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The Big Retreat: Destroying The Defense Budget


On Drudge July 22, 2011, in a news story about the stalled debt talks, there is buried the disclosure that $1 trillion in spending “cuts” being proposed in the debt extension discussions are estimated to come from the already agreed to draw down of the US presence in Iraq and Afghanistan.

But honest book-keeping would already have incorporated the lower defense spending into any baseline from which future debt would be estimated. But in the special way Washington works, the anticipated reductions in such spending is somehow heralded as the proverbial “big deal” that would resolve the budget problem for “decades” (as one excited Wall Street Journal reporter exclaimed) because it is counted as new spending cuts and sounds like a lot of money (which of course it is).

But the reduction was already baked into the administration’s budget proposal in February which also contained $10 trillion in new debt. So how can it be counted again in efforts to further cut the deficit spending projected for the next decades when it was already assumed not to be spent in the first place?

A little background is in order. This year, FY2011, the US will spend $158 billion on the two wars; in FY12, starting this October 1, 2011, that number is declining to $118 billion. Over a decade, that implies a $500 billion cut from the baseline of $158 billion if we simply stayed at the projected spending level for FY2012 of $118 billion. The CBO uses such a baseline because it says “current” US policy is to maintain the force at $158 billion. But as former Secretary of Defense Gates has noted, DOD’s expenditures are already scheduled to be reduced $40 billion, which would imply a $400 billion, ten-year reduction.

But here the news gets even more disquieting. According to most accounts, apparently, on top of this nearly $1 trillion in defense spending cuts, will be another $886 billion reduction in national security expenditures over ten years as proposed by the Simpson-Bowles Commission report, and adopted by some of the Senate “Gang of Six” composite budget, by Vice President Biden, and apparently by Senator Coburn of Oklahoma in his $9 trillion deficit reduction package “Back to Black” released this week. The HASC Chairman Mr. McKeon has wisely commented such cuts would decimate US security. But few appear to be listening.

Now to soften the blow a little, it appears this category of spending cuts would also supposedly also include veterans, nuclear weapons programs in the Department of Energy, Homeland Security, and some elements of the Department of State, although reports are that veterans will be excluded from any future cuts. How realistic is this? Are we really going to be cutting billions from homeland security, especially given the new threats of EMP and cyber warfare? Is our nuclear deterrent, the very backbone if the US deterrent, going to be short-changed which potentially catastrophic consequences? And are our needed diplomatic efforts going to be curtailed?

In fact, when taken together, the Bowles-Simpson proposed cuts and the Drudge reported reductions in what are called “Overseas Contingency Operations”, would cut defense spending nearly $2 trillion over a decade. In short, this means that of the $2.6 trillion in projected overall government spending “restraint” being discussed, nearly 80% comes from national security and defense accounts. This compares to the reduction in defense spending from an assumed flat baseline at the end of the Cold War that reached $1 trillion. We are poised to double those reductions in even less time. That passes for a ”balanced policy” in Washington-speak!

But the critics will counter: defense spending has to be cut. True, a common fairy tale in Washington is that non-defense spending (outside of welfare and entitlements) over the past decade, and particularly the spending of the past three years–CY 2009-10-11–is relatively small and not of consequence in the face of the spending debt we face. This has the benefit of making “non-defense” spending appear best left out of the spending equation. If one brings up the fact that such spending also includes welfare and entitlements, the critics counter that such spending has been “promised” the American people and cannot be curtailed. And so we come back to the idea that defense spending has been the real culprit. So as the Queen of Hearts so eloquently put it with respect to Alice: “Off with her head”!

As a 40 year observer of the Federal budget process, it is not unusual to hear claims that the Pentagon is needlessly spending vast sums of tax dollars. I remember in 1984, at the height of the Cold War, then Senator Biden called for freeze on US spending as a condition of his support for an increase in the debt ceiling. That would have effectively terminated Reagan’s strategic and conventional defense modernization efforts, returned the US to the days of a hollow military, and effectively ended the Reagan national security strategy of defeating the Soviet Union by bringing down the regime in Moscow.

Unfortunately, a largely false narrative–the fairy tale to which I referred– has taken hold in Washington. It is that the Bush administration recklessly expanded defense spending by liberating Iraq and thus dangerously ran up the debt. Let’s look at the numbers.

In the first year of the Bush administration, FY 2002, defense and homeland security spending rose $54 billion, hardly excessive in the face of the attacks of 9/11. Non-defense spending of all kinds went up $133 billion that same year. Over the following seven fiscal years of the administration, defense, veterans and other defense spending went up an additional $283 billion. But non-defense spending increased $837 billion over that same period of time, a nearly 300% bigger increase.

Now what are we looking at? Well, between FY2009 and FY 2016, the administration’s proposed budget in February had defense, veterans and homeland security spending increase by a very small $50 billion. These numbers reflected an already built-in relatively significant cut in defense because of the projected US withdrawals from Afghanistan and Iraq and further five year cuts of $178 billion in unnecessary “overhead”.

Some of the savings were projected to go back into defense but overall, especially given inflation and the increased sustainment and operational costs of maintaining US forces, defense was already slated to take a very big hit.

But what of other domestic spending, especially entitlements and welfare? These accounts according to the same budget documents, were to increase $1.435 trillion. That is right: in five years, such non-defense, non-national security spending is slated to increase annually by nearly one and one-half trillion dollars.

That would be an annual increase equal to seventy-five percent of the entire Federal budget in 2000 or fourteen times all Federal government spending when Dwight Eisenhower left the Presidency in 1960.

It is in this context that we should judge proposals to cut another $886 billion from defense and other national security accounts, as many are proposing in the new budget deal. How can this be justified, when collectively such accounts, in the baseline budget, are projected to increase no more than $50 billion between FY09 and FY16, and thus contribute relatively little to the growth in the US debt?

Want to find $50 billion or $200 billion to cut? Let us try National Public Radio and Television, ($740 million annually), or international family planning, ($725 million) or the feeding and caring for wild horses and burros on our public lands ($720 million). End these programs and save $28 billion a year. Cut agricultural subsidies and save $250 billion over a decade. **

It also appears that there are as of yet no fundamentally serious structural changes proposed by the administration on entitlements and welfare which are by far the drivers of US debt. True, there was rumored to be a proposal to increase the age at which one would become eligible for Medicare from 65 to 66. But this change would take effect in 2036! Boy, what courage!

Much of the debt talks appear to hinge on an agreement to raise taxes by making each taxpayer pay more, rather than simply employing more people and therefore adding more taxpayers! the administration is reportedly asking for at least $1.2 trillion in new taxes. But this would come on top of a minimum increase in taxes of $1.65 trillion already built into existing law. This includes only raising the rates on the top two tax brackets (scheduled to be increased automatically in 2013) and the $900 billion over a decade coming from the new taxes under the new health care law that largely kick in by 2014.

But won’t “masking the rich pay their fair share” help out the budget deficit? Well, let’s take a look. Raising “tax rates on the rich” only brings in at most $750 billion over ten years–compared to ten year projected spending of roughly $46 trillion. Those “required” tax hikes on the rich thus account for roughly 1.5% of the revenue required to balance our books even if all the anticipated revenue actually materialized.

Remember when the extra tax on boats and private airplanes went into effect in 1991 as part of the 1990 budget deal to get the rich to pay up? The country lost $97 million in tax revenue from the sale of boats and shipyard jobs in Massachusetts and Maine, home states of Senators Kennedy and Mitchell, the two key sponsors, fell 25,000.

But critics will argue, these new tax increases allow the debt to be curtailed, for our books to get in order because they are taxes on the rich and not on what they buy. For a fleeting moment I want to believe that just smacking the rich around a little more solves our debt problem. How could I forget Eugene Robinson and Paul Krugman! Haven’t they be arguing this for years?

But then Mr. Reality intrudes. I remember the administration submitted a budget in February that had all of these tax increases included. And still they projected a ten trillion dollar deficit as well!! That’s $10,000,000,000,000.

And what of future projected spending? That reaches some $5.7 trillion annually in ten years from today’s $3.7 trillion. So to quote Mr. Mondale, “Where’s the beef” of deficit reduction? Apparently all the cuts are in defense and they are exceeded by new taxes, yet all the drive-by media can complain about is “cuts” in social spending and on the poor?!

Americans are right to ask: how does increasing taxes cut spending when taxes go up by trillions and spending goes up by tens of trillions? It appears more likely that the increased revenue generated simply leads to the government deciding to spend more money, while at the same time decimating our defense.

Put another way, the February budget included $4800 in new taxes on average for every American even while adding $4.1 billion in spending every day to the nation’s debt. To repeat, there appears to be no correlation between raising taxes, and raising taxes by significant amounts, and any reductions in projected future spending. In fact, the opposite is occurring as the Tea Party repeatedly warns–increased taxes are being used to justify greater US Government spending.

Note also that current law requires all tax rate reductions to expire in 2013. These tax increases are built into current law. These estimates assume raising taxes would not slow the economy or curtail consumer spending or dampen business investment. And thus any agreement that keeps these rates at their current rates beyond 2013–a good idea to spur job growth, is considered a “tax cut” by big-spenders in Congress. That’s right: your taxes do not go up and that considered for budget purposes a needless “tax cut”!

This is important to understand. The debt relief negotiations are setting up the American people for one great big kick in the face–huge new taxes, and huge new spending. That is why the House Republicans and their allies, including many Democrats, will not concede.

Already the built-in assumptions for the US budget are that spending will increase from $3.7 trillion a year to somewhere north of $5.5 trillion. Furthermore, there is a common assumption that tax increases–from eliminating deductions (or “tax breaks” as they are too often erroneously referenced)–have to provide “balance”, even though huge tax increases are already built into law!

But this is the way Washington works: you rig the debate so its terms favor ever increasing spending and taxation. Lost in the discussion is the one unassailable fact: the massive “spending built-in” has to change.

Now why is this important for the security of the United States? And why should the defense policy and national security strategy issues linked to such projected defense spending restraint be part of our national dialogue and campaign debate? For a number of reasons:

(1) The proposed defense budget numbers are wholly fictional–they are without a strategic framework;

(2) There appear to be thrown together from nearly a decade of miscellaneous government reports about possible, hypothetical and recommended defense cuts but with no rhyme or reason;

(3) They appear to rely on a not inconsiderable amount of “Double Counting”; and

(4) They either assume or would require a major US retreat from the world, based on further assumptions that such retreat will not have major negative consequences.

Now it is true a number of Presidential candidates want to severely curtail America’s role in the world. So do many currently holding office. For example, Congressman Ron Paul, now trailing the current President by only four points in the newest Rasmussen poll, wants America to bring all its troops home from nearly everywhere. When asked by Sean Hannity whether we have terrorist enemies, he repeatedly blamed America for their attacks on us. If only we did not make them angry, Paul argued, they would not attack us.

What Paul ignores, as many did during the Cold War, is that totalitarian forces see freedom, liberty and free enterprise as their enemy. The fight against terrorist tactics is a fight against totalitarian state sponsors of terrorism and their allies. Today, Iran is identified by the US State Department as the premier sponsor of terrorism against the United States in the world. Its allies include Syria, North Korea, China, Russia, Venezuela, and Libya, and their associated terror groups including but not limited to the Moslem Brotherhood, Hamas, Hezbollah, FARC, the Palestinians, the Taliban and Al Qaeda.

The chairman of the Joint Chiefs of Staff says there is forensic evidence linking Iran to the killing of American soldiers in Iraq and Afghanistan. According to Israeli rocket expert Uzi Rubin, Iran also now possesses ballistic missiles with ranges approaching 3500 kilometers–they can reach Bonn, Paris and London.

Its nuclear program has been repeatedly been identified as a military effort to build nuclear weapons, not produce nuclear energy. Iran’s subsidiary Hezbollah and puppet state Syria have now been fingered for the murder of numerous top Lebanese government officials. And in a lawsuit in the District of Columbia, Iran has also been found by a judge as having given assistance to the 9/11 hijackers.

There is also evidence that Ramzi Yousef, the 1993 World Trade Center bomb mastermind, worked with Iraqi intelligence. Yousef traveled from tightly-controlled Iraq to the US on an Iraqi passport, showing his trip beginning in Baghdad. A fellow conspirator, an Iraqi-American, fled to Baghdad after the bombing.[1] Yousef himself later turned up in Manila, conspiring with his uncle Khalid Sheikh Mohammed — the mastermind of 9/11 –on a plot to blow up a dozen US passenger jets over the Pacific. But there has been strangely little interest in the question of the sponsorship and financing of these two terrorist masterminds, several years before al Qaeda was even operational.

That brings us back to the current debate about security policy, or lack thereof and the cavalier attitude of some in Washington toward massive cuts in US security programs.

In an article on the website (Gerdab) of the Iranian Revolutionary Guard Corps, America is described as having lost her stamina. It is claimed we are beginning a “quiet and deliberate” withdrawal from the Middle East. We are finished it says. America, it is claimed, has no stomach for the fight Islam is bringing to its shores. It says the “Arab Spring” will sweep jihad into power.

Actually, the “Arab Spring” is a chance to help direct the passions of millions who seek freedom to “reset” the Middle East away from totalitarian Islam. It may indeed have been triggered by the elimination of two key state terror masters: the liberation of Iraq and the removal of the Taliban from power. Unfortunately, too many are seeking to accommodate the very forces–such as the Muslim Brotherhood–which are at the heart of the terrorism directed at us.

Our enemies see us as depleted and unable to get our house in order, unwilling to stand up for our security interests. Iran sees this and simultaneously supports Shia militia’s in Iraq and Taliban and Al-Qaeda elements in Afghanistan. They see important American political leaders saying the war in Iraq “is lost”, calling for immediate withdrawal from Afghanistan, and engaging in support for “Gaza flotillas” to undermine Israel’s security.

As former Wyoming senator Malcolm Wallop has observed, Ron Paul and Pat Buchanan’s politics are so far right and Reverend Wright, Bill Ayers and George Soros’s politics are so far left their collective political butts are touching. It may make for interesting political theater for the far left and far right to play at budget polygamy. But defense budgets are serious things and they should be treated as such.

My friend Reza Kahlili has recently written that Iran sees “this [as] the century of the Islamic awakening and that Islamic nations will soon be able to control the world’s economy through the control of oil and the world’s strategic passages. Continues Kahlili:

“The Iranian leaders also believe that as long as the U.S. is financially weak, as long as oil prices remain high, and as long as it is involved on too many fronts it will not dare confront Iran. That is why they have made a decision to continue on with their nuclear program in spite of four sets of UN sanctions. They’ve even gone so far as to mock the U.S. for the ineffectiveness of those sanctions.”

“One thing is for sure: the jihadists in Tehran feel invincible because, despite the continuous killing of our soldiers in both Iraq and Afghanistan and despite their pursuit of the nuclear bomb, America and the West have shown little stomach for confronting the Islamic regime in Iran.”

“Weakness is being observed. The belief in Islam is for one to deceive the enemy until they are strong enough to take them out. Radicals ruling Iran think that is only a matter of time.”

In my view the regime in Iran in fact has serious weaknesses. We should be seeking to bring the regime down. The US Department of State has called for regime change in Syria. We should extend that to Iran as well. Legislative initiatives now in Congress, if pushed, could go a long way toward ending the mullahs’ rule in Tehran. If combined with a smart strategic defense policy, the US could bring an end to most of the terrorism we now face.

These initiatives include the flex-fuel vehicle standard which would allow cars in America to use a variety of fuels including methanol, ethanol, gasoline or diesel, as well as electric plug-in technology, and then allow the market and the ingenuity of American entrepreneurship to provide fuel choice to customers. In the process, according to Anne Korin and Gal Luft, oil can be turned into salt–a key commodity but one which no longer is the monopoly fuel for US transportation. As a result, world oil prices could drop to $30 barrel, sufficient for long term sustained production but insufficient for Iran’s pursuit of a hegemonic and terrorist campaign against the US and its allies.*

Next can be passage of genuine sanction (I would add divestment) measures as proposed by Senator Mark Kirk and Congressman Howard Berman.These would be designed to “unplug” the Iranian economy, especially its banking and oil and gas sectors, from the world’s economy. Companies would be given a choice: you can trade and invest with Iran or the United States but you cannot do both. Further, there is no justification for endowments or pension funds to contain any securities of any business that does commerce, directly or indirectly with Iran. Divestment must be fully implemented.

Of critical importance would be the passage of the Iran Human Rights and Democracy promotion Act. This provides us with a genuine chance at pulling a Solidarity campaign within Iran aided by the various ethnic and national groups within that country seeking the elimination of the mullah’s tyranny.

Given Iran’s rush to acquire nuclear weapons and its current possession of missiles with which to deliver them, it is imperative the US protect itself from such terrorism. The Shield Act, supported by a widespread and ideological diverse group of members in the House of Representatives (a variant of which passed unanimously last year), would protect critical elements of our electrical grid from what is known as an electromagnetic pulse attack.

Such an attack might come in the form of an Iranian nuclear device detonated some 70-100 miles above the United States. Recent evidence surfaced that the PRC has developed a nuclear EMP capability and is planning to use it against the Republic of China. It could also be transferred to North Korea or Iran, as has other PRC nuclear and missile technology.

The US should also commit itself to the deployment of a robust missile defense capability especially a space-based and boost-phase capability, even as we enhance and sustain the current deployments that now protect us and our allies. Such efforts should also include further work on Airborne Laser technology. Particularly noteworthy has been Israel’s deployment of Iron Dome which now can effectively shoot down short range rockets from Gaza and southern Lebanon terrorist groups.

Two US Congressional mandated commissions and a National Academy of Science assessment have concluded that an EMP attack could be devastating, including violent solar storms. Federal Energy Regulatory Commission officials have concluded such protection is doable in short order.

My own estimates and those of experts conclude that a few hundreds of millions of dollars in one-time utility costs would protect the nation’s key electrical transformers from both an Iranian EMP generated attack or solar storms. The cost for each American would be $1. The Shield Act sponsored by Congressman Franks and Bartlett must be passed this session of Congress.

Unfortunately, one key Senate committee recently only called for additional study of the effects of solar storms and nuclear EMP. That is unnecessary–it is time to protect our key infrastructure from these two potential catastrophic threats.

An Iranian missile-carrying freighter could launch just such an attack, mimicking a test Tehran conducted in the Caspian some years ago. They could do so without the US being able to attribute such an attack to its sponsor.

Nuclear forensics, a very valuable tool, has not made sufficient progress to give the US confidence we could in fact identify the sponsor of such an attack.

Finally, sound US counter terrorism measures and a complimentary military policy are also required. We need to win the peace in Iraq and Afghanistan. We can do both. Premature withdrawal, based on an arbitrary withdrawal deadline attuned solely to the American political calendar, would be an epic tragedy.

We cannot let America’s enemies besmirch the sacrifice of our soldiers who liberated both Iraq and Afghanistan. They did their job. It is time we did ours as well and let our brave soldiers, diplomats and contractors successfully finish the job. Iraq was a major state sponsor of terrorism. Its connections to Yousef and Khalid Sheik Mohammed point an incriminating finger at Saddam Hussein for the 1993 World Trade Center attack but 9/11 as well.

A sound military and security policy in the Middle East also will require the deployment of a strong naval presence, long range prompt strike capability, missile defense and airpower worthy of our strategy. It makes no sense to junk modern air power acquisitions and go back to rely on legacy systems as many of the proposed budget cuts would require. It takes more “old” assets to provide the same protection as “modern” technology, and this in turn increases the need for pilots, mechanics and other support crew. And we should not be sending American soldiers anywhere in the world unless they are equipped with the best US technology.

We should also reject all facile attempts to glom together unrelated and rather shallow analyses of hypothetical defense budget cuts. Such “what if” paper projects that generate specific illustrative budget savings have nothing to do with the adoption of a sound strategic plan or strategy.

If the defense cuts being contemplated materialize, the US may very fulfill the fondest wishes of the Iranian Revolutionary Guard Corps referenced above. We have choices, indeed big choices. We could too rapidly withdraw from Iraq and Afghanistan. We could fall into the foolish trap of believing Iran wants “stability” in the Middle East. We could recklessly cut almost every major weapon system not in or nearing production and cripple US deterrence and military capability.

During the Cold War, it was always a struggle to get our allies to contribute sufficiently to the defense of freedom. Great Britain’s Thatcher and Germany’s Kohl were heroes, too. Allied with President Reagan they together won the war against totalitarianism from the East.

In many respects they and Pope John and Lech Walesa, representing the faithful and the workers of so much of those enslaved by Communism, achieved a victory for freedom and liberty that many still today do not appreciate. they did it with defense spending many then called not necessary.

Should the United States, though, abandon its leadership role against the new totalitarians from the Middle East and elsewhere, the sacrifice of great Americans–and our allies– from Concord, Gettysburg, Normandy, Chosin, Khesan, and Ramallah, will have been in vain. Defense budgets are serious things. Let us treat them as such. ___________________________________________________________________________

*And eliminate some $350 billion in oil import costs flowing overseas, some of it to state sponsors of terror. As former DCI R. James Woolsey has argued, “why should we be paying for both sides in the war against terror states”?

** Lee Iacocca said the national debt in 1981 was $1 trillion; in 1985, $2 trillion; and expected the deficit to hit $3 trillion by 1988. “But if the debt keeps piling up at the same rate that it has since 1980, it’s going to hit $13 trillion by the year 2000: That’s fourteen times the debt in 1980. … And yet every month the government is spending $17 billion more than it takes in.” The government now spends roughly $120 billion a month more than it takes in.

[1] It is also more than a coincidence that the 1993 World Trade Center bombing occurred precisely two years to the day of the anniversary of the surrender of Iraq in the Gulf War while an additional six major terror attacks against the US occurred on key anniversary dates in Saddam’s Iraqi history.


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