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Aug 13 2012

The Sequestration Boogey Man

With Secretary of Defense Leon Panetta joining forces with the Republicans and the defense contractors to preach about the impending apocalypse that will follow even the miniscule cuts to defense spending required by the sequestration deal. Christopher Preble of the Cato Institute punctures all that nonsense:

However, there’s little likelihood that sequestration will significantly reduce the defense budget long term. That’s because sequestration cuts the defense budget only in the first year. Every year after that, defense spending will increase. Spending levels will indeed be lower than the Pentagon last year expected them to be. But only in Washington is that considered a cut. So, under sequestration, instead of spending $5.7 trillion on defense over the next decade, as the FY2013 budget suggests, the government will spend about $5.2 trillion.

That $500 billion difference may not actually materialize. Congress has a few options to mitigate the effects of the initial $55 billion slice off the budget. They could reprogram funds after the sequester, change the definition of “programs, projects and activities” (the budget level at which the cuts are implemented), or take advantage of the flexibility within operations and maintenance (O&M) funds. In fact, because the Office of Management and Budget has declared that war spending is eligible to be sequestered, the total cuts to O&M can be spread out across a bigger pot of money. Beyond all that, sequestration does not affect outlays or funds already obligated, which means it will not affect existing contracts. So, the real story is that should sequestration actually happen, Congress and the Pentagon will have much more flexibility than they’re willing to admit…

Since the end of the Cold War, policymakers and pundits have coalesced around the idea that the United States is the “indispensable nation” responsible for protecting everyone from everything. Under the misapprehension that threats anywhere in the world are necessarily threatening to the United States, we have taken on the responsibility of policing the entire planet. This increases the chances that the United States will become involved in conflicts that do not engage vital U.S. interests, or that we do not fully understand, or can easily remedy. This strategic hypochondria (H/T Ted Galen Carpenter) also burden American taxpayers with additional costs that could and should be borne by others…

Americans shouldn’t worry that sequestration will make our defense budget too small. We account for approximately 48 percent of the world’s military spending. We will retain a margin of superiority over any conceivable combination of rivals, including China, even if our share of military spending fell to 44 or 45 percent of the world’s total.

Hear, hear.

22 comments

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  1. 1
    busterggi

    As I recall, Ronald Reagan, who I never supported, used this approach to basically bankrupt the Soviet Union and force its break-up.

    Republicans who worship Saint Ronald ought to know this.

    Then again, maybe they do and this is how they plan for the red states to secede.

  2. 2
    jamessweet

    NOOO! Our defense budget is only adequate if we are able to take on every single other country in the world simultaneously. Anything short of that, and we are in terrible jeopardy.

    Or, uh, maybe not.

  3. 3
    slc1

    Defense contractors are beating the drums for the notion that sequestration will lead to mass layoffs in defense industries.

    http://www.washingtonpost.com/local/sequestration-today-a-political-football-would-cripple-virginias-economy-if-it-happens/2012/08/12/6f623478-e4f0-11e1-9739-eef99c5fb285_story.html

  4. 4
    lofgren

    Our defense budget is only adequate if we are able to take on every single other country in the world simultaneously.

    Well, it’s certainly my approach to Starcraft, so it should work in real life too.

  5. 5
    Michael Heath

    busterggi writes:

    As I recall, Ronald Reagan, who I never supported, used this approach to basically bankrupt the Soviet Union and force its break-up.

    Republicans who worship Saint Ronald ought to know this.

    Recent released Soviet docs by Russia, coupled to recent interviews of the USSR’s Cold War leaders, reveal that Reagan’s SDI program did not bankrupt the USSR. The USSR was concerned countering SDI would be the last nail in their coffin, but it wasn’t, other issues caused their economic and political collapse prior to their ever spending big bucks to counter SDI.

    In hindsight, the argument by Reaganites that SDI was a legitimate program if it bankrupted the USSR was every bit as idiotic now as it was then.

  6. 6
    Marcus Ranum

    Michael Heath says:

    At Reykjavik, Gorbachev proposed complete nuclear disarmament and saint Reagan shot it down because he wouldn’t budge to take SDI off the roadmap. Apparently Reagan couldn’t wrap his brain around the idea that, without assloads of ballistic missiles to shoot down, SDI was kind of pointless, anyway. I’ve read several accounts of the negotiations between Reagan and Gorbachev and I don’t think Reagan was stupid so the only conclusion I can reach is that he was seriously but as-yet-undetectably brain-fucked and SDI was his “idee fixe.”

    Apparently Reagan watched that bad 1970s “The Day After” movie and was deeply affected by its very toned-down representation of the aftermath of a nuclear war, and latched onto the SDI as a way of protecting his people. Statesmanship and diplomacy didn’t occur to him at all, apparently.

    It certainly was not an instance of clever strategy.

    (I highly recommend Thomas Reed’s “At the Abyss” if you’re interested in an insider’s view of the late cold war from a nuclear weaponeer’s perspective)

  7. 7
    Didaktylos

    According to the legends that I’ve heard, Cold War negotiations between the USA and the USSR were always bedevilled by the fact that the negotiating teams on both sides were composed of people who were expected to be accomplished games players – for the Russians, the game that they had to master was chess; for the Americans, it was poker.

  8. 8
    Marcus Ranum

    for the Russians, the game that they had to master was chess; for the Americans, it was poker.

    And Reagan was playing “chicken.”

  9. 9
    kantalope

    How can cuts in spending result in layoffs? I was assured by every foxnews talkinghead and republican that government spending had nothing to do with jobs.

  10. 10
    Ed Brayton

    Michael-

    Do you have a link to those documents, or to an article about them?

  11. 11
    F [i'm not here, i'm gone]

    Wasn’t SDI only a small part of Reagan’s unprecedented eight-year military builg-up?

  12. 12
    F [i'm not here, i'm gone]

    New word! “Builg”

  13. 13
    pacal

    Actually the spending that “did in” the Soviet Union, if any such thing “did in” the Soviet Uniojn, was the massive and spectacular increase in Soviet military spending that began after the Cuban missile Crisis and continued into the late 1970s. One effect of this was a spectacular increase in the size of the Soviet Union’s nuclear arsenal so that by c. 1975 in terms of number of megatons it exceeded the USA. I’m not sure about number of missiles because a lot depends on what you count as a nuclear missile. The result was that by the mid seventies the USSR had achieved military parity if not a slight military superiority over the USA.

    The cost of it was staggering however. Vast funds that could have been used to modernize and develop the civilian sectors of the Soviet economy were spent on military expendatures whose spin off products were less beneficial to the over all economy and was less benificial than direct expenditure or investment in the civilian sectors. Translated the Soviet Union started to, economically, really stagnate.

    The CIA’s usual figure for the size of the Soviet economy at the time, (c. 1970-1980), was that it was 50% of the USA economy. In the wake of the collapse of the Soviet Union it appears the actual figure was more like 30-40% of the economy of the USA. It appears that the usual estimates of the size of the Soviet economy at the time, (1970s) inflated it’s size signifigantly. This massive sustained effort to achieve military parity with an economy signifigantly smaller than than the American was courting with disaster. The defence burden on the Soviet economy had been huge for well over a decade before Reagan began his defence build up, (Actually began by Jimmy Carter).

    As for Star Wars the fact is the program was not likely to be up for decades, cost trillions to put in place and not work very well anyway. Counter measure’s designed to pierce the system would have been and are vastly cheaper than the system itself. I’m surprised Gorbachev didn’t simply tell Reagan, “Go ahead but it up and we will make sure enough of the missiles get through whatever you put up”.

    It is my understanding what really put the Soviet’s noses out of joint was that it appeared to them that the purpose of such a sheild was to enable the USA to launch a first strike and escape ‘massive” retaliation from Soviet missiles. It was that and not the huge cost of such a system that bothered the Soviets.

  14. 14
    wscott

    We account for approximately 48 percent of the world’s military spending.

    I hate when people throw that statistic around like this, because it implies that military spending is in any way equivalent to military strength, which is demonstrably false. Just because we pay our soldiers 10 times what China does* in no way means each US soldier is worth 10 Chinese soldiers. Similarly, a tank/plane/etc that costs $10 million can’t automatically beat ten $1 million tanks. (There are plenty of historical examples pointing both ways.)

    I’m not saying our military isn’t large & powerful. And I’m not saying it couldn’t handle a trim. But to imply that we’re anywhere close to 50% of the world’s military strength is exaggeration to the point of nonsense.

    * I totally made that number up (I suspect the real ratio is far more pronounced), but the point holds regardless of the actual percentage.

  15. 15
    Michael Heath

    Ed writes:

    Do you have a link to those documents, or to an article about them?

    I’m going from memory in what was reported in the The Dead Hand: The Untold Story of the Cold War Arms Race and Its Dangerous Legacy (my review linked). The author, David Hoffman, had the perfect resume to write this book coupled to his getting access to recently released Soviet docs. He also got unprecedented access to Soviet players, including a lot of the top Soviet scientists and some American scientists who developed much of the U.S. and Soviet’s WMD capabilities.

    As I noted in my review, this was the best book I read in 2011, so I’m not surprised David Hoffman won the Pulitzer. The title of the book is a bit misleading, the story focuses primarily on the end of the Cold War, primarily starting with the Reagan presidency though some prior history is reported to properly set the stage for Reagan and afterwards. One of the fascinating aspects of the book was how conclusions of some of the major players changed during the writing of the book as Hoffman collected documents, provided them to his interview subjects, where this new information changed their perspective from the previous one.

    While it reports the perspective of both sides, the Soviet perspective was the most illuminating given we had relatively little to work from prior to this book. While I’m not an ardent student of this aspect of history, I’m really glad I read this book since it was a great work of history.

  16. 16
    lancifer

    If only sequestration did what the demagogues claimed it did.

    A massive across the board cut in spending wouldn’t cripple the nation, but it might send a signal that unfettered growth of the federal budget was not a given.

  17. 17
    Michael Heath

    Lancifer writes:

    A massive across the board cut in spending wouldn’t cripple the nation, but it might send a signal that unfettered growth of the federal budget was not a given.

    Citation requested a massive across the board cut in spending wouldn’t “cripple the nation”.

    In addition federal spending has not been “unfettered”. Here’s a chart showing spending declining in some periods relative to GDP. E.g., the ‘roaring 20′s’, mid-1980s, and much of the 1990s.

    In fact for those of us who study economics, we realize the optimal way to reduce spending is by optimizing economic growth. We also know that economies can’t optimally grow if government isn’t prudently investing and spending in a areas which promote growth and complement private economic activity. We also know that in some cases, spending increases relative to GDP comes not just from Keynesian-like attempts to defend aggregate demand, but from suppressions and even contractions of GDP as part of the business cycle. Which is why I’m skeptical you can provide a citation that massive spending cuts wouldn’t cripple the nation.

  18. 18
    Michael Heath

    Me earlier, emphasized is added for clarification:

    We also know that in some cases, spending increases relative to GDP comes not just from Keynesian-like attempts to defend aggregate demand during business down cycles when GDP is contracting or at risk of contracting, but from suppressions and even contractions of GDP as part of the business cycle.

  19. 19
    lancifer

    Michael Heath writes:

    In addition federal spending has not been “unfettered”…

    http://upload.wikimedia.org/wikipedia/en/d/d9/Us_gov_spending_history_1902_2010.png

    In the last 100 years it has grown from less than 10% percent to over for 40%.

    Meriam Webster’s online dictionary defines unfettered:

    free, unrestrained.

    A more than four fold increase certainly qualifies.

  20. 20
    Raging Bee

    Beyond all that, sequestration does not affect outlays or funds already obligated, which means it will not affect existing contracts.

    The threat of sequestration is already affecting the renewal of existing contracts, so they’re pretty much lying by their careful choice of words. And, in fact, the mindless taxophobia and budget-cutting that’s currently leading to sequestration (and worse) is already having damaging effects on both civilian and military programs. State governments are laying off cops and judges rather than raise taxes; and that scandal over the miserable conditions in a hospital in Afghanistan is just one hint of what happens when we cut the wrong military or foreign-aid programs at the wrong time.

    FUCK the Cato Institute. They never gave a shit about America’s legitimate interests abroad, and there’s no reason to take those denialist pond-scum seriously on any issue. The tax cuts they mindlessly advocated are the reason we’re having this argument in the first place.

    Seriously, Ed, if you can’t find anyone other than the Cato denialists to criticize military spending, that strongly implies there’s no legitimate criticism to be found.

  21. 21
    Raging Bee

    Since the end of the Cold War…

    What’s really disgusting about this so-called think tank is that their rhetoric hasn’t changed one bit since the 1980s, when criticism of defense-budget demands really was in order. But times have changed radically since then: for starters, we’ve recently been in two long wars, both of which cost money, not just for military operations, but for nation-building and post-occupation aid operations — and then there’s the cost of helping our wounded vets and their long-suffering families to boot.

    Also, China has significantly expanded its military power since then, adn we really do have a legitimate interest in at least couterbalancing their growing influence in Asia — preferably without actual war, of course, but deterring war costs money too. If the Cato asshats can’t even change their rhetoric to accomodate the new reality, then they’re not worth listening to.

  22. 22
    Raging Bee

    A more than four fold increase certainly qualifies.

    No, lance, the word “unfettered” does not pertain to quantity. Just because something grew faster than you like, does not mean said growth was “unfettered.”

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