For military spending to counter China, PDI tells only a small part of the story

In recent years the Pentagon marked out a pot of money, known as the Pacific Deterrence Initiative, to highlight key projects needed to counter China in the region. But in the op-ed below, AEI’s Elaine McCusker argues that at best the PDI represents an incomplete picture of China-related spending, and warns that it could mislead lawmakers and the public.

As the Defense Department prepares to release its detailed fiscal year 2023 budget justifications, including additional program descriptions for the Pacific Deterrence Initiative (PDI), policymakers will want to know what is included to stand up to the China threat and, most importantly, is it enough? The short answer: The defense investment to counter China is much broader than PDI, an incomplete metric at best.

No one doubts the importance of deterrence and military capability to counter China. It is necessary to posture aggressively in the Pacific and for lawmakers and taxpayers to hold the Defense Department accountable for doing so. And while oversight tools are important for the direction and accountability they instill, PDI falls short of its intent and misleads policymakers and U.S. partners about America’s overall investment [PDF] in Pacific deterrence, and in what is being done to confront China as the key strategic competitor and pacing challenge.

To fully identify gaps or inform needed discussions and decisions regarding the China challenge, PDI should be abandoned for a fuller and deeper assessment of Defense investments including plans for future programs.

The PDI was created by Congress in the FY 2021 National Defense Authorization Act [PDF] to reassure partners and prioritize activities in the Indo-Pacific region. The fiscal 2022 legislation [PDF] requires the Secretary of Defense, in consultation with the Commander of the U.S. Indo-Pacific Command (INDOPACOM), to submit an independent assessment of planned and resourced activities to maintain or restore the comparative military advantage of the United States with respect to China.

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This year’s PDI assessment, submitted at the end of March and entitled “Seize the Initiative,” is classified. The unclassified summary, which is difficult to evaluate due to lack of detail on cost estimates and requested appropriations, indicates that deterring China in the Pacific has almost doubled in cost to $9 billion compared to last year’s $4.7 billion estimate from INDOPACOM. In addition, PDI would nearly triple in cost over the next five years from $22.7 billion projected in March 2021 to $67 billion noted in the new estimate.

Though INDOPACOM requested the $9 billion for PDI, the FY 2023 defense budget submission requests $6.1 billion. Even if it were to contain the $9 billion, that would still be a very small part of the overall defense budget — only 1.2% by the report’s own calculation. To put this in perspective, what the Department of Defense spends on the operation of just three of its defense agencies is more than the amount of the entire PDI request.

The assessment divides requirements into six categories, the largest of which makes up close to 78% of the PDI total in FY 2023 and would “modernize and strengthen presence” to “improve the lethality and combat credibility of the Joint Force west of the International Date Line.” Substantial investments would be devoted to capabilities that fully integrate the communications and firepower of the joint force.

We will have to see the appropriation and program details of PDI as the Department releases detailed budget justifications, but it seems safe to say that the initiative does not begin to capture the Department’s real level of investment in activities geared toward the China challenge.

The Department’s FY 2023 budget request includes hundreds of billions focused in this area that are not included in the PDI. For example:

• Adding just a few key procurement programs — Virginia Class Submarines ($7.3 billion), Arleigh Burke class destroyers ($5.6 billion), and Long Range Anti-Ship Missiles ($0.5 billion) — yields more than $13 billion for the China challenge.
• Assuming that much of the Department’s science and technology efforts are focused on restoring U.S. competitiveness against China through military capability — including hypersonics, microelectronics, 5G, and artificial intelligence — adds another $16.5 billion.
• One could argue that nuclear modernization ($34.4 billion), space ($27.6 billion) and cyber ($11.2 billion) are at least partially geared toward deterring China.
• There are more investments in readiness, operations and military construction that are difficult to specifically quantify, yet also focus on China-related top strategic priorities. For example, portions of the $134.7 billion in readiness funding would go toward flying and steaming hours to prepare the force for integrated operations like those required to deter China.

So, what message is really being sent with the PDI request? And, why is it problematic? Artificial budget initiatives like PDI that separate only pieces of an overall effort are not a true signal of investment levels or priorities. Nor are they meaningful in evaluating progress or in making decisions.

Instead of binning the department’s budgets into initiatives like PDI, Congress should view the entire defense budget in this context and, if necessary, consider asking DOD for a comprehensive budget exhibit for all capabilities devoted to this effort. This would provide transparency to decision-makers by letting them clearly assess what the budget holds to counter China’s pacing threat.

Elaine McCusker is a senior fellow at the American Enterprise Institute (AEI) and a former Acting Under Secretary of Defense (Comptroller).