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Budgetary Legacy - Defense Into the Future

The residual impact of decisions made is often overlooked by the uninitiated. That goes for diplomatic and foreign policy decisions that are inherited by subsequent Administrations as well as budgetary decisions. And much like the case of former President Clinton being blamed now three Administrations later for cutbacks in the defense and national security, the new Administration is embarking on an attempt to achieve zero growth in the budget for the Department of Defense that could result in stagnation in our nation's warfighting and intelligence capabilities.

While not "slashing" defense spending, the Administration is adopting a zero real growth policy when it comes to the base budget of the DoD. Over the next five years, the current plan is to allow for 2% growth. But when inflation is expected to average 1.5% in the same period, that yields effectively no growth.

The Administration's outlook is to increase diplomatic and aid programs while reigning in defense spending. Yet as expressed in Michael O'Hanlon's piece in the Washington Post, "Obama's Defense Budget Gap", downsizing the size of the DoD "force structure" is not an option. At the same time, the cost of maintaining the armed forces, even at static levels, continues to rise with the inflation rate. As noted by O'Hanlon, these contemplated cuts are not immediate. They are reductions in future plans. Even then, if plans like the Strike Fighter or Osprey are executed, replacement and/or refurbishment of aging equipment still remain an expense. Other cost elements also are viable, but still cannot totally freeze costs.

Stagnating the budgets of the Defense Department is difficult at best to accomplish without seriously limiting the future capabilities of our military.

Congressional Budget Office has estimated that real defense spending would have to be about 10 percent greater than today over roughly the next decade to afford what is on the Pentagon's books. The CBO has not recalculated in light of Gates' plans, but a rough estimate suggests the need for 7 to 8 percent higher spending for an average year in the future. That is another way of saying that we need roughly 2 percent real growth per year, while Obama offers zero. By 2014, this amounts to a difference of about $50 billion in the annual budget, and a cumulative five-year discrepancy of about $150 billion. Once increased, defense spending would still decline as a fraction of gross domestic product, but not as much as is currently forecast. The plan will have to change. The question is whether we do it now or do it later.

Admirable social programs and financial bailouts all lead to a pressure to balance the budget in other ways. The mostly likely targets for those cost savings lie in the larger pots of money in places like the Defense Department. In addition to the important observations and comments raised by O'Hanlon's piece in the Washington Post, however, there are the questions of the unpredictable nature of the future landscape of the War on Terror, or simply, on the landscape of global instability. It is a difficult balance to strike - an economic crisis today versus an unpredictable future conflict requiring capabilities perhaps still in development. Clearly, today's budget cuts impact on the future. We've already seen the impact of reductions made more than a decade ago. But it could be argued that the future is more dangerous than the past.

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