Cooking the Nuclear Books: Recipe for Disaster

by PETER HUESSY December 8, 2017

CBO has issued a new report claiming the current administration plan for nuclear sustainment and modernization over 30 years exceeds $1.2 trillion or an average of $40 billion a year. This compares to the $28 billion we now spend a year on nuclear force sustainment and initial modernization.

CBO's numbers are dramatically different than other recent reports including their own 2015 estimates. What CBO did was include 100% of the costs of our nuclear capable bombers, unlike its 2015 study which used a more reasonable estimate of twenty-five percent. This enabled the CBO to increase their 2015 cost estimates by $200 billion, while grabbing headlines that assumed nuclear modernization costs were suddenly out of control.

James Miller formerly a senior nuclear policy official with OSD says the correct level of nuclear costs of the new strategic bomber amount to 3% of the total acquisition costs which would come to $2-3 billion, hardly the $269 billion figure used by CBO.

It is not as if Congress must rely upon the CBO handiwork. There is excellent alternative work done estimating our nuclear deterrent modernization future costs.

For example, the CSBA, the Center for Strategic and Budgetary Assessments, published in 2015 an assessment of the nuclear costs from 2015-2040, during which most modernization would be completed. Their estimates were adjusted to include future anticipated cost increases.

The CSBA study included all ongoing sustainment, modernization, Milcon as well as delivery platforms, warheads and associated facilities, with nuclear costs estimated at $750 billion over 25 years.

In chart form here are the platform numbers. They come in at over one-third trillion below the comparable CBO fuzzy numbers and annually some twenty five percent less on average:

CHART PETER HUESSY 1  _2017

Whatever assessment one uses for estimating future nuclear costs, the full nuclear enterprise has repeatedly been approved by Congress knowing full well that the future will require a major commitment of resources to complete the modernization of our nuclear deterrent.

CBO worries, however, such support is in jeopardy should future modernization costs not be curtailed. But surprisingly, CBO says $776 billion is just for sustaining the force without any modernization. This implies modernization is not the fiscal problem the headline grabbing CB0 report suggests.

Even if we bought no new nuclear bombers, missiles and submarines and their associated warheads, and essentially as former top Congressional staffer Clark Murdock quipped "rusted to obsolescence", we would spend an average of $26 billion a year over the next three decades just to watch our country go out of the nuclear business.

Nonetheless, CBO lays out a variety of alternative nuclear force excursions, suggesting that wide swaths of our proposed modern nuclear forces could be unilaterally terminated, delayed or reduced including forgoing the entire modernization of each of the three legs of the nuclear Triad.

Doing so saves billions in new acquisition costs, but in most of the CBO alternatives savings are pegged at 2% at most, but those savings occur much further down the road, as lowered acquisition buys do not save funds until the end of the program buy. Thus, most annual savings come in at a very modest $2-$4 billion annually but primarily in the 2030-2040 period or beyond.

CBO seems to only partially understand that delaying modernization extends and increases the sustainment costs of legacy systems. This is because as systems age the sustainment costs accelerate. That makes sustainment as an alternative to modernization not the free lunch CBO thinks it is.

But not only is extended sustainment more expensive, such options are simply not doable and would lead to serious deterrent shortfalls.

For example, the Ohio submarine hulls cannot withstand more than the 42 years they will be operational, already significantly beyond their original life expectancy. The force would have to decline sharply if not replaced with new submarines on the current schedule. Even if this was not required, the cost advantage of the Columbia class submarine is significant in that it needs no reactor overall and replacement. That alone saves an estimated $25 billion compared to the current Ohio class submarines.

As for bombers, we face a future expanded threat environment particularly sophisticated air defenses, which will require greater stealth and standoff capability combined. Only the B2, limited to less than 20 aircraft, would be able to fully meet such future threat environments. Thus, the current force without the new B-21 and LRSO will not be able to meet our deterrent requirements given the tougher threat environment. Simply sustaining the old force will probably end up being both more expensive and leave us with a less capable deterrent.

The CBO study also contains ICBM sustainment and GBSD costs that are inflated by many tens of billions, making modernization costs look large, although they still remain less than any other element of the Triad. For example, why would building GBSD missiles at 60 per year have no impact on costs compared to acquiring missiles at 5-12 a year? That fact alone reduces the higher GBSD cost estimates used by CBO by $25-30 billion.

Current Minuteman and initial GBSD research and development now cost $.8 billon. At the height of future modernization, those costs are projected to reach $4 billion even in inflated dollars. Over the lifetime of the program, reasonable total costs would be $48 billion for modernization and $30 billion for operations, some $60-70 billion less than the CBO numbers.

Overall, if one uses the CSBA study, the modernized portion of the nuclear platforms in then year's dollars is roughly $16-17 billion a year in the middle of the next decade, roughly $2.5 million for ICBMs, $12 billion for the Columbia class submarines and $2.5 billion for the bombers including for a new cruise missile as well, (and using then year inflated dollars and 25% of all bomber costs):

CHART PETERY HUESSY 2 _ 2017

Thus, when put together with sustainment costs the total annual nuclear bill comes to $35-37 billion by the middle of next decade when it will peak and then decline.

Is $35-7 billion affordable a decade hence? It would be 5.5% of a $700 billion defense budget, a level of defense spending both the HASC and SASC Chairman have urged for this year and are reflected in defense bills both committees have passed. Even assuming the defense budget doesn't increase beyond that recommended level for nearly another decade, nuclear costs would be only 5.5%, hardly an adequate explanation as some analysts have argued for the shortfalls reflected in the remaining 95% of the budget.


If measured as a portion of the overall federal budget, the nuclear investment compares to $5.6 trillion federal spending projected for 2026, or .7 of 1%. This modest expenditure would be to sustain and modernize the bedrock national security force of the nation and of some 40 other NATO, Asian and Middle East nation's which rely on our extended nuclear deterrent. As such these expenditures are a total bargain.

While it is understandable that CBO is laying out some notional alternatives without necessarily endorsing such action, missing from CBO's casual dismissal of the need for key portions of the nuclear Triad are the potential costs of going forward with what can be considered only risky recommendations.

Just because the CBO is juggling budget numbers doesn't absolve its analysts of pondering a key question: what if your notional alternatives end up encouraging aggression and the outbreak of war? What would the costs then be? What if strategic stability is seriously undermined?


For example, killing Minuteman ICBM's and foregoing the GBSD modernization ends up reducing the entirety of our nuclear deterrent to 10-12 discrete targets that if attacked by our adversaries would take the USA out of the nuclear business. *

This startling result was described by General Stephen Wilson, the Vice Chief of Staff of the USAF as giving North Korea with 10 nuclear weapons a hypothetical ability to destroy almost the entirety of the American nuclear deterrent with their limited nuclear arsenal.

The General said why would we be so careless as to give North Korea such leverage? CBO only says eliminating Minuteman means that large scale nuclear exchanges are somehow then limited-apparently because an adversary would only have to use very limited numbers of nuclear weapons to disarm the United States. That is hardly a future scenario which we should welcome and exactly what the Deputy Chief of Staff of the USAF warned about.

CBO reviews this scenario but strangely describes this 98% cut in U.S. nuclear assets as not affecting key drivers of strategic deterrence. CBO assumes no ICBMs would survive if deployed and thus no greater survivable warheads are available in a full-up ICBM force being deployed compared to none.  

Overall, missing from the CBO analysis is a serious recognition of whether there will be negative consequences of such budget driven and thus arbitrary alternatives. Assumptions are routinely adopted that downplay such outcomes.

But what is the value of these budget excursions if they make no strategic or security sense irrespective if they save money because the assumptions adopted load the cosmic dice used to evaluate force options?

One can put together all sorts of alternative strategic futures such as CBO does including foregoing the submarine and ICBM leg of the Triad and delaying bomber modernization or dramatically curtailing the number of new bombers we produce.

But not building the B-21 nuclear bomber or the LRSO/cruise missile eventually takes the United States out of the business of holding at risk mobile or relocatable targets where bombers are key. The flexibility of having recallable nuclear platforms as well as the diplomatic signaling capability would go away. To accomplish what? CBO gives us no clue.


And the idea of slowing the Columbia class program is also without merit. Every year delay means at least three subs will not be in the force. Why? This is due to the phenomenon of a submarine force "bathtub" that occurs between 2029-2040 when only ten submarines will be in the force during that decade. As currently planned, every year from 2029 one submarine must be taken out of service. If not replaced the force levels decline by one submarine.

But here is a complicating factor. Two submarines currently in the force will forgo a reactor replacement because a new submarine will take their place but after 2040. But if no new submarine has been completed, these two submarines will between 2029-2040 have to go out of service along with the other planned ten Ohio class boats. That means instead of 10 planned submarines all being available for rotated deployments, as few as eight would be available implying only three on continuous patrol, a problem CBO seems not to recognize.  

The retaliatory force thus available will be seriously curtailed because of such a plan. Key is survivability of our ocean deployed force not just warheads on the remaining submarines. Survivability is highly correlated with the number of submarines available. Not only will fewer submarines be available than are required, but there will be a sharply reduced number of warheads available for deterrence as well.  

And if combined with an end to the ICBM force, the United States deterrent will be unilaterally reduced by upwards of least one third to forty percent, to where the current deterrent strategy will not be executable. All this to save $2-4 billion a year?


Why does CBO think such alternatives make fiscal sense when our adversaries could engage consequently in successful aggression because they think we are weak and unable to or unwilling to deter? Is war going to be a cheaper alternative than putting the resources into the force structure needed for our nuclear deterrent?

As I have warned, the reductions CBO lays out would be unilateral and leave the United States second to Russia in strategic nuclear force levels on top of the tactical nuclear advantage Russian already enjoys. China could then seek to match our much lower force levels, although they may be able to do so now. Neither outcome can be good for our security.  

Even more worrisome, what if the New Start warhead levels don't remain the ceiling for Russia's force but become the floor? Such reductions as CBO is examining would leave the United States a very limited reserve or hedge capability should the Russians not maintain their New Start force levels when the treaty expires. In fact, in CBO's own analysis the United States would be short thousands of warheads and without a hedge response should Russia deploy its maximum number of warheads.  


Given the consensus within Congress over the past decade to fully support the programs on nuclear modernization, despite simultaneous caps on the defense budget, and even as demands on our armed forces have continually escalated, CBO's worry that the required bedrock nuclear force is somehow a top candidate to be given less attention, support and resources, is misplaced. The American people speaking through the Congress and the current administration apparently support a first rate modernized nuclear force. 


CBO could look elsewhere for money. The GAO says every year there is now $134 billion in improper payments (not including DOD). Annually recovering a little more than one quarter of this would pay for the entirety of the costs of nuclear modernization which is required to sustain our freedom, our liberty and our security. As they say in the Geico ad, "easy money". 

Our nuclear deterrent is affordable and necessary. And the American people support it even at the current and projected costs. And do we really have a choice? As the nuclear threat from Russia continues what other response can we have then "Yes, Mr. President" when asked to bend to the task of modernizing our nuclear deterrent. 

________________________________________________________________

*Three bomber bases, two submarine bases and three key nuclear laboratories. 

Peter R. Huessy is Director for Strategic Deterrent Studies at the Mitchell Institute for Aerospace Studies as well as President of Geostrategic Analysis, a defense consulting firm he founded in 1981. He is also a guest lecturer on nuclear deterrent policy at the U.S. Naval Academy and formerly Senior Fellow in National Security at the American Foreign Policy Council and JINSA.

 


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