget beginning in January 2013 if Congress does not agree on a plan to do so through the legislative process.
  • This could result in further cuts of up to $500 billion from the DoD budget.

Three Illustrative Strategic Directions that the Department of Defense Could Take

  • Assume that violent extremism and related insurgencies will outlast efforts in Iraq and Afghanistan and remain a serious threat to the United States and its interests, and maintain readiness to respond to that threat.
  • Cede more responsibility to allies to take the lead in defense of shared interests in their region, particularly when allies' specific regional interests are greater than those of the U.S., and redouble efforts to build up the capacity of new partners.
  • Focus on the Asia-Pacific region while accepting even deeper cuts in forces focused on the European and Central command regions than previously called for.

Each Strategic Direction Poses Certain Risks

  • Maintaining threat readiness means U.S. local partners could remain dependent on the U.S. for their security, and that technologies critical for future defense challenges might receive inadequate investment. The intent to strengthen forces earmarked for the Asia-Pacific region could not be implemented.
  • In ceding responsibility, allies might not pick up leadership in defense of common interests, leaving those interests more exposed. There is also the risk that building the capacity of partner security forces will not succeed due to ineffective or illegitimate governments.
  • Focusing on East Asia could spell trouble if the extremist threat to U.S. interests in the Central Command region does not recede. Also, the U.S. focusing its military on the Western Pacific might cause China to intensify its own military modernization efforts.


  • Researchers suggest rather than making cuts that are expedient or easy, that the budgeting process start from a strategy basis in determining the reductions, prioritizing challenges, and identifying where to accept more risk in the process.

The research described in this report was prepared for the Office of the Secretary of Defense (OSD). The research was conducted within the RAND National Defense Research Institute, a federally funded research and development center sponsored by OSD, the Joint Staff, the Unified Combatant Commands, the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community.

This report is part of the RAND occasional paper series. RAND occasional papers may include an informed perspective on a timely policy issue, a discussion of new research methodologies, essays, a paper presented at a conference, or a summary of work in progress. All RAND occasional papers undergo rigorous peer review to help ensure that they meet high standards for research quality and objectivity.

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