StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



Department of Defense

Posted by Stan Collender

Not only are the Obama administration’s $450 billion-over-10-years military spending cuts not likely to be enacted before the 2012 election, but no significant deficit reductions of any kind should be expected to be enacted this year.

The witches’ brew of hyper-partisan politics, the 2012 election, the influence within the GOP of it’s tea party wing and the narrow majorities in the House and Senate will combine this year to do what they did in 2011: Make a deal on any aspect of the budget impossible to achieve. More energy and effort will be expended this year on avoiding, delaying, or reducing the sequester’s military spending cuts than in developing an agreement on any additional Pentagon reductions.

In addition, given the narrow majorities in both houses, the spending reductions that were outlined by Pentagon officials today will provide the representatives and senators from the congressional districts and states that would be harmed with ample opportunities to make life miserable for the Democratic and Republican leaders.

Posted by Gordon Adams

We are in the midst of a full-throated attack by our own Department of Defense and its supporters in the Congress, who are saying anything they can to scare the Congress into sparing defense budgets from further trimming.  it is a scary assault, in part because so many erroneous and irrelevant statements are being made simply to move the banner of fear ahead.

The latest round is the letter in the New York Times today from House Armed Services Committee Chair Buck McKeon, seeing to rebut the October 31 New York Times column Paul Krugman wrote on the impact of defense cuts on employment, similar to comments I made the same day on Capital Gains and Games.

Posted by Gordon Adams

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.

Posted by Gordon Adams

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.

Posted by Gordon Adams

Rumor has it that the current deficit/debt discussions between the White House and the Republican House leadership may include $1 trillion in defense savings over the next ten years.  If this were true, it would be both good news and a manageable savings, since it constitutes roughly 15% of the total resources DOD currently projects for defense over the next ten budgets.

But it is not true.  Turns out to be a case of wasting the Congress' time with phoney cuts, abusing budget baselines, and a political fraud on the American people.  The trillion dollars, it turns out, is all based on the assumption that we will spend significantly less on the wars or any other combat deployments than the more than $1 trillion we have already invested.



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