deficits

The results yesterday bring a big change, but not the change observers think when it comes to the defense budget. 

For the defense committees, ideology will rear a powerful head, and the rhetorical and political battles over DADT, Afghanistan, the New START treaty,  missile defense, China, Iran, and the Middle East will all provide powerful headlines and verbal fisticuffs. 

But when it comes to budgets, the departure of Ike Skelton and the arrival of the Republicans at the helm of authorizing and appropriating committees simply mean "business as usual." 

The new leadership in defense supports high defense budgets; the old one did, too.  They will lobby for earmarks for their pet rocks and their districts; the old ones did, too.  Tea Party preferences on earmarks won't be likely to stop the old guard.

But there is a difference.  It is outside the defense world and the defense committees, but very rooted in the policy preferences of the new conservatives.  They want smaller government, and they want it now.  They want lower taxes, and they want them now.  They want a balanced budget, now. 

By now much virtual ink has been devoted to the “cuts” that Secretary of Defense Robert Gates proposes in the defense budget and defense programs.  These have been treated as a clear statement of intention that DOD will contribute to the overall effort at restraining federal spending, the deficit, and the growing national debt.   

In reality, the Gates strategy does not make any contribution to restraining federal spending or reducing the deficit.  And in trying to avoid cutting his budget, he is putting the Pentagon behind the curve in the growing effort to discipline the federal budget and on a collision course with other parts of federal spending and revenues. 

If you haven't looked at this yet, you should: It's Bruce at his absolute best.

To say the least, Andrew, Ed, Pete, Troy and I are so proud.....

Last night, Washington deficit hawks gathered on Capitol Hill to hear OMB Director Peter Orszag and former OMB Director and current CIA Director Leon Panetta at the Committee for a Responsible Federal Budget dinner. Orszag emphasized the future deficit reduction embodied in the recently enacted health reforms, particularly the new Independent Medicare Advisory Board, and expressed confidence that the President's National Commission on Fiscal Responsibility and Reform will set the course for future deficit reduction when it reports on December 1, 2010. He acknowledged that the strength of the recovery needs to be closely monitored as stimulus spending declines, and he noted that a year ago it was hard to find anyone who expected as much GDP growth and renewed job creation as we have had since. Orszag expressed great appreciation for the support he received from Leon Panetta while working as an economist on the Council of Economic Advisers and since. 

 Yesterday, an unnamed Treasury official told the Bureau of National Affairs that April's average primary dealer forecast for FY10 was $1.38 tr., up slightly from $1.36 tr. in January.  OMB's estimate in President Obama's February budget was $1.556 tr., and CBO's in March was $1.500 tr.  Stronger economic growth than projected by OMB and CBO is the main cause for the improved estimates.