A sequestration solution for the Pentagon

By Benjamin Friedman
February 28, 2013

The sequestration drama in Washington is less severe and intractable than you have heard. A partial solution: Block the across-the-board cut of $42.5 billion in military funds this year — the Pentagon’s portion of $85 billion due March 1 — and spread the savings over several years by tweaking military spending caps already on the books.

Because this option preserves deficit reduction without raising taxes and lets the military drawdown intelligently, a congressional majority might support it.

Pentagon leaders are sounding the alarm — warning about the impending sequester and the additional $500 billion reduction in spending over a decade. Furloughed civilian employees, extended deployments, reduced naval patrols and procurement delays, they say, will leave the military unable to perform its job and deter U.S. enemies.

President Barack Obama and congressional leaders nod gravely — then blame the other party. Democrats suggest replacing sequestration with new taxes and spending cuts, some to the military. Most Republicans talk about replacing sequestration only with spending cuts and prefer reducing the federal workforce, entitlement spending or other domestic programs’ budgets.

This politicking obscures much — including common ground. First, the Friday deadline is soft. Legislation can reverse sequestration after it hits. The Pentagon can use other funds to delay the reckoning until later this year. Congressional leaders know this, which is why their negotiations don’t match the urgency of their rhetoric. Talks should pick up before March 27, though, when the temporary measure funding the government is due to expire.

Second, our leaders avoid explaining that there are two kinds of sequester. Only one slashes arbitrarily. The other enforces spending caps, which cut while encouraging prioritization. Pentagon leaders hoping to dodge any cuts conflate the two, seeking to confront Congress with an all-or-nothing conundrum.

The 2011 Budget Control Act said that if Congress failed that year to schedule $1.2 trillion in deficit reduction over a decade (compared to the projected baseline), the Treasury would take (sequester) a year’s worth of those savings at the start of 2013 — half from the Pentagon. The New Year’s tax deal shrank and delayed that cut — hence the $85 billion due Friday.

This sequester is designed to induce a deal via anticipated pain. It cuts more than 8 percent of the Pentagon’s non-war budget. Because it applies equally to every “program, activity and account” (except military personnel), it prevents managerial choice.

The other sequestration enforces the budget act’s 10-year budget caps on the military and other discretionary spending, which save the rest of that $1.2 trillion. The Pentagon can manage funds normally beneath the cap. If budgets exceed the cap, sequestration cuts enforce it.

The impending sequester can be less swift and broad than our leaders assert. Funds authorized in one year are spent over several — so the total cuts take years. Transfer and reprogramming authority can allow managers to move funds. The uncapped war budget remains a safe haven for programs little related to war.

The Pentagon’s predictions are mostly nightmares, meant to frighten. The 2013 sequester would leave military spending at roughly 2006 levels, adjusting for inflation. Over a decade the caps, combined with the war’s end, would leave spending near Cold War highs. The U.S. military will remain far superior to all others.

Still, we should not let the cries about fake wolves blind us to real ones. This year’s sequestration should be avoided. It will likely lead to furloughs, complicate procurement and harm readiness. Drawdowns should not be achieved by a demoralizing slash.

There is a better way: Lower the caps incrementally for several years to make up the $42.5 billion in savings. Make the reductions less avoidable and allow the Pentagon more time and rope to plan them. Simply by keeping caps flat for three years, for example, rather than indexing them to inflation, Congress would save more than $50 billion.

Of course, delayed cuts might never arrive. New presidents and Congresses may undo them if the pressure for austerity fades. That is a downside. But you can account for political uncertainty by making future cuts larger than those they replace.

Sequestration is not a dirty word. It forces choice, which the U.S. political system evades — especially when spending in the name of defense. We can avoid military sequestration’s vice and keep the virtue: the imposition of discipline on an agency that has pursued too many ambitions at excessive expense.

 

PHOTO: President Barack Obama seeks to highlight the effect the sequester will have by speaking at Newport News Shipbuilding in Newport News, Virginia, on February 26, 2013. REUTERS/Kevin Lamarque

 

5 comments

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Take every required spending imposed upon the Pentagon by Congressmen and Senators, that the Pentagon didn’t want or didn’t need, and cut that. The savings will be quite a few shekels.

Kill some of the fancy toys the military wants, that will never work as expected, are for enemies that do not exist, and are for wars that will not be fought. That will add up to more savings, and will not ‘hollow’ out the military.

Third, look realistically at the staffing, which is very top heavy. Do we really need that many Generals and Admirals, which are more then we had in WWII?

Posted by pavoter1946 | Report as abusive

Pavoter1946′s comments are exactly right. The Defense Budget is where huge dollars are funneled into special interests, esp. DC contractors, and major campaign funders.

Look at the 2012 ranking of the largest government contractors: http://washingtontechnology.com/toplists  /top-100-lists/2012.aspx. Especially notice the private consulting firms that do squat for US Defense. Also take a look at the latest contracts awarded and your eyes will glaze at the $millions spent on projects like procurement software, efficiency reviews, etc. From the list of private contractors, just google the names of the directors and you will find that nearly 80% of the top directors had worked in the departments that are now awarding them these contracts.

I for one applaud the sequester. Yes it will hit the most vulnerable – the poor, children, unemployed – basically anyone who doesn’t have a DC lobby. However, for the first time in decades the Defense Budget is being cut. It’s about time.

Posted by Acetracy | Report as abusive

We had two wars in the last decade with no increase in revenues but instead a decrease in revenues. We had a global meltdown due to de-regulating our banks. Both the bankers, whom we bailed out, and the Industrial War Complex made out very well during this time. The average American lost ground. Now everyone is so interested in preventing these same industries from paying higher taxes or cutting their spending, as the case may be, but do nothing to prevent the loss of income for those who have paid a lifetime for SS and medicare and have reached or are almost ready to reach retirement. It was impossible to save for retirement with 401ks sinking, your mortgage tanked or loss of your home entirely,savings rates at the most anemic or pathetic rate ever since banking began, and people age 50 and over loosing jobs with zero ability to become fully employed ever again. And still our leaders do nothing to stop the rape and pillage of those whose main economic stay will be through SS and medicare – instead they, including the President, offer cuts in those areas while all they can talk about is how it will affect the Pentegon or the Industrial War Complex. What is wrong with this picture??? Where is the “for the general welfare of the people”? Somehow we enpahsize only those interested in big business, big corrupt bankers, and those who already get all the tax loopholes. What about the rest of us who have paid our taxes for 50 years, and have paid into our SS Insurance and Medicare our entire lives and have worked all along? Why don’t we count? Until we resolve that the American people are more important than corporations or greedy bankers – we are doomed as a nation.

Posted by Concernedcitz | Report as abusive

What enemy can we not destroy instantaneously if we so choose? Just because our will to kill is less than it used to be, doesn’t mean we face a higher threat. Occupations were never considered defense in the past, but now we can’t fight any war without going in after to pick up and brush off the enemy. That is not defense, that is politicing for the business opportunities.

Posted by brotherkenny4 | Report as abusive

“…our leaders avoid explaining that there are two kinds of sequester. Only one slashes arbitrarily. The other enforces spending caps, which cut while encouraging prioritization. Pentagon leaders hoping to dodge any cuts conflate the two…”. Quite right, and this is not by coincidence.

And so it is “…Because [any] option [that] preserves deficit reduction without raising taxes and lets the military drawdown intelligently…” would give frustrated citizen/taxpayers precisely what they know this country needs, no “congressional majority” dare support it.

Yes, “The Pentagon’s predictions are mostly nightmares, meant to frighten. The uncapped war budget remains a safe haven for programs little related to war. Transfer and reprogramming authority can allow managers to move funds. The U.S. military will remain far superior to all others.”

So there is NO incentive to those who benefit so richly from the “status quo” to cooperate to achieve necessary, logical and relatively painless reductions in spending. That is precisely why it is simply not true that “This year’s sequestration should be avoided.”

History shows us that “delayed cuts…never arrive” and that…presidents and Congresses…undo them if the pressure for austerity fades.” If Sequestration “forces choice, which the U.S. political system evades…” bring it on!

Anyone that thinks this problem limited to defense spending alone is head-in-sand blind. The “imposition of discipline” on ALL agencies that have “…pursued too many ambitions at excessive expense…” is LONG overdue.

Posted by OneOfTheSheep | Report as abusive