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Doomsday for the Defense Department

In the words of American University Professor Gordon Adams, the defense community has spent the last year “tearing at their hair, gnashing their teeth and rending their garments,” at the prospect of going off the so-called “fiscal cliff.”

While that might be a bit melodramatic, the point is well taken: Planet Pentagon, the center of a solar system filled with Beltway Bandits, think tanks, and a constellation of defense contractors that orbit a black hole through which billions of our tax dollars disappear each year, has been in quite a state. First came the $487 billion cut to projected growth [1] over the next decade that the administration proposed earlier this year. (Charles Krauthammer called it, “a road map to America’s decline” [2].) Add to that the threat of “sequestration,” [3] which could spell a $55 billion across-the-board cut to the Department of Defense in FY 2013, with an aggregate $500 billion slashed over the next 10 years. That’s close to a trillion dollars in defense-spending reductions over a decade.

This might just happen, if the White House and Congress come to no agreement and decide to go over the “fiscal cliff,” which includes not only sequestration for DoD but another half-trillion or more in automatic cuts from the rest of the federal budget, as well as tax hikes.

But after months of contractors and lawmakers threatening massive job losses, while military brass and their surrogates bandied about words like “catastrophic,” and “decimation” when describing the post-sequestration landscape (Secretary of Defense Leon Panetta once suggested sequestration would “invite aggression” [4] from foreign enemies), it seems as if this side of Washington has finally come to terms with the reality. Whether through sequestration or a negotiated deal, dramatic reductions are inevitable.

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“Wherever you are on defense, everyone is talking about how we deal with a long-term drawdown,” said Adams during a forum on budget issues sponsored by the U.S. Naval Institute in Washington last week. Until the election, the defense hawks on Capitol Hill, bolstered by CEOs and lobbyists representing the contracting industry, had attempted to make defense cuts a political issue. But today’s fiscal crisis is bigger than defense–it’s about the health of the country, said Adams, and the majority of Americans see that. A November poll (.pdf) [5] sponsored by The Economist/YouGov found that 51 percent of those surveyed favored cutting defense to bring down the federal budget deficit, compared to 21 percent who said Medicare should be reduced and 31 percent who said Medicaid deserved a cut.

“All efforts to make defense the issue have failed. They failed because this is not the context, there was no resonance,” he said. “Everything has to be on the table and it has to be on the table because you cannot get to the goal if a little is not taken from everywhere.”

The threatened pre-pink slips [6] from giant defense contractor Lockheed Martin, which insisted it was bound by the WARN Act to notify its employees of potential January layoffs, never came [7]. Lockheed CEO Bob Stevens, who took home $25.8 million in compensation last year, had joined other CEOs in going public with his griping over the summer and gave plenty of fodder to Republicans like Sens. John McCain (R-Ariz.) and Kelly Ayotte (R-NH), who once remarked that sequestration would “undermine national security” and “fundamentally tear our defense industrial base.”

Today Stevens is much more sedate, acknowledging [8]that sequestration will likely happen with only the hope that it might be delayed. Meanwhile, Lockheed is assuring shareholders that its F-35 fighter program, the most expensive in the history of the Pentagon [9], will not be affected by the looming defense cuts. Phew.

“They were running a furious campaign. It was all politics, all show,” Gordon told TAC in a recent interview, noting that these major companies had been anticipating the eventual drawdown for some time – they knew the high times, like the two-front war, wouldn’t last. Layoffs, consolidation, shifting priorities — all have been going on for the last few years. “Then they started this ‘save us from sequestration’ campaign. What’s fascinating is that none of that stuck — it made no difference whatsoever.”

Perhaps they would have been singing a different tune if Republican Mitt Romney, who had pledged to increase defense, had won the White House, but the CEOs are now saying they will accept more (but smaller) reductions if Congress can avoid sequestration altogether. In a recent press conference hosted by a handful of CEOs [10] (Stevens was not one of them), company officials said they are merely looking for a way to avoid a crisis, suggesting that between $25-$150 billion in cuts would be manageable. “We need to stop pretending there’s a scenario out there that offers no defense cuts,” said David Langstaff, president and CEO of TASC Inc. [11], suggesting “orderly” reductions were preferable.

“The defense community has stepped up to $487 billion,” he pointed out. “The heavy lifting still has to be done in other areas” of the federal budget.

The national-security think tanks in Washington, typically a reliable gauge of where the winds are blowing, seem to know better. Several have come out with detailed reports in recent weeks [12] that find upwards of $500 billion or more in doable savings in the military budget over the next decade — a critical admission, seeing that a year ago this community considered half a trillion in additional cuts a disaster not worth contemplating.

The point that the RAND Corporation [13] (which is partially funded by the federal government) makes, for example, is that planning for sequestration is better than sitting around unprepared. In its report, “A Strategy-Based Framework for Accommodating Reductions in the Defense Budget (.pdf) [14],” the authors explain, “the premise is that reductions in budget authority can be accommodated with less risk and uncertainty if they are made with a clear strategic direction in mind.”

That may not be what the industry wants to hear, considering that some of the top players, like Northrop Grumman, Raytheon, and General Dynamics, get between 75 percent to 90 percent of their business from the federal government. According to defense consultant Jim McAleese, who also spoke to the Naval Institute audience, many of these companies are now scrambling to get their DoD contracts signed because any funds budgeted before Jan. 1 won’t be affected by sequestration. Military pay and all VA programs are also exempted.

“Consensus forms slowly in Washington, and it evolves slowly in Washington, but now the consensus is behind what is going to happen,” said Adams, who believes, as he did in 2009 when he began talking about it publicly, that the budget is headed for a normal drawdown that could result in a 30 percent reduction in spending over pre-Iraq War levels. This was the case in every postwar period since World War II. The trillion-dollar cut that might just become a reality would only be about 15 percent (down to 2007 spending levels), Gordon said, but he expects “gravity” will bring the spending down even further, eventually.

“It’s not catastrophic,” said Reagan administration Navy Secretary John Lehman — a Romney adviser with close ties to the ship-building industry — [15] at the recent Naval Institute confab. He declared himself a “cliff diver” who insists the DoD procurement system “is so broken it will take a crisis to fix.” A radical notion for this crowd, but he didn’t get booed off the stage.

Coincidentally on Dec. 5 the Office of Budget and Management (OMB), which sets the parameters for the federal budget, for the first time told the Pentagon to start planning for sequestration to happen. Luckily, the think tanks have done a lot of the Defense Department’s work for it, without — so far — any tearing of hair, gnashing of teeth, and rending of clothing.

Kelley Beaucar Vlahos is a Washington, D.C.-based freelance reporter and TAC contributing editor. Follow her on Twitter [16].

22 Comments (Open | Close)

22 Comments To "Doomsday for the Defense Department"

#1 Comment By Michael On December 13, 2012 @ 8:33 am

There is a lot of $$$ to be cut from the Pentagon budget.

#2 Comment By Mark in LA On December 13, 2012 @ 10:33 am

What they are really afraid of is what happens after the cuts take place and nobody other than those dependent on the Department of Defense for their livelihood notice. That might bring a call for even more cuts or even a full blown reevaluation of our military’s purpose – maybe even a Ron Paul revolution.

#3 Comment By Someone Else On December 13, 2012 @ 11:00 am

> [Cuts would] “fundamentally tear our defense industrial base”

She says that like it’s a bad thing.

#4 Comment By EngineerScotty On December 13, 2012 @ 7:27 pm

The Pentagon is upset by sequestration.

I wonder what the military thinks of all this.

#5 Comment By Kelley Vlahos On December 13, 2012 @ 8:35 pm

Engineer Scotty: Can’t say for sure, but sequestration would definitely turn the cost-cutters’ sights on military retirement and health care costs, the spending for which has gotten way out of control (that’s just not my opinion, the DoD itself has admitted as much). So, the thought that ‘nothing is sacred,’ I think, has everyone in the military — uniform and civilian — a little anxious for how it might go down.

#6 Comment By Escher On December 14, 2012 @ 3:27 am

Cuts to projected spending increases? That is like me going on a diet by increasing my calorie intake by 1000 calories instead of 2000.

#7 Comment By Carl Lowland On December 14, 2012 @ 7:49 am

On the cliff, or, off the cliff, I just don’t want to hear the military presenting their opinions in the media for, “public consumption”, unless the President personally approves it. The entire department of defense works for the President, who in turn works for us. No jumping chain of command direct to the people. No military opinions. Nothing but silence and solid loyalty to the President. We do not have a banana republic with a military ready to take over in order to “save” the country from it’s politicians. No military in the media unless approved by the President, period.

#8 Comment By richard vajs On December 14, 2012 @ 8:03 am

Think of the situation as if the DoD is a dogsled going across the Siberian wilderness chased by wolves – you can expect that the “old and the weak”, i.e. the small contractors, ( the “Mom and Pop Shops”) will be thrown to the wolves long before any Raytheons or Lockheeds are.

#9 Comment By Bob D On December 14, 2012 @ 8:30 am

Hegel is a candidate for Panetta’s dept of defense position. He’s always come across as a rational politician when it came to defense. But then again, so did Panetta before he took that job.

#10 Comment By Greg T. On December 14, 2012 @ 10:06 am

One of the biggest positives of going cliff diving is seeing some actual cuts in all government spending. Not to mention that finally more Americans will have some skin in the game,and maybe understand the true costs of big government.

#11 Comment By J M On December 14, 2012 @ 10:10 am

Much truth here. But this would be more convincing if the author noted that her family, too, is on the Pentagon dole which Mrs Vlahos hates for everyone else.

Might want to mention Mr Vlahos’ DoD employment …

#12 Comment By eugene On December 14, 2012 @ 10:50 am

Independent figures on the military budget, including $$ hidden in some other department, come up with a figure around 1.2 trillion yr. That’s 1200 billion, sooo 50 billion cut amounts to about 4%. Yep, that amount of cut will leave the country utterly defenseless. Just think, we’ll be spending 1 trillion 150 billion instead of 1.2 trillion. I’ll tell ya, I’m not sure I’ll be able to sleep at night as I’ll be shivering in fear. But then if you believe the constant stream of government manipulated figures and the propaganda driven mass media, I guess it is frightening. You scare way, way too easily.

#13 Comment By Derek F On December 14, 2012 @ 11:04 am

Defense cuts can be much larger than the “so-called” sequestration cuts, which are not real cuts at all. The government needs to cut all military spending (i.e. maintaining several hundred bases abroad, military make-work projects, etc) to start. Spending on true defense, consistent with the constitution, would remain.

#14 Comment By Strider55 On December 14, 2012 @ 3:55 pm

@ Bob D: So did Caspar Weinberger, whose budget-cutting prowess earned him the label “Cap the Knife.” Then he became Reagan’s SecDef and instantly transformed into “Cap the Ladle,” who never met a spending program he didn’t like.

@ Kelley: Recall that during the summer a plan was floated to significantly slash military retirement benefits — and unlike all the previous cuts, current personnel were not “grandfathered.”

#15 Comment By Don Bacon On December 15, 2012 @ 9:52 am

Kelley Vlahos covers it– she even made a planet the center of a solar system! That woman can do anything.

On Panetta’s “invite aggression” I wonder which that might be, Canada or Mexico. Canada seems to be a good little puppet (or satellite) –so that leaves Mexico? Its last aggression was when General Francisco Villa raided Columbus, New Mexico in 1916, and I don’t thing Pancho will be back after he ate some bullets in that Dodge sedan.

It didn’t take the CEO’s long to sit down, shut up and eat their porridge. Some adult in the room told them what their sky-is-falling rants would do to stock prices, so they quickly figured out that making plans to deal with it was more in line with their job description than complaining was.

Okay, I still like: “Planet Pentagon, the center of a solar system filled with Beltway Bandits, think tanks, and a constellation of defense contractors that orbit a black hole through which billions of our tax dollars disappear each year,” I admit it.

Kelley, a personal request relating to Lehman’s quote that the DoD procurement system “is so broken it will take a crisis to fix.” It’s true. Please consider taking on Frank Kendall, the Pentagon’s acquisition chief, who said recently: “We’re going to work our way through this,” Kendall told an investor conference hosted by Credit Suisse. “There’s a lot of money still to be made.” –Chicago Tribune, Nov 28

The man is totally incompetent (hey, he reports to Panetta) and won’t do anything about the F-35, among other fiascos.

#16 Comment By Richard Kane On December 16, 2012 @ 3:42 am

This article deserves a call for action,

This is my local action oriented response in Philadelphia

Finally a bipartisan effort to reduce Defense Spending

[17]

I hope we all contact Chuka Fatah, Bob Brady and Senator Casey to participate. With Senator Toomey all we can do is urge him not to betray fellow conservatives who differ with him over Defense Spending,
[18]

[19]
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#17 Comment By Alberet On December 17, 2012 @ 6:28 am

The Pentagon is more of a threat to America then any barefoot “terrorists”.
Congress in league with the Military Industrial Complex has LOOTED the Treasury of TRILLIONS
9/10/2001: Rumsfeld says $2.3 TRILLION Missing from Pentagon,
01/30/2012 The Pentagon doesn’t know what happened to more than $100 million in cash held at Saddam Hussein’s palace in Baghdad .

#18 Comment By Bruce Klemash On December 17, 2012 @ 12:23 pm

Start by shuttering about 1/3 of overseas bases and all the 250+ golf courses. Then start cutting the number of admirals and generals with their outrageous staffs.

#19 Comment By Major Martin On December 17, 2012 @ 8:55 pm

The Pentagon could probably save several million just by reducing the number of silly, useless medals pinned to the breasts of armchair officers.

Pat Oliphant, where are you when we need you?

#20 Comment By Veteran On December 17, 2012 @ 9:10 pm

Bruce K. is right. Only in a bizarre world where, because the wars are undeclared, defense contractors can take home $25 million a year- in WWI, WWII and even Korea, this was unheard of, the entire nation is impoverished by lapel-pin patriots who claim that no price is too high for “defense”

#21 Comment By Steven InDallas On December 18, 2012 @ 3:32 pm

If our military industry has to outspend the next 5 largest defense budgets COMBINED in order to keep us safe, then they aren’t very good at their jobs, are they?

We should be able to pick the second highest budget, add 10% to that and still stay dominant. If we don’t have the guys that can make that happen, then get rid of them and find the guys who can.

(A large part of the problem is that so much of our defense budget is going to enrich the CEO’s of military industry.)

Steven in Dallas

#22 Comment By Rocketman On December 19, 2012 @ 7:13 pm

The REAL problem isn’t being addressed. Unless the president and congress decide that America is no longer the world’s policeman and cut back significantly on our foreign misadventures it won’t matter how much or how little money is spent by the DOD because it simply won’t be enough. Right now America’s fighting men are tired from multiple deployments and our equipment is worn out. This is the perfect time to let countries like Germany and Japan know that they are going to have to start paying for their own defense and then use that money to begin rebuild our equipment to be able to get America back to where we can defend ourselves which is something that we currently can’t.