“Some in Washington still want to spend $700 billion on old outdated Cold War Programs”

--Advertisement from the American Security Project which aired during the GOP Debate on Nov. 22, 2011

“The United States is projected to spend an estimated $700 billion on nuclear weapons and related programs during the next ten years.”

--Ploughshares Fund Working Paper, Version 2, Sept. 27, 2011


In these grim economic times, the cost of maintaining and upgrading the United States’ aging nuclear arsenal of 5,000 warheads is certainly a ripe topic for discussion. The U.S. government has never officially disclosed the exact cost, and whether one should include environmental clean-up costs, missile defense and other programs related to nuclear weapons is a legitimate topic of debate.

In recent weeks, a fierce fight has broken out in the nuclear world over an estimate issued by Ploughshares Fund—a foundation focused on nuclear policy—that the United States will spend $700 billion over the next ten years on “nuclear weapons and related programs.” That estimate has stuck and become part of the public discourse, appearing in the recent advertisement and a letter by Rep. Edward Markey(D-Mass.), often without the caveat of “related programs.”

But the administration of President Obama—who won a Nobel Peace Prize in part for calling for a world without nuclear weapons—has flatly rejected the $700 billion figure. James Miller, principal deputy undersecretary of defense, told Congress on Nov. 2 that the figure was close to $214 billion over ten years, with $88 billion being spent at the Energy Department, which maintains nuclear weapons, and more than $125 billion spent on delivery systems at the Defense Department.

 “I've had an opportunity to look at some of the materials that were referenced in the cost estimates just before coming over here and I—without giving this more time than it deserves—suffice it to say there was double counting and some rather curious arithmetic involved,” Miller said.

 There is such a large gap between $700 billion and $200 billion that some readers asked us to look into the matter. To put it in perspective, the gap between these two estimates would fund the State Department and all foreign aid for the next decade. Hang on, there are lots of numbers, but it is an important issue.


The Facts

 First of all, Ploughshares is counting a lot of things that the administration is not including in its estimate. As the spreadsheet below shows, the group included such things as the costs of missile defense (on the theory that it exists only to protect America against nuclear weapons) and environmental clean-up. As we said, there is a legitimate debate about whether or not to include such items—is missile defense needed even if the U.S. gives up all of its nukes?--but those items account for nearly $270 billion of the Ploughshares figure.

PloughShares Spreadsheet on nuclear weapons spending

So let’s compare apples to apples, and look just at the numbers for maintaining and sustaining the nuclear arsenal. According to the administration, the figure is about $215 billion. According to Ploughshares, the number is $348 billion, plus as much as $125 billion for modernization, for a total of as much as $473 billion.

 That is a key part of the difference. The administration says the $125 billion is “our best estimate of the total costs of sustaining and modernizing the nuclear enterprise and the delivery systems from fiscal year '12 through fiscal year '21.”—the equivalent of what Ploughshares estimated is $348 billion. Ploughshares then added that $125 billion figure (rounded to $100 billion) to its total estimate of costs.

 Joe Cirincione, president of Ploughshares, said doing so might result in “some double counting” but added that the group believes “those costs are going to grow” because “there is also a long history of DOD revising its initial estimates upward.”

 And how did Ploughshares come up with the $348 billion in the first place? There is no dispute over the Energy Department part of the estimate--$88 billion. That comes from actual budgets. But the Defense Department does not easily break out nuclear activities, and so that requires some guesswork.

 Ploughshares mostly relies on a 2009 report issued by the Carnegie Endowment for International Peace, written largely by Stephen I. Schwartz, and updates it using inflation-adjusted numbers. That report calculated the DOD figure by using the budget numbers for “Major Force Program 1” (strategic forces), and then applying a formula to estimate overhead and support costs.

(For those interested, the formula can be found in footnote 5 on page 49. Below is a spreadsheet of Pentagon expenses to do your own calculations.) 

Dept of Defense, Major Force Program Spending - 1962-2016

Under that formula, estimated support costs for fiscal year 2008--$10.9 billion—were higher than the direct costs of nuclear delivery systems--$10 billion. Is that reasonable?

Schwartz, who now is with the James Martin Center for Nonproliferation Studies, attributed the formula to work done by Steven M. Kosiak (who now works for the White House budget office). In a different context, for a study called the Atomic Audit, Kosiak had used a different formula that if applied to the 2008 figures, would bring the overhead costs down to $4.2 billion.

 Similarly, Schwartz concedes that the formula, if applied to later years, results in overhead costs that appear rather strange. For fiscal year 2012, for instance, the formula yields $21 billion in support costs for an $11 billion program, in part because the costs of the wars in Iraq and Afghanistan play havoc with the figures.

 The fact that the formula has problems with current data suggests there is a problem with the formula to begin with. (For one thing, it assumes that all of the other major force programs contribute “support and overhead” to nuclear forces in the same relative proportion they contribute to general purpose and special operations forces, which does not seem logical.)

 “This is obviously an imprecise way of calculating these costs, and one prone to potential errors as the non-nuclear parts of the defense budget increase and decrease, but according to Kosiak it's the only logically defensible way of generating a reasonable estimate,” Schwartz said. (Kosiak could not be reached for comment.)

 Schwartz also noted that using strategic forces (i.e., Major Force Program 1) as a proxy for the nuclear delivery systems is increasingly problematic because fewer aircraft now actually have nuclear tasks. “MFP 1 both overstates the costs of the U.S. nuclear arsenal (by including systems that no longer perform a nuclear mission) and understates those costs (by failing to include a host of essential support programs, as well as the costs of tactical nuclear weapons),” he said.

 Schwartz said that he warned Ploughshares and Markey’s office to be careful with these estimates, especially when lumping many things together.  “Unfortunately, things get shorthanded,” he said. “Ploughshares wanted a large number to make their case for political reasons.”

 A big unknown question is whether the DOD figure of $125 billion really includes all of the modernization costs, as Miller suggested. DOD’s most recent budget documents estimate that from 2010-2016, strategic forces will consume $83.3 billion, or about two-thirds of the $125 billion the administration now says it plans to spend to operate, maintain, and enhance nuclear delivery systems.

 “It's a little like saying it costs me $1,000 a year to operate my car, except that I am not counting the cost of insurance, repairs, registration, taxes, etc.,” Schwartz said. “The actual cost is higher, maybe even much higher. But unless the folks at DOD can provide us with a breakout of the costs for each system, it's impossible to say what's included and what's not.”

 Cirincione, who has written Miller asking for clarification about the figure, said that Ploughshares responsibly rounded down the modernization figure to $100 billion because of the uncertainty. He argued that the secrecy surrounding these numbers made it difficult to know exactly what is being spent on nuclear weapons. “DOD has never given a full accounting of what we spend on nuclear weapons,” he said. “Because we don’t know how much we spend and will spend, Congress is not able to make informed decisions.”

Cirincione noted that the document that produced the $700-billion figure is a “working paper” and could be revised depending on new information.

“Our estimate -- based on the best publicly available data -- is a reasonable accounting of the actual investment that the U.S. is making in outdated Cold War nuclear weapons and related programs,” he added. “We believe is it far more accurate than budgets claims that hide the true costs to our troops and our nation of these programs.”


The Pinocchio Test

 We don’t take any numbers from the Defense Department as the gospel truth, and certainly it makes sense to call for a complete accounting of the nuclear-weapons budget across all parts of the government.

 Ploughshares is an admirable organization, but we conclude there are serious problems with the $700 billion figure.  Simply updating a 2009 study with inflation estimates is a bit simplistic, especially when applying the formula used in the study to current budget figures might cause you to rethink the numbers.

 Moreover, considering how widely circulated the $700-billion figure has become, Ploughshares has a responsibility to rethink its use of the $125 billion for “modernization” in light of this month’s congressional testimony, especially because its figure has been cited so often without the caveat that it includes more than just the nuclear arsenal.

Given the uncertainty of the figures, Ploughshares should consider providing a range of numbers and perhaps more clearly segregating the cost of nuclear weapons from the cost of related programs. The numbers are big enough that they don’t need to be exaggerated.

(UPDATE, 10:30 am: Ploughshares provided a fuller response to the issues raised in this column, arguing that “whether we are spending $500 billion or $700 billion on nuclear weapons in the next decade -- the number is still too high.”)

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UPDATE, Dec. 7, 2011: My colleague Al Kamen published an interesting email by one of the advocates for this figure, which sheds some light on debate over these figures. The email, which concerned Ploughshares’ response to this column, acknowledged that “there are and have been differences over the $700B number, and some groups haven’t wanted to use it (for legit and thoughtful reasons).”

UPDATE, Dec. 7, 2011: Jeffrey Lewis of the ArmsControlWonk blog weighed in with a lengthy analysis of some of these numbers.

UPDATE, Dec. 1, 2011: We have embedded below a statement from Stephen I. Schwartz that seeks to clarify some of his comments in our interview with him. Please note that he is not saying he was misquoted and that our notes conclusively show that he was correctly and properly quoted in our article.

Statement of Stephen I. Schwartz