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Gates Targets Overhead: The Pentagon will have to pay for most of its modernization efforts by reducing its massive overhead costs, says Defense Secretary Bob Gates. Speaking May 8 at the Eisenhower Presidential Library in Abilene, Kan., Gates said the three percent real growth he’s advocating in defense spending—and he admitted that the Administration has only asked for “just under two percent” above inflation—will just barely cover the escalating costs of personnel, healthcare, and operations and maintenance. Modernization will have to be paid for “within the programmed budget,” more specifically from the overhead costs that account for 40 percent of defense spending. Converting those tail-to-tooth savings may provide roughly two to three percent growth for modernization, he said. The silver lining for the services: Gates said he’ll let them keep whatever savings they find to buy new equipment. (Gates speech) (Also see "Simple Matter of Math" from Monday's DR)