'Complicated' And 'Ugly'

The impact of the resolution of the federal debt ceiling on the defense budget will likely be both "complicated" and "ugly," American Enterprise Institute analysts Gary Schmitt and Thomas Donnelly write in a post today on the AEI website:

What we know pretty well: For the upcoming 2012 fiscal year and the annual congressional appropriations bills, we know that $684 billion has been allocated for "security" agencies. These include the military, Homeland Security, Veterans, nuclear security, the intelligence community, and the 150 or so foreign aid budget accounts. That represents a $44 billion reduction from the Obama administration's original budget requests, which totaled $728 billion.

While under the budget deal Congress still can apportion the $44 billion of cuts as it sees fit, it's unlikely that House speaker John Boehner's rhetorical promises to protect the military at the expense of other "security" accounts can be fulfilled. The politics of that would be messy, at best, and very few of these other accounts offer up the kind of "big ticket" cut possibilities that defense does and are required to hit the $44 billion mark.

More likely, the cuts will be more or less proportionate to existing budget ratios within the security account, meaning the administration's original request of $553 billion for the military (also affirmed in the House budget resolution crafted by Rep. Paul Ryan) will probably be dunned for about 76 percent of the total cut--about $34 billion. Thus the 2012 defense topline will come in around $520 billion, give or take a billion or so that might be pulled from foreign aid or the intelligence community.

That's lower than the numbers being used by both the White House and defense committee members in the House - they're talking about defense spending of $530 billion - and much lower than the more optimistic talk coming out of the speaker's corner or the I-know-nothing stuff coming out of the Senate. And while it's true, strictly speaking, that we will have to wait until the appropriations process is complete, months from now, the logic of what is going to happen is clear: the defense budget is going to get schwacked.

It represents a $10 billion cut (more in inflation-adjusted, purchasing-power dollars) from the 2011 budget of $530 billion. That's the one the former Defense Secretary Robert Gates complained about so vociferously, forecasting a "crisis" if he wasn't given $540 billion.

What we know less well: Things get less certain in 2013 and beyond. The debt ceiling deal holds "security" spending for 2013 to $686 billion. Back in February when it rolled out the 2012 defense budget, the Obama administration forecast that military spending for 2013 would be $571 billion. It's a more than reasonable assumption that the military will be forced to swallow another couple of spoonfuls of cuts to keep within that topline for the same reasons noted above. Hence, $50 billion might be a good guess, based upon the budget arithmetic and likely appropriation politics.

What we should fear: The so-called "second tranche" of deficit reduction, in the hands of a soon-to-be-named "supercommittee" of lawmakers backed by the threat of an automatic sequestration "trigger" should it fail to agree on sufficient further cuts, would almost certainly push the military past what incoming chairman of the Joint Chiefs Gen. Martin Dempsey described as a "very high risk" threshold of cuts. The deficit reduction law seeks another $1.2 to $1.5 trillion in cuts and, if the supercommittee fails to meet the target, mandates additional reductions (split between domestic and security accounts).

Who winds up being on the supercommittee "matters a lot," Schmitt and Donnelly write, adding: "But even more important may be the larger political debate." Specifically:

If Republicans aren't more committed to their professed strong America and Reaganite principles this second step in deficit reduction could be the one that takes the U.S military over the cliff, toward Dempsey's "very high risk" future.