Real Defense Budget Alternatives

With the “fiscal cliff” behind us, it’s important to remember that in less than two months, the Congress will be dealing with another manufactured crisis: The budget cuts of the 2011 Budget Control Act known as “sequestration.”  The Department of Defense will bear 41% of the prescribed cuts, eliminating an additional $492 billion over 10 years.  Although entitlement spending will also be on the table, the initial fight will be over cuts to the Defense budget.

A new study by the nonpartisan RAND Corporation concludes that the defense budget cuts cannot be taken without altering our overall defense strategy, and that “the department should modify defense strategy to fit the new resource constraints and prepare its course of action sooner rather than later.”

The authors highlight three alternative strategies, which anyone interested in this topic should read and consider.  An accompanying article by the authors states, “Reductions of the magnitude implied by sequestration—some $500 billion over the coming decade—cannot be accommodated without a re-examination of current defense strategy.”

The bottom line: In two months, Congress will be faced once again with inevitable cuts to defense spending, and Republicans should not come to the bargaining table without a strategy for deficit reduction.  While reactionary, the fears that arbitrary cuts will ignore our defense strategy and jeopardize national security are not unwarranted.  Obviously, any defense cuts – like all government spending – should be tied to defense strategy.

Moreover, we should not be spending more on defense annually without explicit justification.  In the absence of justification, Republicans should consider budget cuts – sequestration or otherwise – as a plausible option.  We should also remember that the proposed sequestration cuts are much less severe than those after both the Korean and Vietnam wars.

Sequestration would cut roughly $55 billion a year over a nine year period.  The chart above, generated by Veronique De Rugy of the Mercatus Center, demonstrates that sequestration only effects baseline spending, and not the cost of wars, which remains unaffected.  As you can see, the current trajectory of sequestration cuts deeper in 2013 than in any other year, causing an abrupt shift to the historic and projected funding trend line.  GOP hesitation with sequestration, while not always sound or well-articulated, is not without basis, because of this deep cut into current FY13 funding.  To avoid this, Republicans should offer a more sensible budget that would draw down gradually, year after year, in a smoother fashion.

First, it’s worth noting the Defense Department made roughly $500 billion worth of voluntary cuts to spending in its FY13 budget last year, shown here at the House Armed Services Committee website.  These voluntary cuts are shown below, as compared to both the President’s initial budget request (which increased spending roughly 2 to 2.5% per year), and the additional sequestration cuts (in red).  All savings listed herein are relative to the green line representing these voluntary savings:

As alternative strategies to sequestration, Republicans should consider taking 1%, 3%, or 5% annual cuts to spending through the five-year Future Years Defense Program (FYDP), from 2013-2017, followed by a flat-lined budget in the remaining years.  These gradual cuts produce savings similar to those prescribed by sequestration, at $323 billion, $668 billion, and a massive $1,030 billion, respectively.  Another strategy Republicans could consider is simply flat-lining defense spending for a nine-year period.  Although in real terms, spending would not keep up with inflation, this plan, while not approaching the scope of sequestration, actually cuts $128 billion more than the voluntary defense cuts. These alternative strategies are compared to sequestration (in red) below:

More fittingly, either cutting 5% over a three-year period followed by a flat-lined budget, or cutting 2% over the FYDP followed by a flat-lined budget, renders results more approximate to those prescribed by sequestration (in red), with savings of $783 billion and $508 billion, respectively:

Any of the strategies shown here could be executed more deliberately by the Pentagon than sequestration, with its abrupt near-term shift.  Smoother budget cuts could coincide with a strategic drawdown and/or redirecting of force, while preventing the “hollowed out” force the Pentagon wants to avoid.

In two months, Republicans should be willing to take defense cuts early in the discussion, therefore giving them more time – and leverage – to address entitlement reform.  They should demand justification for spending any more on the baseline defense budget than the current FY12 funding level.  They could also take the opportunity to challenge the executive  ranch on military redeployments to Afghanistan, as well as their undeclared and unapproved military excursions to places like Libya that are endangering our troops currently and our citizens for years to come.

For additional reading on the subject, Christopher Preble of the Cato Institute offers strategy considerations for the year ahead in an article in US News and World Report, Veronique De Rugy of the Mercatus Center has written extensively on defense budget cuts and their (minimal) effect on the national debt, and my reasons for supporting sequestration cuts can also be found here at United Liberty.

 
 


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