Latest intelligence spending figures analyzed

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A former Congressional Research Service (CRS) expert, who wrote a very useful analysis of intelligence spending last year, has updated his analysis following the release of the FY2014 figures.

Erwin Marshall provides an amazing chart (above) that provides the most complete year-by-year totals for IC funding going all the way back to 1980. The clever part about this is that it is only recently that actual numbers have been released, so it relies on extensive estimations. Compare this chart to the one we provided in our article on the IC earlier this year and you’ll see that they agree.

Here’s our figure:

Figure 1

We were more conservative on figures we included, not having the capability or access to make informed estimates (or the 2013 CRS report since our paper was already in production at that time). Despite this, you can see the trends very clearly show huge increases in spending after 9/11, and recent declines. But as Marshall asks: can the IC absorb these cuts or will they cause operational difficulties?

On the challenge side, Marshall argues the US faces many threats from small actors, and the intelligence is ever-more important as US military downsizes and becomes more “hesitant” to engage militarily. (These are his arguments, not my own.) So fewer boots on the ground, more ISR.

Despite this, Marshall argues that the IC can “easily” absorb budget cuts. This is not what Clapper says of course; in his remarks about current threats he often says this is the most challenging set of conditions for the IC in his career. But basically Marshall says the IC has been wasteful following 9/11. All of this can be cut: “There are plenty of opportunities to cut budgets without degrading capabilities.” Marshall blames lack of IC leadership, lack of effort at reducing inefficiencies (especially by ODNI) and legislators for the continuation of IC wastefulness.

From my perspective, I think the thing to keep in mind is that despite recent tailing off of post-9/11 spending levels from a high in 2010, levels are still way higher than pre-9/11. In fact, adjusting for inflation, it has grown by more than 200 per cent, according to Marshall. By comparison, the DoD budget has grown by only 60 per cent over the same time period. From the CRS:

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The CRS report notes that this indicates how intel and defense spending are “decoupled” but I think you can see that the trends are the same if not the rates of change.

I would agree with Marshall that intel and ISR are the tings to watch. However, there too we have seen a significant drop-off of UAV or drone orders (the exception is the Global Hawk, the winner of a battle between Congress, who favored it over the U2, which was favored by the military). According to interviews we just carried out in DC with CRS and others, it is likely that currently there is a “pause” in UAV orders. This is prompted by drawdowns of activity in Iraq and Afghanistan, and the need to operate drones in contested airspace, where they are vulnerable. So the “pause” might be ended if manufacturers can provide persistent surveillance in contested airspace or improved stealth capabilities.

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