Sequestering the Jury

What you need to know about OMB's 394-page report on defense cuts.

Well, the new report from the Office of Management and Budget on "sequestration" is out. And, though it will generate lots of coverage, it says almost nothing. Basically, what OMB has done is to dodge the political bullet by producing a dry and minimal analysis of what across-the-board budget cuts would look like -- without saying which specific programs would feel the most pain.

This document is not going to satisfy the highly politicized rants that John McCain, Buck McKeon, and the defense industry have been making for months -- complete with defense-plant road show -- about how bad the sequester would be for our national security. But they didn't have the specific cannon balls they wanted to fire at the administration; that is, they did not have enough information to say that the sequester would close a certain plant or halt a given production line, thereby showing what jobs might be lost in what valuable political territory. They hoped the report would provide them with that ammo. Instead, it offers them a matchbox, at the most.

Basically, by saying only, as it did, that the Pentagon faces a 9.4 percent drop in funding, the administration is arguing "we need more time" -- time that will probably last until January -- to go through all the "programs, projects, and activities" that would be affected by across-the-board cuts. For now, it provided an Excel spreadsheet, at the level of budget accounts, about how much funding would be cut that might affect specific programs.

The difference is simple: Programs, projects, and activities are specific things, like F-35 fighters and Stryker vehicles and destroyers. The funding for these items is aggregated and therefore buried in broader accounts, like Air Force aircraft procurement, Army wheeled and tracked combat vehicles, and Navy shipbuilding. Instead of providing the program-level data, OMB provided the account-level data. Doesn't tell you much about which programs would be affected or how.

There may be some merit to the report's claim that 30 days was not enough time to produce this level of detail, though doing so is pretty cut-and-dried in defense. But it is safe to assume that the decisions about the report and what it contained were made at a high level in the White House. (I have been told by one source that the Defense Department supplied the numbers but did not see the final draft. And why would they need to? A kid with a calculator could run these numbers.) And on Pennsylvania Avenue, politics certainly prevails, as seems to be the case with the OMB report.

Why would the White House want to provide such a highly aggregated analysis? For the same reason the congressional Republicans want the detail: politics. The administration is doing a good job of seizing the high ground on national security; the Republicans are desperately looking for a foothold, and a sequester looks like one to them.

This is not about defense, really. It is a political shadow play about a sequester in the middle of an election, set up more than a year ago when the Budget Control Act was passed and the deadline for cuts was set for after the election.

A sequester for defense, the report says, as for all of the government, would be a disaster. There are a few of us around who think that cutting $50 billion out of defense next year is actually possible, properly managed, and at no price at all to U.S. national security.

There are even ways to manage a sequester of 9.4 percent of the Department of Defense's resources, should it happen. Pentagon data show, for example, that DOD has reprogrammed more than $20 billion in funds in six of the last nine years -- nearly $50 billion in FY 2008 alone -- meaning that every year there are billions of unneeded and unused dollars in various programs. And, should a sequester happen, OMB could use its authority to apportion funds in a way that deferred the overall impact of cuts into the third and fourth quarters of next fiscal year, giving the political system time to fix the problem (which has happened in previous sequesters). Moreover, because the defense industry is working off current contracts (unaffected by the sequester) and because new funds spend out slowly, the impact on the private sector will be nothing like what Lockheed CEO Bob Stevens has been screaming about for months. Really, the sequester would hit the Pentagon's civilian work force more than anyone else -- but nobody is screaming about that.

So the report makes it hard to specify what Armageddon looks like. But that is unlikely to stop the politics around this issue. Some in Congress and Republicans in the campaign want to make some hay here, so they will doubtless give the administration witnesses who are appearing next week before the House Armed Services Committee a hard time about this report. Expect the administration to continue to duck. They want attention to a deal here, but not until after the election.

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National Security

Bipartisan Bloat

If there's one thing that Obama and Romney agree on, it's more military spending. Too bad they're both wrong.

The Republican Party has become a hallmark of inconsistency. The GOP claims to be committed to small government and fiscal discipline, yet advocates huge increases in military spending. At the Republican National Convention in Tampa, Florida, a parade of party leaders and minor dignitaries predicted that President Barack Obama was poised to implement a massive increase in federal spending in a second term, funded by even-more-massive tax increases. The key to turning around the American economy, they say, is to free up resources in the private sector, cut taxes, and shrink the size of government -- excepting, of course, the Pentagon.

The party that opposes nearly all other forms of federal spending happily embraces the military variety. Republicans assert that military spending cuts will result in massive job losses, even as they argue that cuts in other federal spending would grow the economy and create jobs in the private sector. They are skeptical that the federal government should engage in nation-building at home, but celebrate it abroad. Republican candidate Mitt Romney accuses Obama of fostering a "culture of dependency" in the United States, yet ignores that U.S. security guarantees have created an entire class of affluent countries around the world that now rely upon U.S. tax dollars to pay for their defense.

The GOP's call to increase military spending sends a clear message to the world: If Romney is elected president, the U.S. military will become even more active than it has been over the past decade. The United States will continue to subsidize wealthy allies, allowing them a free ride on America's coattails. As Uncle Sam spends more on its military, other countries, but especially those sheltering under the American security umbrella, will funnel even more money toward their bloated welfare systems and ignore their obligation to defend their citizens and their interests. It amounts to an expensive and counterproductive form of foreign aid (which the GOP also often opposes).

In fairness to Romney, this pattern will likely continue if Obama is reelected. After all, he hasn't been anxious to kick other countries off the dole. In his State of the Union address this year, the president affirmed his belief that the United States is still the world's "indispensable nation," and his National Security Strategy is equally emphatic: "[T]here should be no doubt: the United States of America will continue to underwrite global security."

Obama's unwillingness to make deep cuts in military spending confirms his rhetoric. Over the next decade, the Pentagon's annual base budget (which excludes most war costs) will average $517 billion in constant 2012 dollars, 11 percent higher than what Americans spent during the George W. Bush years. Obama's proposed budget does not conform to the levels demanded under the "sequestration" provisions of last year's budget deal. His reasoning is straightforward: He wants Republicans to agree to tax increases to offset the extra Pentagon spending. It is a clever ploy that highlights the inconsistency and confusion within GOP ranks. Some Republicans are open to tax increases to pay for an even-larger military, but Romney is not. It isn't clear, however, how he would pay for his promised increases, which exceed the president's plans by at least $1.7 trillion over the next decade. Anti-tax crusaders like Grover Norquist have urged Romney to reconsider his plans to spend more on the Pentagon, and Norquist has more support than you might think on Capitol Hill.

Republicans could reasonably claim that military spending should get a pass because the Constitution clearly stipulates a federal role in defending the country. But nowhere is it written that Americans must provide security for others; that is the job of their governments, not America's.

Indeed, the Republicans' reflexive commitment to more military spending is particularly curious given their appreciation for how incentives work in the domestic sphere. Republicans know quite well that people are not inclined to pay for things that others will provide for them. GOP leaders speak often of moral hazards -- when individuals or businesses behave irresponsibly because others are there to bail them out. The same problem exists in international politics, but is strangely ignored in the GOP's plan to continue policing the world.

Extending the Constitution's "common defence" provisions to Western Europe and East Asia might have made sense in the early days of the Cold War, when these countries were broken, and broke, and the United States was confronting a common foe. But Washington should have shed these security commitments after the Soviet Union landed on the ash heap of history. It makes even more sense to rethink U.S. strategic objectives as other countries grow wealthier. Instead, as it stands today, the United States accounts for nearly 50 percent of global military spending, and that share will rise if America's allies cut their military spending, as many have already done.

If Romney were to call for reducing the burdens on U.S. troops and taxpayers by expecting other countries to do more, he might actually win over some undecided voters. There is little evidence that Americans are interested in subsidizing allies and paying higher taxes to increase the defense budget. On the contrary, some polls find strong bipartisan support for significant cuts in military spending. A military focused on defending core U.S. national security interests could be smaller, and far less expensive.

Some conservatives, including a few of the speakers at the Republican National Convention, are willing to consider cuts in military spending as part of a package that would also include deep cuts in domestic spending. It begins by understanding what the United States spends, and why. Senators Tom Coburn and Rand Paul are backing a plan to audit the Pentagon. In remarks in Tampa on Aug. 26, Paul explained, "Republicans need to acknowledge that not every dollar is well spent or sacred in the military, and we have to look for ways to make every department accountable."

Such change is unlikely if Romney carries through with his plan to grow the military's budget to levels not seen since World War II. But it isn't too late for the nominee, and his party, to recall their opposition to government spending, writ large, and to revisit their plan to ask Americans to spend even more to subsidize the defense of wealthy allies that are more than capable of defending themselves.

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