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Defense Cuts Are Likely, But Their Impact Remains Hard To Predict

Defense Cuts

First Posted: 08/02/11 01:17 PM ET Updated: 10/02/11 06:12 AM ET

The debt deal reached by the White House and congressional Republicans this Sunday includes $350 billion in security cuts over the next 10 years, with as much as $600 billion in additional defense spending cuts if the proposed congressional committee can't enact $1.2 trillion in savings.

But it remains unclear which specific areas of U.S. defense spending would be affected by the new cuts, and the actual language of the House bill contains little specificity. Winslow Wheeler, a project director at the Center for Defense Information, said the $350 billion figure doesn't refer to Department of Defense spending, but instead to the larger umbrella category of security spending.

The cuts could affect a number of other agencies besides Defense, Wheeler wrote in an email, including the Department of Homeland Security, the Department of Veterans Affairs and the Department of Energy.

“Defense is going to get cut. I just don’t know how big it’s going to be,” said Chris Hellman, a senior research analyst at the National Priorities Project.

“The defense wonks that I hang out with online spent a good portion of yesterday trying to figure out exactly what it was we were looking at,” Hellman said on Tuesday. “And I don’t think we’ve come to a consensus.”

The U.S. defense budget, which accounts for about a fifth of all federal spending, has risen 80 percent since 2001 and 33 percent since 2006. A fact sheet provided by the White House on Sunday's deal called the proposed cuts “the first defense cut since the 1990s.”

Even though the defense budget hasn’t been reduced in decades, cuts in some form had been floated for much of the debt-ceiling negotiations. Earlier this year, President Barack Obama had proposed cuts of $400 billion at the Pentagon, and it was reported at one point that his administration might be looking to cut as much as $700 billion in national security-related spending.

During the weeks of negotiations that culminated in Sunday’s deal, defense cuts emerged as an especially contentious point for conservatives. Former Defense Secretary Donald Rumsfeld wrote in the Wall Street Journal that it would be "a grievous mistake” to cut the proposed $400 billion. Rep. Buck McKeon, who chairs the House Armed Services Committee, accused Obama of “irresponsible leadership,” saying that cutting $400 billion from defense spending “would wholly gut the military and callously endanger the American homeland.”

As of Tuesday, Republican presidential candidates Mitt Romney and Newt Gingrich are among the prominent conservatives who have criticized the defense cuts in the tentative deal struck over the weekend.

‘UNCERTAIN AND INDISTINCT’

“We’re headed for a defense build-down,” said Gordon Adams, professor of U.S. foreign policy at American University’s School of International Service.

“We did a build-down after the Second World War, we did one after Korea, we did one after Vietnam, we did one after the end of the Cold War," Adams told The Huffington Post. "And guess what? We’re coming out of Iraq and Afghanistan. We’re going to do another one now.”

The proposed cuts would be felt in a number of industries. The manufacturing, service, IT, communications and electronics industries would be among those affected. But Adams said the economic impact is not likely to be dramatic.

“The defense budget overall is about 4.5 percent of the gross domestic product,” said Adams. “That’s the whole defense budget. If you extract from it the roughly 30 percent that we spend buying stuff, now you’re at 1.5 percent of the gross domestic product. That’s buying the equipment and the electronics and the IT and the communications.”

That 1.5 percent in consumption will never fall to zero, said Adams, “because you have to buy some stuff.”

But that doesn't mean the cuts couldn't have an effect. Northrop Grumman and Lockheed Martin, two of the world’s largest defense contractors, both saw their profits decline in the second quarter of 2011. Northrop CEO Wesley Bush has reportedly cited the budget debate in Washington as one factor depressing his company’s sales.

Though conservatives have warned that defense cuts would leave the United States vulnerable, Adams was less concerned about the impact on national security.

“It doesn’t mean the end of Western civilization as we know it,” he said.

Assuming defense gets $350 billion in cuts, plus the additional $500 to $600 billion in so-called sequestered defense cuts that would be triggered if Congress is deadlocked on how to find another $1.2 trillion in savings by the end of year, those cuts combined would still only represent about 13 percent of the projected defense budget for the next 10 years, Adams said.

By comparison, he said, there was a 36 percent decrease in defense spending between 1985 and 1998. And “we ended up in 1998 with the force that used Saddam Hussein as a speed bump,” Adams said.

As of now, it remains to be seen what kind of cuts defense will receive. Wheeler told The Huffington Post that even if Congress fails to put together its own package of cuts by Thanksgiving, and the additional $500 billion in sequestered defense cuts are triggered, the Department of Defense is likely escape the worst of it.

“The debt deal kicks the defense budget can down the road for this and future Congresses,” Wheeler wrote. “People should not read precision and certainty into a political deal specifically designed to be uncertain and indistinct.”

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