Advancing a Free Society

The Budgetary Outlook for Defense

Thursday, April 7, 2011

House Budget Chair Paul Ryan released the Republican budget proposal this week.  It is a profoundly serious document, one that ought to shame President Obama.  Not only did the President’s budget not attempt to address either the accumulated debt or the annual deficit, the President has tried to spin this profligacy as somehow “winning the future.”

As Keith Hennessey so nicely illustrates, Congressman Ryan’s budget plan would eliminate deficit spending by 2040; the President’s budget never does.  President Obama’s budget extends spending of money we do not have past the point at which the Congressional Budget Office models crash and can no longer assess the economic consequences.

Congressman Ryan’s budget achieves this salutory effect without cutting defense spending beyond the cuts already included in President Obama’s budget.  He adopts the President’s budget figures for both baseline and contingency spending out five years (the length DOD projects them in the Future Years Defense Program).  The Ryan budget acknowledges that defense spending is not at historically high levels as a percentage of GDP, nor is it increasing at rates that produce the dismal long-term budget outlook the Republican plan is designed to redress.

Cuts in defense spending are nonetheless occurring and likely to continue, even if the Ryan proposals are adopted, for three reasons.  First, operating on the basis of continuing resolutions these past six months have already increased the cost to DOD of doing its work.  The Pentagon doesn’t have the authority to sign contracts beyond the term of funding, making almost everything they do more costly, from equipment purchases to feeding deployed forces.  By making costs increase without increasing funding, Congress has imposed a hidden cut in dollars available for defense.

Second, the President’s budget includes unrealistically low figures for contingency operations.  Contingencies are the budget language for wars, and the President’s budget anticipates cost savings from closing out military operations in Iraq in 2011 and drawing down in Afghanistan that are not likely to materialize.  So unless Congress actually increases defense spending, DOD will have to internalize those additional costs.

Third, cutting defense at least nominally will likely be part of any long-term budget deal that imposes strict reductions in other spending programs.  While the language of “shared sacrifice” will be resented by military families that have been shouldering our wars with very little shared sacrifice from the rest of our society, expect Democrats to insist on some cuts to defense as necessary alterations are made to so-called entitlement programs that drive our indebtedness.

(photo credit: sayednairb)