Sequestration Defense Budget Cuts Not as Drastic as They Seem | Economic Intelligence


Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

In a few months, the federal government is scheduled to implement a series of across-the-board spending cuts in a process known as sequestration. The two parties agreed to these cuts last year as part of a deal to raise the debt ceiling by a cumulative $2 trillion.

Washington got its debt ceiling increase. Now it’s time for them to deliver on the spending cuts.

To no one’s surprise, many on both sides are looking for ways to get out of meeting their end of the bargain. There is one noticeable exception. In the last few months, Sen. Tom Coburn, a Republican of Oklahoma, has produced two reports in which he lists the easiest place to cut government spending: waste.

[See a collection of political cartoons on the budget and deficit.]

The first report was the senator’s annual Waste Book. A second report just came out last week and focuses on the waste in the Department of Defense’s $600 billion budget. It identifies $68 billion over 10 years. This waste should be perceived as low-hanging fruits since it is made mostly of the spending that takes place within Defense Department, but has nothing to do with protecting our country. Some of these programs, such as $700 million in alternative energy research, duplicate efforts elsewhere in the federal government, while others, like $9 billion in Pentagon-run grocery stores or $10.7 billion to educate children of military families in the United States when these kids already have the option of attending public schools, have no bearing on our national security.

As this report (The Department of Everything) explains, it is easy to save almost $70 billion over 10 years “without cutting any Army brigade combat teams, Navy combat ships, or Air Force fighter squadrons.” The press release notes that the report merely skims the surface; much more needs to be done.

[See a collection of political cartoons on defense spending.]

The report also offers a nice complement to a July 2011 report produced by Senator Coburn called “Back in Black.” In this document, the senator offers a comprehensive $9 trillion deficit reduction plan, with $1 trillion in cuts over 10 years coming from defense, including reform of the military healthcare system and the cancellation of outdated weapons systems.

Coburn’s reports are important at a time when too many Washington politicians and pundits insist that defense spending should be spared from any cuts—and even sheltered from review. According to some, any defense cut, no matter how small, would jeopardize the country’s safety, kill a million jobs, and shrink GDP significantly.

Evidence and research tell a different story.  First, while half of the sequestration cuts will come from defense spending, most of the cuts are to the projected growth of spending. That means that over the next 10 years, after an initial reduction in defense spending, this budget will continue to grow, at a slower pace than it was scheduled to, but it will grow nonetheless. That means that these cuts, while impractical because of their across-the-board nature, are far from being “devastating.” Defense spending has nearly doubled since 2000, and the country is getting out of two wars and a reduction of this sort should be expected.

[See a collection of political cartoons on the economy.]

While there is little doubt that some defense jobs will be lost as a result of sequestration, it won’t be as many as the industry claims. What’s more, some of these job losses will be offset by increased output in other sectors as resources shift. Seeing through the one-sided rhetoric of private interest groups who are fighting against these cuts, we must keep in mind that the Department of Defense isn’t a jobs program. In fact, its only role should be to address the threats facing the nation. That means that private-sector profit or even private-contractor job losses shouldn’t prevent sensible reductions in federal spending.

If Washington is going to get serious about stabilizing our long-term economic outlook, implementing the sequestration cuts are the first steps in the right direction.

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