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How About Those Defense Savings!!

19 Sep 2011
Posted by Gordon Adams

The President's new plan for deficit reduction presented to the Super Committee today claims nearly 25% of its overall spending savings from cuts to defense, specifically, from winding down the wars in Iraq and Afghanistan over the next ten years. 

Set aside, for the moment, the absence of any clear plan for doing so in Afghanistan. Focus on the size of this number; sounds enormous.  And it is a phoney.

Mind you, it is the same phoney savings claimed by the Gang of Six in July (which I warned about here), by Budget Chairman Paul Ryan in the spring, and by the President's fiscal commission last year.  They are phoney because the CBO budget baseline, from which all these folks are measuring, contains a mechanical plug for war costs.

You see, neither the administration, nor the Congress, has any idea about what the wars will cost in the future.  The administration created a $50 billion plug for the future war costs.  It had nothing to do with programs, just a budget plug - "the wars will cost something, but we don't know what." 

In practice, the wars have cost more.  In FY 2011, the war budget was $159 billion.  CBO doesn't know what the wars will cost either.  So they use another kind of plug, a mechanical projection of what was appropriated.  That's $159 billion.  And their current services baseline, which everybody now uses, including this "exercise" called the Super Committee, just inflates that number out into the future.

So what the What House has done is create a fictional amount - they call it "illustrative" in the new proposal, that would be saved from the CBO baseline by winding down the wars.  That's not driven by policy, either, it's just "illustrative."

So they get to claim that amount as "savings."  But everybody knows the war is winding down and everybody knows the CBO baseline is not adjusted for winding it down.  Everybody knows, too, that CBO did some "winding down" estimates, but it has not adjusted its current services baseline for those estimates, leaving this escape hatch for the Super Committee.

So these savings are not real.  And they do not touch defense at all. In fact, defense budgets would remain undisciplined, lowered only by the $350 billion from the CBO ten-year estimate the White House claimed in August.  You can get to those savings in a heartbeat; just keep growing defense from the FY 2011 level with inflation over the next ten years and you will probably save that amount.  And the defense budget will continue to grow.

Time for some real discipline so we can get to those hard choices and priorities Adm. Mullen said in January the DOD had been avoiding for the last ten years.  The President's new proposal makes no contribution to that goal.





This just adds fuel to another brighly burning fire

I was having lunch today with a friend who is very economically savvy, and does a lot of work worldwide. Between weak leadership and mediocre Presidential candidates on both sides, outright lies or unwillingness to face the truth - defence, Medicare, PPACA, etc. - not to mention the Tea Party's no new taxes [Bruce has been excellent re following that] - as a country we are seriously in a nose dive. With all Bernanke's heroics, given the political mess, I don't see how we don't really crash, and then, after quite a few very hard years [again], maybe get some new leadership and realism, and struggle back... which I would see starting in 2017 at the earliest, as it will probably take the Crash, and truly new faces on the national scene, and different attitudes on the part of the American people. This isn't a Black Swan - it's been predictable for years - but why it still has to occur is beyond me.

Gordon Adams

The USA is the most loved, most admired, most esteemed country in the whole wide world, maybe ever in all of history! And to make sure that continues to be true, we need an army and navy and air force and marine corp that are bigger or at least more expensive than all the other armies and navies, etc., in the world lumped together. Plus we need to demonstrate every now and then that we can send our army and marines or whatever to pound rubble into sand anywhere in the world!

Seems simple enough to me. Who doesn't want to be loved and admired? What part of this simple and wonderful system eludes you?

response to Mike S

The problem is that's NOT what we're spending our money on. I have no problem buying the best insurance policy (a fine military), but I also want leaders who plan to not take unecessary risks (the Iraq war) stay healthy (mitigate climate change) and invest in ourselves (bridges that don't fall into the Mississippi). Defense spending went up 70% over the past decade and we're not safer. Read Winslow Wheeler's stuff at We're going in the opposite direction than what you'd like to see. We're not "better", just more expensive, and no amount of money seems to matter because defense is seen by our elected leaders as a jobs program, not s strategic imperative. You're picking an argument where there is none. If putting strict boundaries on spending gets us a modern national security strategy, I'm all for it.

All DOD will do is Afghanistan

The supercommittee is going to deadlock: the six Republicans cannot raise taxes, and the six Democrats can't cut Social Security and Medicare benefits. 6-6; and it needs a majority of 7 to pass its bill to Congress for its up-or-down vote. If nothing happens, the automatic sequestration trigger cuts in, with an additional $500-600 billion cut to DOD over the $350 billion already mandated, all beginning in 2013. That's as much as $950 billion to be cut from DOD over ten years. But some in Washington are saying that the U.S. has to stay in Afghanistan for another 10 years, at $120 billion a year, or $1200 billion. Between the $950 billion cut, and the $1200 for Afghanistan, there would seem to be some kind of mismatch. Is American security now to be all about Afghanistan?

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