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As last week ended in Washington, there were glimmers of hope that the Pentagon might avoid sequestration.
Last year’s Budget Control Act would impose $500 billion in cuts over the coming decade if lawmakers fail to reach a deal to reduce federal deficits by $1 trillion over the same period. The Pentagon, which has already cut nearly $500 billion from its 10-year plan, can ill afford another cut of that size — especially one that hacks indiscriminately across the board.
With Republicans adamantly opposed to any revenue increase, and Democrats refusing deep entitlement cuts without raising revenues, the two sides have been deadlocked.
But Pentagon warnings about the threat of a hollow force, and military contractors raising the specter of tens of thousands of layoffs, are raising the temperature on politicians in the midst of a dogged election year.
Republican Sen. Lindsey Graham of South Carolina opened the first crack in the Republican anti-tax edifice last week, saying his party has no choice but to back away from its anti-tax pledge if it has any hope of avoiding automatic defense cuts and cutting the nation’s debt.
That same day, Sen. Carl Levin, the Michigan Democrat who chairs the Senate Armed Services Committee (on which Graham also serves), suggested a larger deficit-reduction package that includes taxes and entitlement cuts could be had, with the Pentagon contributing $100 billion from its budget over the coming decade.
On the campaign front, the Obama administration maintains that defense spending will flatten over the coming decade, but still remain robust enough to modernize today’s war-weary military.
Presidential candidate Mitt Romney, meanwhile, promises to reverse last year’s defense spending cuts and more: He would peg military spending to 4 percent of gross domestic product, add 100,000 troops to the Army, increase Navy shipbuilding from nine to 15 per year and comprehensively upgrade the Air Force.
Supporters argue the American people will support deep cuts elsewhere, or even additional borrowing, to pay for defense. Following their model, annual defense spending under the Romney plan could top $900 billion by 2021.
But even Romney campaign insiders admit their candidate’s pledge is more of a goal to be worked toward than something to be implemented on day one. In the end, they acknowledge the math is tricky: To raise defense while paying for trillions of dollars in promised tax cuts means targeting popular entitlement programs, including Medicare and Social Security.
Tackling the nation’s $15 trillion debt will ultimately be the top priority for either administration. However, with America out of Iraq and drawing down in Afghanistan, it will be hard to hold the line on defense cuts, let alone invest billions more. Indeed, poll after poll has shown bipartisan public support for deeper defense cuts.
What does it all mean? History points the way forward: Defense spending is cyclical, and in the past four cycles, adjusting for inflation, it peaked at just over $500 billion and bottomed out at around $360 billion.
Given the Obama administration is seeking $535 billion in 2013 — well above the peak, let alone the bottom — DoD spending is headed for a continued decline in the years to come. Pentagon and industry leaders would be wise, therefore, to plan for a future with less money, not more.
