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  • Debt Ceiling Defense Cuts Will Happen

    There is considerable misunderstanding about what the new debt ceiling law does to the area of defense. Many people are describing the required defense cuts in terms of dollar-figure reductions. A recent article appearing in The Cable, for example, referred to a $350 billion reduction for defense.

    These descriptions are abstract at best, because the law itself does not give a baseline dollar amount from which cuts would be made. Instead, it gives two scenarios for cuts to take place: spending caps or automatic spending cuts.

    Spending caps. The debt ceiling law establishes dollar-figure caps on spending. These figures are applied to broad categories of spending: security, non-security and discretionary. Defense falls under the security and discretionary categories but constitutes only a portion of both. The caps are assigned to individual fiscal years, covering fiscal year 2012 through fiscal year 2021. While an analyst may assert that the assigned numbers imply a relative reduction in defense spending, this means the analyst is making assumptions, including choosing a baseline from which to cut. Another way an analyst could make a guess is simply to assign proportions of the broader security and discretionary spending categories to defense. Doing either of these things is still just a guess at the final amount of defense cuts.

    Automatic cuts. The law establishes a goal of reducing federal deficits by $1.5 trillion, while requiring automatic spending reductions of $1.2 trillion if the goal is not met. In the latter case, half of the automatic spending reductions would have to come out of the defense account. Again, the numbers for deficit reduction and automatic spending cuts are not linked to a baseline amount for comparison, so it is impossible to know exactly how much will be cut.

    Thus, one should immediately dismiss assertions that any analyst knows the specific dollar figure. Rather, defense will be funded at a level consistent with the dollar figure of the cap in any applicable fiscal year. However, it would also be wrong to assert that the law lacks specificity. The specifics are found in the dollar figures assigned to the caps in the first instance and deficit and spending constraints in the second instance (automatic cuts).

    Unfortunately, the desire to explain the implications for defense dollar reductions can lead to other misleading descriptions. The article in The Cable asserts that “there are no actual defense cuts” required by the law. This is implausible.

    For example, no serious analyst would conclude that under a security spending cap of $684 billion in fiscal year 2012, not a single dollar would come from the defense portion of that category. This is because defense makes up roughly 75 percent of “security” spending, as that term is defined by the law. In the event that the $1.5 trillion deficit-reduction target is not reached, the automatic spending cuts would kick in, and $600 billion would have to be cut from whatever figure applies to the defense account at that time. It is beyond implausible to say that the debt ceiling law will not impose a large-scale reduction in the defense account under the automatic cut.

    The argument that the law does not represent policy is equally misleading. The fact is that the automatic spending reduction for defense is required by the law if things stand as they are now. This makes it the policy of the United States, and it is backed by the force of law.

    There should be no doubt in the minds of anyone in Congress or the public at large that the policy established by the debt ceiling law will strip the military of its ability to secure the vital interests of the United States. The law, unless it is altered or repealed, will do irreparable harm to the United States military.

    Posted in Security [slideshow_deploy]

    5 Responses to Debt Ceiling Defense Cuts Will Happen

    1. RogCol says:

      Yes, the DOD will lose some funding as it should. The problem is where will it cut? Years ago, it was said that to be financilly sound AT&T needed to cut 50% of their staff, and it had better be the right 50%. They did cut and it was not the right 50% and they never recovered to their once powerful place in the Telecomm Industry.

      • Guest says:

        DOD should lose funding as it should? They never start cuts with personnel first. The first cuts ALWAYS come from either retiree or dependent programs. I and my husband were both promised healthcare for life when we enlisted. That contract was broken unilaterally, and it was healthcare for life if you retire. Then the bar was moved again, and now retirees pay for their own health insurance. What's next? Premiums we can't afford? Then what? we are too young for Medicare or SS.

        Be careful what you wish for. It is real people that get hurt.

    2. Dick says:

      Any chance of cutting some worthless organizations like EPA, Energy, etc.

    3. art says:

      The EPA is worthless? Seriously? Not saying they don't impose a cost, but to the extent that they effectively regulate externalities, they're simply transferring costs that certain actors in the private sector impose on others involuntarily. That's basic economics (and common law), not ideology. And there's plenty of biological science to back up the externality claims. If you disagree, I have a PCB plantation at the bottom of the Hudson River I'd be glad to sell you.

    4. Guest2 says:

      Defense can be easily cut. We have too many foreign bases and too many troops stationed abroad. The Iraq war was a complete waste. Our actions in Iraq and Afghanistan are unlikely to secure any long term benefit to our country and may have sewn seeds for the opposite. In the short term, maybe we killed someone who would have completed another 9/11-like mission, but we'll never know for sure. As for concerns that military retirees will face cuts, the country has a solemn obligation to combat injured veterans. In my view, all federal pensions (including military and congressional) should be completely phased out and replaced with Social Security and 401(k) accounts – the same as what's available to the average Joe in the private sector. Defined benefit plans always lead to unfunded liabilities and hence the shifting of tax burdens to the next generation who had no say in taking on the original obligation. Keep it simple and fair: Each person should be expected to fund their own retirement. If they fall short, there's welfare and private charities.

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