Secretary of Defense Leon Panetta asserted during a press conference on September 20 that the recently enacted debt ceiling law requires $450 billion in savings from the Department of Defense (DOD) budget over the next 10 years. While this is a widely accepted assertion, it is not accurate.
The debt ceiling law imposes caps on larger pots of money, variously described as security category spending and discretionary spending. These spending caps do not require specific spending reductions from the DOD budget. The $450 billion 10-year reduction was actually chosen by the Administration. Unfortunately, it appears that Congress is prepared to accept the Administration’s choice to impose the $450 billion on the DOD budget.
It is important to point out as well that the debt ceiling law also establishes a process for imposing an across-the-board spending reduction of a half-trillion dollars or more in the defense budget if a newly established congressional joint committee cannot find $1.5 trillion in additional savings from the overall federal budget over nine years.
While this across-the-board reduction would apply to the defense budget, there is nothing preventing the joint committee and the Administration from agreeing to the $1.5 trillion in savings in a way that does not impose reductions on the defense budget. Actions by the Administration and Congress to cut the defense budget under the debt ceiling law will be the result of decisions they have made, not from a direct requirement of the law.
Finally, it is essential to point out why the Administration and Congress are deciding to impose large-scale reductions in the defense budget at this time. This is because the deficit reduction procedures established by the debt ceiling law are strongly biased in favor of defense budget reductions.
The reason is that the provision governing the across-the-board cuts makes the cuts the default outcome if things stay as they are now and there is no decision to achieve the required deficit reduction from other portions of the broader federal budget, most particularly the entitlement accounts. Under present circumstances, it is far from certain that the joint committee will reach an agreement. This means that the across-the-board defense cut is a real possibility.
Even less likely is that the joint committee will reach an agreement on the $1.5 trillion in deficit reduction that does not in general terms match the dollar reduction that would be imposed by the across-the-board cut. This is because everybody knows going in that if those who oppose further defense budget reductions on the committee hold up an agreement, the across-the-board cut is the certain result. In short, defenders of the defense budget hold no procedural cards in the overall process established by the debt ceiling law.
The debt ceiling law should have never been drafted in a way that now even the Obama Administration acknowledges could damage the nation’s security. Accordingly, its current warnings ring hollow. It sought to fashion the debt ceiling law in this way because it sees defense as a low priority. Nobody should be fooled into thinking otherwise.