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As Defense Industry Lobbies Against Cuts, Rhetoric Overshoots Reality


First Posted: 08/18/11 09:44 AM ET Updated: 10/18/11 06:12 AM ET

Facing the possibility of actual defense spending cuts for the first time since the end of the Cold War, the nation's biggest defense contractors have put aside their traditional hyper-competitiveness and joined forces in a messaging and advocacy blitz under the slogan "Second to None."

The campaign's website, secondtonone.org, warns that "American leadership in aerospace and defense is being threatened by forces in Congress and the administration."

Budget cuts proposed by "extreme voices", it says, would "devastate our military, weaken our economy, and force us to cede global leadership in a time of increasing threats."

But even the most drastic defense budget cuts being considered wouldn't come anywhere close to dislodging America from its top spot in global defense spending.

If the so-called Super Congress fails to find a more palatable way to reduce the deficit by $1.5 trillion over 10 years, the spending cuts the White House and Congressional leaders agreed upon to reduce the deficit would cut projected non-war-related defense spending about 14 percent during the next decade, according to a report from the Center for Strategic and Budgetary Assessments.

By contrast, China, the nearest competitor when it comes to defense budgets, currently spends about one sixth as much as the U.S. In fact, the U.S. spends more on defense than the next 17 top-spending countries combined, according to figures compiled by the Stockholm International Peace Research Institute.

Graphic by Jake Bialer. Source: Stockholm International Peace Research Institute (SIPRI).

Defense Secretary Leon Panetta earlier this month described the so-called trigger as a "doomsday mechanism" that "would do real damage to our security, our troops and their families, and our military's ability to protect the nation."

Even with the cuts, the Pentagon's base budget would be at the same level it was in 2007, not counting war money, said Winslow Wheeler, an expert on military reform at the Center for Defense Information. In constant dollars, 2007 spending was a 16-year high, well above the Cold War spending average. Much of the $500 billion cut from the baseline defense budget would actually be cuts in projected future growth, not in real dollars. Base spending in 2013 would be $478 billion, about $50 billion -- or about 9 percent -- less than in 2012, and would slowly increase from that point on.

"The rhetoric and hysteria about these levels, compared to what they are, is really quite stunning," Wheeler said. "In terms of dollar amounts, even the 'doomsday mechanism' -- in Panetta's words -- would leave DOD flush with cash."

The "Second to None" campaign is being led by the Aerospace Industries Association, a trade group that normally stands idly by while its members fight over such things as who gets to build fighter-jet engines.

When AIA Vice President Fred Downey spoke to The Huffington Post about the dangers of second place, it was primarily in the context of the threat foreign competitors pose to the U.S. aerospace industry. But he didn't back away from the broader warnings on his website about the country losing its overall defense dominance. "It could be both," he said.

And Michael Herson, president of American Defense International, a lobby shop that represents several major defense contractors, insisted in an interview that the danger of being second in defense is real.

"Today or tomorrow, no, but the day after, maybe," Herson said. "It's just something that we need to be aware of and mindful of. And Americans need to think about whether they want to be number one, whether they want to be second best?"

The trigger "would be devastating," he said. "At that point, you're going to have to say, 'Okay, in addition to canceling major weapons systems, what are we willing not to do anymore?' " And that, he said, would mean "we're going to give up capability -- and those gaps are going to be filled by other countries, most likely China."

Significant budget cuts would undoubtedly require the Pentagon to dramatically reassess how it currently spends its money. But some critics say that wouldn't be a bad thing.

The Pentagon has embarked on an unsustainable path of increased spending, with less and less to show for it, Wheeler said. And the primary culprit is new, expensive hardware.

"It's not just that new hardware is more expensive, it's that the new hardware is so expensive that we cannot afford to replace the inventory," he said. "When you replace 600 $60 million dollar F-15s with 188 $400 million per-copy F-22s, you both shrink the force and you add to its costs," he said.

The Pentagon has also dramatically increased its personnel costs -- "not just on combat pay and enlistment and retention bonuses," Wheeler said, but "on all sorts of political constituencies that were knocking on doors on Capitol Hill."

"What we've been talking about here is a money party," he said.

"Costs are always growing faster than budgets, and that creates a perpetual crisis," said Chuck Spinney, a former military analyst for the Pentagon who criticized the budget process even when he was there. "And a budget crisis is good for business," he said. "It creates extortionary pressure."

But Spinney said legislators should resist any such pressure. For decades now, he pointed out, the Pentagon has been unable to audit its books and fully account for how it spends its money. Without that kind of information, Spinney said, "for Panetta to say this is going to cause a crisis is horse shit."

Although the defense industry -- and the defense secretary -- are trying to make trigger-sized cuts unthinkable, they would be very much in keeping with recent deficit-reduction recommendations. The co-chairs of Obama's fiscal commission proposed $100 billion in annual defense cuts; the Bipartisan Policy Center's deficit commission called for $1 trillion in savings through a five-year freeze on defense spending; and a bipartisan group of iconoclasts in Congress led by Rep. Barney Frank (D-Mass.) suggested nearly $1 trillion in defense cuts over 10 years.

The past decade has been a particularly lucrative one for U.S.-based defense contractors. Profits have shot up from $6.7 billion in 2001 to $24.8 billion in 2010. Stock prices of defense companies in the S&P 500 index have risen 67 percent, compared to 8 percent for the index as a whole.

The Opensecrets.org website calculates the industry had already spent $33 million in lobbying in the first six months of 2011, well on its way to surpassing last year's all-time high of $64 million. The 12 members of the Super Congress have received at least $700,000 in campaign contributions from defense companies in the last five years.

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