Congress Plays War Games with Defense Budget
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The Fiscal Times
July 19, 2012

As the defense industry and its allies in the Pentagon and Congress stepped up their drum beat  Wednesday about the dangers that scheduled automatic cuts in the defense budget pose to national security and the economy, there could be little doubt that Congress and the White House will block or defang those cuts by the end of the year.

A formidable array of players, from Defense Secretary Leon Panetta and House Armed Services Committee Chairman Buck McKeon, R-Calif., to former Vice President Dick Cheney and the CEOs of Lockheed Martin, Pratt & Whitney and EADS North America, have mobilized against the roughly $500 billion of across the board defense cuts that are set to kick in beginning in early January absent congressional intervention.

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Some defense  experts and industry critics say that even if the cuts were to take effect to help reduce the deficit, the Pentagon would have more than enough in operating funds  and weapons development  as the U.S. winds down its presence in Afghanistan and Iraq.  But House and Senate Republicans and Democrats alike are heeding Panetta’s warning that the automatic spending cuts could undermine national security. And they take seriously the repeated alarms from industry groups and the Bipartisan Policy Center that across-the-board cuts could send the shaky economy back into a recession.

A new report commissioned by the aerospace industry concluded that the scheduled budget cuts – on top of a 10 percent defense cut previously implemented by the Obama administration – could cost the country more than 2 million jobs and boost the national unemployment rate by 1.5 percentage points over the next year.  Those job losses would be felt in a number of campaign battleground states with large defense contracting footprints, including Florida, Illinois, Pennsylvania and Virginia.

“The impasse, and the lack of a clear way forward, has created a chaotic and uncertain budget environment for industry and defense planners,” McKeon said today. “In addition to the issue of jobs, I worry that the cavernous silence from the President [on the likely impact of sequestration] will lead many to exit the industry or to walk away from capital investments that are in the best interest of our troops.”

The automatic, across the board spending cuts – known as sequestration – were approved by Congress and the Obama administration last July as part of major to raise the debt ceiling while reducing the long term deficit. The Budget Control Act requires $1.2 trillion in automatic cuts over the next decade, with the first $109 billion taking effect January 2, 2013, evenly divided between defense and domestic programs.

But since then, many lawmakers on both sides of the aisle have come to regret the action – fearing that it will lead to a hollow military force and pose hardships for members of the military and their families. Others wrongly assumed when they voted for the Budget Control Act that the automatic cuts would never take effect.

Panetta told a Senate Appropriations subcommittee in June that while he was all in favor of fiscal discipline, “That kind of sequestration cut across the board will have a serious impact, not only on our men and women in uniform, but our personnel and the contractors that serve the Defense establishment.”

 The GOP-dominated House passed legislation a month and a half ago that would spare the Pentagon the additional cuts while shifting the burden of savings completely to domestic social programs. But Senate Majority Leader Harry Reid of Nevada argues that Congress should live up to the terms of the legislation and he has refused to go along with the House-passed measure.

The House today also passed a bill that would require the White House to detail how it would implement the roughly $110 billion in Pentagon and non-defense spending cuts scheduled for early next year.  Republicans are attempting to shift blame for sequestration to President Obama, and they are complaining that he and his advisers have failed to provide adequate guidance to the defense industry and its suppliers on how best to prepare for the possible cutbacks.

Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.