Homeland security agencies likely to face tough budget decisions

As the Defense Department and other federal agencies strive to protect the homeland over the next several decades, they are likely to face increasingly difficult budgetary decisions and sophisticated terrorist threats, a panel of national security experts told defense contractors Tuesday.

"We don't have a great budgetary future," Daniel Crippen, director of the Congressional Budget Office, said during the American Institute of Aeronautics and Astronautics' 2002 defense conference.

Crippen said a growing population of retirees will require some stringent federal belt-tightening over the next several decades. He noted that the federal government currently spends about 7 percent of gross domestic product (GDP) on Social Security, Medicare and other mandatory programs for retirees. But he said "conservative" projections indicate that by 2030, those entitlements will leap to 14 percent to 16 percent of GDP.

In order to meet those retirement obligations, the federal government would have to either cut a wide range of discretionary programs or raise federal taxes from the current 18 percent of GDP to 30 percent. Crippen said those budgetary constraints might force lawmakers to make "the biggest change in fiscal policy the world has ever seen" in order to effectively protect the homeland and fight the war on terrorism, which is expected to last decades.

That war is likely to grow increasingly complex, according to Kim Holmes, vice president of the Heritage Foundation. "Terrorist threats to the United States will be increasingly unbound and increasingly anonymous," Holmes predicted, pointing to weapons of mass destruction as an example. "[Terrorists] will target not just our critical infrastructures, but they will try to inflict the maximum damage on our economy."

The United States must rethink certain traditional policies, said John Hamre, who served as deputy Defense secretary during the Clinton administration, and is now president and CEO of the Center for Strategic and International Studies. For example, he said, the government must modernize its export-control policies with regard to defense-related technology acquisitions.

"What really worries me is the blinders we have on ourselves that are left over from the policy decisions of the Cold War," Hamre said.

Hamre said the "impermeable border" separating the intelligence community from law enforcement agencies also has hindered national security.

"We've put handcuffs on the government, so it couldn't jeopardize the civil liberties of U.S. citizens," Hamre said. "Somehow, we have to develop a dramatically stronger situational awareness in this country without becoming a police state."

Edward (Pete) Aldridge, the undersecretary of Defense for acquisition, technology and logistics, who is serving as co-chairman of the conference, said the Pentagon must change the way it does business if it hopes to effectively transform the Defense Department for the 21st century.

Aldridge said the Pentagon is taking steps to keep the traditional defense industry healthy while encouraging non-traditional defense contractors to do business with the Pentagon.

"The watchwords are speed, agility, flexibility and innovation," Aldridge said. "If we're ever going to truly transform the national defenses, we simply must abandon the comfortable and familiar. There is no better time than now."