November 21, 2011
Cuts to Defense Budget Might Be Inevitable, but Pentagon Knows Best
Cuts to the defense budget are necessary because today's elected leaders and their constituents seek policies that are not mutually sustainable. Lawmakers feel broad pressure to do three things: 1) reduce the deficit, 2) maintain or reduce today's approximate level of tax revenue, and 3) preserve the approximate balance among current spending on entitlements like Medicare, domestic programs like education, and national defense. Yet arithmetic suggests that these objectives aren't achievable if implemented simultaneously. As long as elected leaders continue down this doomed path, cuts to the defense budget are inevitable.
In purely economic terms, the United States can afford to spend as much on defense as it does today—approximately $530 billion per year, plus an additional $159 billion (and shrinking) for the wars in Afghanistan and Iraq. Since current defense spending equals only about 4 percent of U.S. gross domestic product, America actually can afford to spend more than it does today. However, the size of the defense budget is not determined solely by its affordability relative to national wealth. It is also determined according to elected leaders' decisions about what threats face the nation, what strategy the U.S. military should pursue, and whether taxpayer dollars are best spent on defense or on something else. These decisions are more art than science because they involve difficult choices about political values. There isn't necessarily any right or wrong answer when deciding what role America should play in the world.
Assuming lawmakers continue to pursue irreconcilable policies and defense cuts therefore remain inevitable, how should they be implemented? The Budget Control Act's automatic trigger, which will be pulled if the "super committee" doesn't make a deal that Congress accepts, will double the defense cuts that are already planned, resulting in $882 billion in total reductions over 10 years. This trigger is a terrible policy because it would push defense spending off a cliff in 2013 by cutting military expenditures suddenly and significantly. Lawmakers purposefully designed the trigger to be unappealing in order to encourage the congressional super committee to compromise. Instead of using this politically-tinged process to cut defense spending, lawmakers should set a 10-year target for total cuts and instruct the Pentagon to manage the drawdown in a gradual fashion. This approach would enable defense officials to spread reductions more evenly over the coming decade, thereby preventing the incredibly disruptive effects that the Budget Control Act's trigger would impose in 2013.