Defense is On the Table
Some people, like Ezra Klein, think the taxes/unemployment agreement pending before the Congress this week amply demonstrates that "no one [including the Congress] really cares about the deficit," since the package will add roughly $900 billion to the deficit over the next couple of years. Maybe some people are right. Members of Congress have rarely been reluctant to push a pet spending rock when the opportunity presented itself and this agreement is expensive.
But this was a peculiar kind of opportunity – the last gasp of an outgoing Congress. Easy to blame them, when next year rolls around. But when the posturing stops this week and the last Congress slinks out of town, the last month will have been memorable for the way it changed the atmosphere around deficits, particularly with respect to defense.
The Simpson-Bowles deficit reduction proposal may have failed to get the requisite 18 votes to force it on the Congress, but it changed the debate about our spending. And the earlier Rivlin-Domenici panel matched that effort and raised it, putting an even wider array of options on the table, including the idea of a payroll tax holiday next year to provide short-term stimulus.
But maybe the most important change in the weather produced by both panels was the death knell of the notion that defense spending should be held harmless from deficit reduction efforts. Clearly, defense is no longer the "favorite child" of the budget. Rivlin-Domenici called for $1 trillion in defense cuts by FY 2020 and that level was matched, roughly, by Simpson-Bowles. Both panels put forward detailed lists of potential defense cuts.
These two sets of recommendations joined earlier proposals from the Sustainable Defense Task Force (Frank/Paul), which were also endorsed by Rep. Jan Schakowski and Andrew Stern, both members of the President's panel. And, even more revealing, Rep. Paul Ryan, incoming chair of the House Budget Committee, who was a panelist who did not endorse the Simpson/Bowles options, has made it clear that, as committee chair, everything is on the table. As has Rep. Eric Cantor, incoming House Majority Leader.
National security analysts joined the call in a November 18 joint letter to the Simpson-Bowles panel. And even Grover Norquist and a bevy of conservative analysts sent a similar letter to Minority Leader Sen. Mitch McConnell and incoming Speaker Rep. John Boehner on November 30, urging them to include defense in any effort to reduce federal spending and the deficit.
Even the outgoing Congress is moving in this direction. The House year-long Continuing Resolution would provide funds for the base defense budget that are $19 billion below the President's request for FY 2011. And the Omnibus bill drafted by Sen. Inouye is rumored to be at least $10 billion below the request. Both numbers are deeper cuts than the defense appropriators favored earlier this year.
Meanwhile, the White House is negotiating with DOD on a base defense budget number for FY 2012 which is below the number Secretary of Defense Bob Gates sought, when he wanted to hold the line at one percent real growth. DOD officials are suggesting privately that the reality is starting to seep in. Discipline is coming to defense and Secretary Gates' effort to hold the line is failing. And it will come in the framework of a broader effort at deficit reduction, one endorsed by a growing number of elected and former elected officials. Klein may have it right about the crown leaving town, but I predict that over the next two years the politics of deficit reduction will move center stage in Washington, DC and "everything will be on the table."