StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

Military Contractors Should Be More Concerned About 2013 And Beyond

05 Jan 2012
Posted by Stan Collender

The fact that the Obama administration’s proposed Pentagon spending reductions are not likely to be enacted in 2012 should bring little comfort to the contracting community.

Even if they’re not put in place this year, reducing the military budget from current baseline levels will be hotly debated this year and be a campaign issue.

This is likely to change the budget debate that has occurred since at least 2001 from how much should 2 military spending rise to which reductions are most acceptable. That’s a significant change.

Without an external shock that alters this outlook such as a terrorist attack or new overseas contingency, this changed debate will last at least until a significant deficit reduction plan is adopted, and, regardless of who gets elected and which political party controls each house of Congress, it will make the Pentagon as much a part of that discussion as Medicare and Medicaid.

Reductions in the Past

Pentagon enjoyed 40% increase in real terms since 9/11. In large part fearmongering, unwarranted influence, and PAC peddling. Every experiment to use more technology and contractors 'in country' was over funded!!

Drawdowns since Korea average reductions in 30% range constant dollars.

Constant 2011 dollars from OMB Historical Tables 3-1 and 10-1.

Peaks: FY1953: $591B; FY1968: $595B
Fy 1983: $553B

Years greater than $595B constant dollars: 2009, 2010 and 2011. 2011 is $703B (include Overseas Contingency Ops funds, which are also in Vietnam and Korea numbers)

Post Cold War Low: FY1998/9 $400B.

Post Vietnam Low: FY 1977 $370B

Post Korea Low: FY 1959 $415B

The terrists are so much more bother than the Red Army's 40000 tanks, and Red Navy's 800 submarines.....

first near future.

before 2013 we are have to look for 2012 because a global crises coming from europe i think and obama must think this and then decide what to do.

if they dont care US can down before this plans happend. thanks lot.

Time to Let Europe....

The German seems to be doing fine conquering with the Euro, the US military is not going to be on call to hold their gains.

Europe "defend" (hold it together?) itself.

They can call after they are spending 5% of GDP for things the US taxpayer is covering for them.

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