defense spending
Defense budgets go up and down. They have ever since the end of the Second World War. We are in a build down today, one that is likely to continue for the next decade, reardless of what the Super Committee does, and regardless of the hard court press coming from the Pentagon, its allies in Congress (Chairman McKeon of the House Armed Services Committee), and, especially, the industry that manufactures weapons for the Department of Defense.
While the world of Washington, DC circulates around the work of the super committee (an Indonesian shadow play in my view), some of us are wondering what the defense budget will look like over the next decade.
My own view, consistent for the past two years, is that we are in a build down. It really doesn't matter what the super committee does, we are still in a build down. It will last the decade and, when we all turn around and look back, it will have produced defense resources that are at least $1 billion below what DoD forecasts today will be the defense budgets over the next decade.
And that will be normal; the past build downs have seen defense resources decline an average of 30% in constant dollars over ten years. Right now, the Budget Control Act would lead to a build down of about eight percent, so historically very low. We will get to at least 17%, because that is what $1 trillion represents, as a ten year reduction from the Pentagon's appetite.
The President's new plan for deficit reduction presented to the Super Committee today claims nearly 25% of its overall spending savings from cuts to defense, specifically, from winding down the wars in Iraq and Afghanistan over the next ten years.
Set aside, for the moment, the absence of any clear plan for doing so in Afghanistan. Focus on the size of this number; sounds enormous. And it is a phoney.
Secretary Panetta was on point yesterday when he warned against a sequester of defense funding beyond the first tranche of budget disciplne in the new debt agreement.
But the point he was making is important. What is not desirable is a sequester - a blunt, across-the-board reduction in agency budgets. It is about the worst way to cut a budget I know, for it is not driven by planning and choice-making, just mechanics.
What is likely, however, is a deeper reduction in defense budgets than the $400 billion or so over the next decade currently in the debt agreement plan and being implemented by the Pentagon. That's easy - we could provide DOD with inflation growth over the next ten years and the savings from the current Pentagon budget appetite would be more than $400 billion.
The House Armed Services Committee is marking up its defense bill for FY 2012. There are lots of interesting provisions, like an open grant to the executive branch to engage in almost any kind of war it wants, anywhere, against anything it might consider a terrorist. But from a budget perspective, the committee is clearly living in a parallel, and very unreal, universe.
The committee seems to think that the starting point for talking about defense spending is the $553 billion number the administration originally sent up in February. But we entered a new world with the congressional decision to provide $529 billion to the Pentagon in the base budget for FY 2011.
Were Congress to actually provide $553 billion for FY 2012, that would be growth of 4.5% in the defense budget, or roughly 3.0% real growth. But the FY 2011 level they appropriated sent a clear message from the Congress: defense must participate in the overall effort to control federal spending.
