Eric Labs
Subject: The Future of the US Navy
Bio: Congressional Budget Office Analyst for Naval Forces and Weapons
Transcript:
Larry Bernstein:
Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast which covers economics, politics, and culture.
Today’s topic is The Future of the US Navy.
Our speaker is Eric Labs who is the Congressional Budget Office Analyst for Naval Forces and Weapons. I want to hear about the challenges coming from China and how that will impact what kind of Navy that we need.
The shipbuilding process needs an overhaul. I plan on asking Eric if we should buy our warships from the South Koreans and Japanese or should we limit purchases to American suppliers even if it costs a lot more?
How will technology change sea power? We hear that Ukraine destroyed the Russian Fleet in the Black Sea with a combination of drones and even bombs on a jet ski. How can cheap weapons change the naval battlefield?
Let’s get started. Eric can you please begin with six minutes of opening remarks.
Eric Labs:
My remarks are my own and do not represent the views of the Congressional Budget Office or the Congress.
Let me start off with some Navy 101. The Department of the Navy, which includes the Navy and the Marine Corps, has a budget of $258 billion. $54 billion is for the Marine Corps and $204 billion is for the Navy. There are about 330,000 sailors in the fleet with 57,000 reservists, and there are about 172,000 Marines with 32,000 reservists, and both services are served by 230,000 civilians.
The Navy today has 295 ships, what it calls its Battle Force, although not all of those are combat ships. 64 of that 295 are logistics and support ships, like oilers, resupply ships, surveillance ships, tugs, and salvage ships. They're critical to the fleet, but they do not shoot weapons.
Let's turn to ship construction. In 2025, the Navy will spend $39 billion in its shipbuilding budget for new ships. That's up from $33 billion in 2024. The Department of Defense puts out a five year spend plan. Half of the money for shipbuilding over the next five years will go to buy submarines. About a fifth will go to buy surface combatants, destroyers, and frigates, and about 12% will go to buy nuclear powered aircraft carriers.
Since the beginning of my time at CBO, which is about 30 years now, the Navy has articulated a goal for a larger fleet. Now the goal is 381 ships. The Navy does not make progress towards its goal of building a much larger fleet as new ships are commissioned, old ones are retired. The obstacle of the Navy building a larger fleet was money.
While we fought two land wars in Asia, defense budgets were large, but that money was not flowing into the shipbuilding account. However, as the People's Republic of China began a large naval buildup and now has the largest navy in the world, many people in government grew concerned and started to put more money into the Navy. But it has been extremely hard for the nation's shipyards to meet the demand. The challenges in the shipyards led to longer times to build new ships, enormous cost increases for ships are already under construction and for future ships that $39 billion I mentioned earlier of that amount, $8 billion is to pay for cost overruns.
The time that the United States is taking to produce new warships is increasing dramatically. We used to build destroyers in five years, attack submarines in six years, aircraft carriers in eight years. Now it takes us nine years to build destroyers and attack submarines and eleven years to build aircraft carriers. The Navy is getting fewer ships than it otherwise could have, and if we could still build ships at the rate of those historical intervals we would be well over 300 ships.
Larry Bernstein:
Eric, you work for the Congressional Budget Office to estimate the expense for these shipbuilding programs. Tell us about the Congressional Budget Office.
Eric Labs:
The Congressional Budget Office is one of the independent support agencies of the US Congress. We do not work for the president; we work for the Congress. Most of what CBO does is long range economic forecasts. The biggest division in CBO is called the budget analysis division and their primary tasks is for every piece of legislation is a cost estimate.
If you want to open a new post office, what it going to cost. The Affordable Care Act, if you want to revamp the nation's healthcare, these are big expensive projects that require analysis by a lot of people to put a cost estimate on that. One of my jobs is to look in depth at the Navy's estimates of what they say future ships are going to cost.
Larry Bernstein:
I did a podcast with Craig Symonds, the Naval Historian at Annapolis, and the topic was shipbuilding immediately after Pearl Harbor. The American Navy had a plan about the role of various classes of ships and because of the radical improvement of naval air power and the shock at Singapore when the Prince of Wales and the Repulse were sunk, there was a recognition that the previous expenditures on large capital ships was mistaken. The American industrial complex at that time was unlike the rest of the world, we were able to pump out ships. You talk about 11 years for a frigate, it took a few weeks.
How do you think about how technology can make an entire subset of the US Navy obsolete and requiring a radical wartime resource allocation on a prompt basis and maybe your fears about an 11-year lead time on a specific type of weapon is something we should not be too concerned about?
Eric Labs:
After the attack on Pearl Harbor, the United States had enormous industrial manufacturing capability, enormous shipbuilding industry, and it was able to rapidly shift into wartime production. Although a lot of ships that had already been ordered as a part of the Two Ocean Navy Act in the 1930s and 1940, the Congress and the administration at that time had already recognized they needed to build up a much larger navy in anticipation of a future war.
Today, the situation is quite different. We don't have the same level of manufacturing capacity, certainly in the realm of shipbuilding that we did back then, and ships are technologically a lot more difficult to build. So, it would not be able to shift production rapidly if we needed to today.
In terms of the technological change could cause us to rethink what we are building, for example, what's going on in Ukraine with drones. Ukraine not having much of a navy but still destroying a lot of Russian ships.
There is some truth to that, although the analogy is overwrought. For one thing, a healthy percentage of those Russian ships that Ukraine attacked were in port or were in shipyards. The United States Navy plays for the most part an overseas game. If we're interested in defending or supporting allies in the Western Pacific, then this is not to say that drones aren't going to play an important role, but their ranges are relatively limited.
My view is that the Navy does need to get larger and it needs to distribute firepower amongst a larger number of platforms. You want to start distributing those missiles, the offensive capability of the Navy, into much larger numbers of ships, including smaller combatants and unmanned systems.
Larry Bernstein:
Asymmetric warfare is paying dividends for the Ukrainians. I heard for example, that they put a bomb on a jet ski and pointed it at a Russian naval asset and destroyed it. Drones have caused relative chaos for the Russians to the point where they've pretty much abandoned the Black Sea as an operating zone.
How do you think about the lessons of Ukraine?
Eric Labs:
The Russian Navy is not nearly as well equipped and well trained as the United States Navy. The battle against the Houthis over the last year and a half you see an extremely capable and well-trained U.S. Navy that has been shooting down hundreds of drones and anti-ship missiles aimed at commercial ships as well as U.S. Navy warships with not one of them being able to hit a U.S. Navy ship so far. The problem with that though is the cost exchange ratio is high. Cheap drones, cheap missiles are being taken down by million-dollar missiles by the United States Navy.
It also shows that that is not sustainable because we're not building munitions fast enough that we would expend them in the Red Sea much less in a war in the Western Pacific.
Larry Bernstein:
I did a podcast with Richard Fontaine at The Center of New American Security, and he did a war game of a war in Taiwan. And one of the interesting conclusions was that neither the Americans nor the Chinese were able to maintain air superiority. Chinese land bases against a combination of Taiwanese land bases and American carriers went to a draw.
I also had Admiral James Stavridis on the podcast to discuss a work of fiction that he wrote called 2034, and the book has a premise, the Chinese were successful in sinking a US aircraft carrier with enormous loss of life. A decade building these carriers, and its knocked out in a few minutes during the war. We put thousands of sailors at risk on these carriers within the reach of the Chinese land missiles. As a result, there's this American desire to push towards unmanned vehicles.
Eric Labs:
The Navy definitely does want to move towards a hybrid fleet, which is some combination of manned ships along with unmanned vehicles. Obviously, any war is going to involve risk, and if you are not prepared to risk the weapon systems that you have built to fight that war, then you probably should not be engaging in that war in the first place. Using those expensive manned platforms sensibly and what Chester Nimitz said during the Battle of Midway on the basis of calculated risk.
You do not want to charge into the Taiwan Strait with aircraft carriers. But if you are operating those ships hundreds of miles away, you are going to have to have the necessary systems to make them effective in that combat zone, meaning you have to have long range weapon systems, long range missiles, long range anti-ship missiles, long range anti-aircraft missiles to conduct that war. And the United States Navy is developing and buying those things. They just don't have many of them yet. But they do understand that hybrid navy is the way of the future.
That's one of the reasons why the Navy wants to invest a lot in submarines. Submarines are inherently much less vulnerable than any surface ship. And so, they want a lot more of them. But the submarine industrial base is one of the most challenged parts of the US shipbuilding industrial base today.
Larry Bernstein:
There haven't been many naval battles in a long time. You just mentioned Midway, The Battle of the Coral Sea, but it is rare. Some people might say, why are we investing in a Navy if this is not the way that wars are fought? We cannot be referencing something from the 1940s.
We do see it from time to time. Argentina got into a naval war with Britain. A French Exocet missile struck Her Majesty's Sheffield. They never saw it coming and boom.
This was the shot heard around the navies of the world. They constructed anti-missile responses, but there will always be new technology improvements in missile technology, in aircraft, in torpedoes. So how should we think about challenges associated with technological breakthroughs? You talked about risk/reward. I don't think the British understood the risk they were taking with the Sheffield when they brought that ship close to the Argentines. They thought they had the technological advantage compared to the Argentines. They were in for a sad reckoning.
Eric Labs:
The British certainly paid a price for that conflict. And the other interesting detail about that conflict is the British lost more ships to aircraft dropping dumb bombs than they did to anti-ship missiles.
After the sinking of the Sheffield, Navy's around the world, including the United States Navy, put a lot of money into the defensive systems aboard ships, and you're seeing the fruits of that in the Red Sea today. So you've got the ability to shoot down stuff, but if you're facing an opponent like China, which has hundreds of long range and very sophisticated missiles, how you operate and defend in that scenario is going to be different than the Red Sea because China would be capable of saturation attacks against the U.S. Naval task force if it comes into the range of those Chinese missile batteries.
What countries like Taiwan need to think about is how do you make them difficult to invade and attack? Some people have called it a porcupine strategy where you just cover the island with lots of anti-ship missiles and asymmetric weapon systems to make an invasion of Taiwan very difficult. But if you want to project power overseas, maybe you incorporate all those unmanned systems into various ship platforms that can help you distribute your firepower amongst much larger numbers of targets to complicate the Chinese targeting capability against a U.S. naval task force.
One thing we have learned about the history of naval warfare is that it tends to be sharp, sudden, and decisive on one side in a relatively short period of time. You do not end up with these long-term slow moving attrition warfare battles.
Larry Bernstein:
We've focused on expensive weapons systems like the aircraft carrier but oftentimes wars are determined by cheap vehicles. In our previous podcast a few weeks ago with Craig Symonds, he highlighted the importance of the LST as being critical to the Battle of Normandy. He also mentioned that we had some mine sweepers that were able to clear out the beaches at Normandy in an evening so that the troops could arrive at dawn. I was bewildered about the relative ease of the mine sweepers to clear that out because one of the major defense aspects of Taiwan will be the use of mines and the thought that you could just mine sweep it in a few hours seems problematic. How do we think about cheap systems?
Eric Labs:
You are right that properly located minefields are going to be an important component to the defense of Taiwan, and therefore China's ability to clear those minefields would be of interest to everybody involved. But that's where you combine that with other weapon systems. You make sure that your minefields are protected so that you make it very difficult for China to send over minesweepers without having to engage in anti-ship batteries available to the defenders.
It's not clear in any future war whether you can completely stop a Chinese invasion of Taiwan. There's so many factors and scenarios that go into that, but you need to plan to make it as difficult as possible.
Many China experts say that the invasion of Taiwan is probably the least likely scenario. Perhaps they look to a blockade strategy. They could do that by ships by long range missiles to destroy Taiwanese ports to make it difficult for Taiwan to import all the foodstuffs that they need to survive. And if they can keep doing that on a regular basis they could achieve the political goal that they're looking for.
Larry Bernstein:
I had James Holmes who is a naval strategist at the Naval War College on the podcast. What he said was that the Japanese in World War II did not properly figure out the weak spots in the American Navy, and specifically, he referred to the oilers in the Battle of the Coral Sea. Nimitz was constantly worried about where are the oilers? Was an oiler destroyed? We don't have enough petroleum products available in the vicinity. And James Holmes said, this continues to be a very big weak spot in the American Navy and it's an opportunity for its antagonists. You mentioned in your opening remarks that there are dozens of ships that are in the supply chain to support these battleships. How should we think about oilers and other relevant ships that are necessary to support a global navy?
Eric Labs:
The logistics part of operating and supporting a navy is crucial. Your average sailing time for a major navy warship that is not nuclear powered is only going to be days before it's going to need to be refueled. Now they want to introduce smaller, lighter oilers because if they're going to build this larger, more distributed fleet, they're going to need a lot more logistics ships to support that fleet. I do not think we can count on the Chinese not understanding the Japanese lesson that James Holmes refers to. I think they recognize the need to go after the logistics fleet.
The trick is to make those oilers either to be well defended or to make them look at something that they're not.
Larry Bernstein:
The production of major Navy ships requiring domestic production. We are running this global defense project with our allies. The Japanese and the South Koreans are in the business of making ships. Should we invest in those shipyards? What is driving the decision to have these long-term projects solely in the United States?
Eric Labs:
Congress for a long time has required by law that U.S. naval warships be built in yards in the United States. Even the workers in those shipyards must be U.S. citizens. There has been public debate on that over the last few months inspired by President Trump himself back in an interview in December. He said that maybe we need to consider buying warships from of our allies.
China has about half of the global ship building industry. The Koreans and the Japanese have another 45%, and the rest of the world combined has about 5%. One of the major Korean ship builders has offered to build five Aegis destroyers for the United States Navy per year. That requires legislation to make that change. But given the challenges that our US naval shipbuilding industry is having, people should talk about it.
Larry Bernstein:
In your opening remarks, you said there have been some change orders on this 11-year project the cost overruns are 40%. It is that nature of the beast. Good ideas happen along the way. Technology changes and lessons like the Sheffield going down change the dynamics of how that ship is built. There is a story of some Italian frigate that was supposed to be copied and it turned out to be nothing like the original plan. Tell us about cost overruns.
Eric Labs:
You are talking about the Constellation-class frigate that is being built in Wisconsin, and it was ostensibly based on the Italian frigate, and the design was supposed to be 85% common, the US version with that Italian version. The Navy's making changes to it such that it is only about a 15% common ship, and it grew by 500 tons and has taken 10 years to build.
There's a line item in navy shipbuilding budgets that says change orders. So, they try to program in a certain amount of money for that.
The U.S. shipbuilding industry is having real problems attracting and keeping the labor force. Attrition rates have been high; it has been difficult to recruit workers for the shipyards. If you've got a 30% attrition rate, that means on average your workforce is turning over every three years. Therefore, you don't get people understanding how to build a ship to allow you to keep your costs down.
The Navy does engage in change orders and that does add costs and they cannot resist tinkering with the design. Change orders drive up costs.
Modifying the design every year for the next batch of ships is not a cost-effective way to building Navy ships. The Koreans and the Japanese do not do that that much. They settle on the design and then they let industry run with that design for a significant number of ships before they modify it.
Larry Bernstein:
Southwest Airlines only has one type of airplane, and the result is the crews know how to fix it, the pilots know how to fly it, and their maintenance numbers are fantastic relative to their peers who've got different engines and the like.
Eric Labs:
The Navy is not good at that. Back in the 2000s, when they were competing for a Navy ship program called the Littoral combat ship, there was two different builders, two different designs that were quite different from each other. Ostensibly they were going to compete for a 10-ship program and the Navy would pick the best bid among the two. The Navy was so impressed with the bids that they went to the Congress and said, the bidders are fixed price contracts that are offering these 10 ships at very good prices. Let's buy both. And the Congress gave them permission to buy both, two different ship designs, which meant that that was going to be two different combat systems, two different maintenance tails, two different logistics tails for the life of these ships.
Larry Bernstein:
I end each podcast with a note of optimism. What are you optimistic about as it relates to the future of the US Navy?
Eric Labs:
The U.S. Navy has a complex set of challenges ahead. U.S. naval shipbuilding industry is in its worst state in the 28 years I've been the CBO Naval Analyst. It is confronting its greatest geopolitical threat since World War II. That being said, I do have abiding faith in the ability of the United States to innovate and figure out solutions.
Larry Bernstein:
Thanks to Eric for joining us.
If you missed the last podcast, the topic was should the US abandon NATO? Our speaker was John Bolton who was Trump’s National Security Advisor in his first administration. John discussed why the Americans are frustrated with the Europeans underwhelming investment in their own defense. We also evaluated the war in Ukraine, America’s security interests on the European continent, and whether it makes sense to kick Turkey out of NATO.
I would also like to make a plug for next week’s show on Taking Down Harvard. Our speakers will be Jonathan Zimmerman who is a Professor of History of Education at the University of Pennsylvania and Jay Greene from the Heritage Foundation. I expect this timely subject to be a feisty exchange.
You can find our previous episodes and transcripts on our website, whathappensnextin6minutes.com. Please follow us on Apple Podcasts or Spotify. Thank you for joining us today, goodbye.
Check out our previous episode, Should the US Abandon NATO?, here.
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