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Obama's Modern Warfare: More Machines, Fewer Soldiers

7 March 2014 in Trading Ideas

Many would argue that the recent events in Ukraine further bolster the idea that the US must continue as a legitimate global military presence whenever and wherever it is needed.

True or not, that presence is likely to look a whole lot different.

The Pentagon recently put forth its new spending proposal that attempts to push the military off the war footing that it adopted in the wake of the US terror attacks in 2001.

As part of the plan, Defense Secretary Chuck Hagel intends to shrink the US Army to its lowest level since before World War II. Specifically, Army troops would drop over the coming years to between 440,000 and 450,000. This is a further cut than the already scheduled move to 490,000 soldiers from the post-9/11 high of 570,000.1

As the New York Times pointed out, the new priorities take into account the fiscal reality of government austerity and the political reality of a president to end two costly and exhausting land wars.

The result, according to government officials, could be a military still capable of defeating any adversary, but too small for protracted foreign occupations.


The new budget plan is just another step toward how the US has been re-shaping its military – a theme that is the core idea of the Modern Warfare motif.

The motif has increased 9.3% in the past month. In that same timeframe, the S&P 500 is up 5.9%. In the past 12 months, the motif has risen 73.5%; the S&P 500 has gained 24.1%.

It’s worth noting, as the Times did, that “modern” in no way means incapable, as government officials maintain, saying that the money saved from reducing personnel would assure that those remaining in the service would be well-trained and supplied with the best weaponry.

This new American readiness means, at least in the Pentagon’s budget, protected money for Special Operations forces and cyberwarfare.

However, it’s probably an understatement to say that the politics of military budget negotiations are such that the scale-back is an immediate certainty. Indeed, as the Financial Times recently reported, several Pentagon advisers are concerned that the US military could be “over-wooed” by the potential benefits of new technologies, such as drones, precision missiles and robotics, as it seeks to cut spending.2

The FT quoted Major General HR McMaster as criticizing what he calls the “fallacies” that new technologies or highly capable Special Operations forces are going to revolutionize warfare. “These are important capabilities but they are not a strategy,” McMaster said.

Ultimately, it will be up to Congress to decide if — and how quickly — the cost of the Pentagon’s vision will be realized.

1Thom Shanker and Helene Cooper, “Pentagon Plans to Shrink Army to Pre-World War II Levels, nytimes.com, Feb. 23, 2014, http://www.nytimes.com/2014/02/24/us/politics/pentagon-plans-to-shrink-army-to-pre-world-war-ii-level.html?action=click&module=Search&region=searchResults%230&version=&url=http%3A%2F%2Fquery.nytimes.com%2Fsearch%2Fsitesearch%2F%3Faction%3Dclick%26region%3DMasthead%26pgtype%3DHomepage%26module%3DSearchSubmit%26contentCollection%3DHomepage%26t%3Dqry693%23%2Fobama+military+budget&_r=0, (accessed March 5, 2014).

2Geoff Dyer, “US military: boots off the ground,” FT.com, Feb. 28, 2014.