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:
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.
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