Flipping the Cube: Transforming the Defense Budget Structure

The Pentagon’s $820 billion budget is the United States government’s biggest expense other than Social Security and health care. However, despite its obvious importance, the Defense Department’s budgeting process is notoriously inflexible and slow. As a result, current operational and security needs often do not match spending priorities established two or more years ago.Congress recently established an independent Commission on Planning, Programming, Budgeting, and Execution (PPBE) Reform to identify ways to improve the defense budgeting process. A key recommendation in the commission’s final report is to transform the structure of the defense budget itself—realigning it to better connect funding to desired outcomes. Rather than organizing spending by inputs in a “cube” with categories of activity such as research, procurement, or operations on one side and military services and programs on the other sides, the proposed new structure would divide the budget primarily in terms of missions and capabilities.  Proponents argue that this approach would foster greater transparency, agility, and innovation by allowing the Pentagon to move money where it is needed to address challenges and opportunities. Skeptics raise concerns about ensuring adequate oversight when funding is not tied to specific inputs.Join Hudson Senior Fellow Dan Patt for a discussion on restructuring the defense budget with two commissioners who shaped this proposal—Jamie Morin, former Pentagon director of cost assessment and program evaluation, and David Norquist, former deputy secretary of defense and under secretary of defense (comptroller). The panel will explore the problems this reform aims to solve, alternative approaches the panel considered, how increased flexibility could reshape incentives and decision-making, and potential downsides and implementation obstacles.