Congressional Quarterly is reporting that Senate Democrats have found their target number for defense cuts as part of their defecit reduction plan to counter House Budget Chairman Paul D. Ryan, R-Wis. Senate Budget Chairman Kent Conrad, D-N.D., has yet to present a fiscal 2012 blueprint to his committee, but we are learning early details regarding what the expected defense budget cut might be.

Conrad’s deficit-fighting plan is expected to be included in a fiscal 2012 budget resolution that he hopes to release for a markup May 18.

His latest draft calls for cuts of $900 billion from defense and $300 billion from non-security discretionary spending over 10 years.

Bryan Callon of Captial Alpha Partners, LLC who does intelligence analysis of the Defense budget for investors (and whose services are fantastic), offered some context.

Playing with numbers suggests that a $900 billion cut to defense could be achieved by simply holding spending flat – in current dollars – from a 2013 level of $560 billion.

Effectively, in the $900 billion plan that will reportedly be proposed by Senator Konrad, the DoD budget would get cut roughly $125 billion from FY2013 – FY2016 proposed numbers in the Presidents FY2012 outyear budget plan, but as spending levels returned to real growth of around 3% annually, the DoD budget would take a cut of around $775 billion from FY2017 – FY2021.

Assuming a flatline at $560B for FY13 numbers, the current DoD Proposed Outyear Topline from FY12 – FY16 after all existing cuts and based on proposed defense spending that flatlines in FY15 and FY16 might look as follows, with the net cut number on the right:

FY12 – ~$553B
FY14 – $571B (-$11B)
FY14 – $586B (-$26B)
FY15 – $598B (-$38B)
FY16 – $611B (-$51B)

$775 billion in the out years might look similar (but very imperfectly, it won’t add up perfectly because of estimates I used) like this:

FY17 ~(-$70B)
FY18 ~(-140B)
FY19 ~(-161B)
FY20 ~(-183B)
FY21 ~(-205B)

The big difference in the out years is because real growth is expected to return to the DoD budget in FY17 under existing plans. Whether the budget cut is $400 billion or $900 billion, that is now exceeding unlikely.

That is an example of what $560 billion at FY2013 level over 10 years would mean based on the current Presidents budget and Senator Konrad’s proposal.

Thinking about defense cuts another way, the $400 billion defense cut over 10 years by the President is the floor and the $900 billion cut over 10 years proposal by the Senate Democrats is the ceiling. As for the House Republicans, their plans for government spending cuts largely avoid defense cuts as a topic, with most press releases related to FY12 budget this session focused on current events like the cancellation of the EFV, the death of Osama Bin Laden, and social issues in the military like DADT and DOMA.

I find the lack of engagement by House Republicans very disappointing, because the President’s proposal for a “Roles and Missions” debate that coincided with the $400 billion defense budget target appeared to open the door for House Republicans to steer the DoD budget debate towards a strategic conversation in the DoD. Instead, National Defense Strategy is being driven by a budget cut debate focused only on top line money figures.




Posted by galrahn in Uncategorized


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  • Derrick

    Won’t a good proportion of those proposed cuts come from reducing the number of troops in Iraq and Afghanistan?

  • RickWilmes

    “I find the lack of engagement by House Republicans very disappointing, because the President’s proposal for a “Roles and Missions” debate that coincided with the $400 billion defense budget target appeared to open the door for House Republicans to steer the DoD budget debate towards a strategic conversation in the DoD.”

    Perhaps the House Republicans actually understand what an actual cut versus a decrease in spending means tied to a “previous baseline growth rate.”  For further elaboration see the following.

    “When financially hard-pressed Americans and firms work diligently to cut spending so as to bolster their solvency, they know the word “cut” had better mean “decrease” — and certainly not its opposite (“increase”) – or they’ll fail to be fiscally prudent. But that’s not the way of it in Washington, where public officials and the breathless media shills claim incessantly that there’ll be a “cut” in spending, when in fact what they mean is: an increase, but at a slightly lesser rate than initially intended (under some previous “baseline” growth rate).”

    http://blogs.forbes.com/richardsalsman/2011/04/17/phantom-federal-budget-cuts/

  • Galrahn

    Rick,

    No matter how you phrase it, both the President and Senate plans would reduce spending in the budget. Isn’t that the intent?

  • RickWilmes

    A reduction in planned spending is not a cut.  Basically, what the President and Senate are debating is at what rate government spending should be increased not a decrease in the current levels of spending. 

    Consider the following from the article you cited.

    “Responding to Sanders’ complaints that the earlier proposal was too easy on the wealthy, Conrad tilted his latest plan to include more tax increases and fewer spending cuts, according to a Senate aide who has seen details of the plan.

    The blueprint — which Conrad presented to Democratic colleagues May 10 — would call for raising taxes by about $2 trillion over a decade while cutting spending about $1.5 trillion, according to the aide.”

    As the article I cited this is a sleight of hand and does not get to the fundamental issue causing our budget woes. See the following from the article I referenced in my previous comment.

    “In watching this sleight-of-hand, imagine you’re Alice in Wonderland, hearing Humpty Dumpty: “When I use a word, it means just what I choose it to mean, neither more nor less.” If, like Alice, you ask how a word can mean “so many different things,” you’ll hear this: “The question is – Which is to be master? That’s all.”

    Indeed, the crucial political question of our day is “which is to be master,” and we, who deserve to be free citizens in a constitutionally-limited Republic, face masters in government, not only when officials presume it is valid to take and squander our wealth, but also to mislead us about their ways and means of doing so.”

  • RickWilmes

    As the U.S. determines if the Pakistani government had a role in hiding Osama bin Laden, the proposed budget cut to “Terminate U.S. Contributions to the Asian Development Fund,” may be of interest. Pakistan borrows $1.5 billion annually from the fund. The proposal would reduce US spending by $356 million.

    http://majorityleader.gov/youcut/

  • Derrick

    Well…at least the President is willing to begin the “Roles and Missions” discussion. With a reduced budget, the US will just have to reduce its military’s role and cut down on the number of missions too.

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