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Searching for the Elusive $78 billion: Are the Defense "Cuts" Real

28 Jan 2011
Posted by Gordon Adams

Ever since Secretary Gates announced ( his "cuts" in the defense budget - $78 billion over the next six years - people have been confused.  Last summer he said he was going to find more than $100 b. in savings over five years, through management "efficiencies in the DOD, but he was going to give the services back all that money for priority investments and forces.  When he announces his "cuts," did that mean the White House stepped in and took most of his savings away, leaving the services empty-handed?

Not really, but welcome to the wonderful world of defense accounting.  Secretary Gates now says ( he did find those $100 billion in efficiency savings, and he did give them back to the services to buy necessary services, as well and equipment and people, over the next six years. 

But in November, the White House asked him for around $150 billion to contribute to deficit reduction.  He negotiated hard, and almost split the difference, getting the number down to $78 billion.  But he didn't want to upset the services by saying he had broken his promise. 

Instead, he went out to find another $78 billion, that he could say was not the money he promised the services.  Where he found it has been slowly dribbling out of the Pentagon for the past two weeks.  Enterprising sleuthing by the Washington Post Fact Checker, Glenn Kessler, now lets us put the numbers together, though they remain somewhat mysterious. ( Turns out it was not that hard.

- Six billion of the savings don't happen until 2015 and 2015, when the Army and the Marines start to roll back part of the 92,000 person increase that happened over the last decade.  Way into the future; don't hold your breath for the money today.

- Four billion of that comes from stretching out the schedule for the F-35 fighter.  The Marine version has been put on life support for the next two years.  It may be back; don't hold your breath.

- $12.5 billion comes from pocketing the White House decision to freeze civilian pay for the next three years.  Credit for a decision the Pentagon did not make.

- $41.5 billion comes from "efficiencies" that hit agencies that are part of DOD, but not in the services, so-called "defense-wide" agencies.  Not much detail here; still somewhat of a mystery who and what is getting trimmed.

- $14 billion is a truly "magic" number.  It comes from revising DOD inflation estimates for the future downward from what they were before.  This is a hardy, perrenial argument between DOD and OMB, with DOD asserting that it experiences more inflation than the rest of government or the economy, and OMB arguing that economy-wide inflation holds at DOD, as well.  Conveniently, OMB seems to have won that argument, at least for this year's budget, but the projected Gates "savings" are the beneficiary.

Remember, through all of this, as Gates says, the defense budget is still going up, and it only stops growing after inflation in FY 2015.  If it is this easy to find savings in the out years, maybe it is easier than we think to find savings this year, if the Congress decides to extend the Continuing Resolution to cover the whole fiscal year. If you want to know if the Pentagon can manage the FY 2011 problem, it can.  Go to my post at The Will and the Wallet to find out how:


Defence inflation

One has to love Gordon's use of the word "magic" As a non-DC insider, it strikes me that the DoD claim of higher inflation than the rest of us [housing and wages certainly aren't "inflating" - housing down, wages stagnant], is because DoD contracts are carte blanche ["cost"+"overruns" and delays - fee for service [FFS] and then some.] The oher great thing is that you can do accounting multiple ways - LIFO, FIFO, etc, and - magically! - and get different numbers.

"Defense" Is the Worst Form of "Big Government" There Is!

Your blog column above should be on the front page of every major American newspaper! Our lickspittle media regurgitates anything Defense Secretary Gates says as gospel, without ever looking at the facts or questioning a thing. Can you imagine if the Department of Education owned even one golf course? The Republicans would be screaming bloody murder to close it immediately. The Department of Defense owns and operates over 100! Google "military golf courses", if you don't believe me. The American people have been bamboozled, hornswaggled and just plain ripped off by the Pentagon and their brethren in the defense industries to the tune of trillions of dollars! It needs to end. If we lived in a sane world, we would cut defense spending by 90% and we still wouldn't be one iota less safe than we are now. Close 90% of the military bases around the world and mothball all but a few nuclear submarines. End the wars in Afghanistan and Iraq immediately and end all foreign deployments. Thank you for being an oasis of sanity in a sea of madness.

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