The three percent solution

The debt ceiling bill making its way through Congress will cut broad defense spending  by $350 billion across ten years. The broad definition encompasses homeland security, veterans affairs, and nuclear programs, in addition to straight DOD spending. Those accounts totalled $881 billion in fiscal year 2012. Defense Department spending on its own was roughly $670 billion (that includes both the baseline budget and war operations). Even if DOD can offload some of the cuts onto other national security departments, it is likely to face a reduction of roughly four percent in its total spending.  

Scoring of the spending cuts counts as savings a significant amount not spent in Iraq and Afghanistan. This financial windfall is the result of the president’s policies to curtail our military operations in the wars — going to zero military personnel in Iraq by the end of 2011, and refusing commanders in Afghanistan the troops they asked for to achieve the president’s objectives. With these figures folded in, DOD will probably be faced with a real reduction in spending of between two and three percent — in a budget that has more than doubled in the past decade. DOD will need to husband its resources carefully, but the roof won’t fall in.  

In fact, the deal Republicans in Congress were able to make reduces DOD less than the president proposed in his April budget speech. The president’s proposal would have made no dent in the deficit, yet still would have cut defense by more than the legislation in its first phase.

But it is the second phase of debt reduction that has the potential to be extraordinarily damaging to defense. If the bipartisan commission cannot reach agreement, it will trigger automatic across the board cuts of $1.2 trillion beginning in 2013. It would appear likely the bipartisan commission will, in fact, deadlock, in which case a 50-50 domestic and defense split would require DOD to cut spending an additional $600 billion. It would mean a 14 percent cut overall to defense spending. This DOD could not do without a major reconfiguration of forces and capabilities, and a major reduction in our actual fighting power.

And the structure of the bargain gives Democrats more in defense cuts (and therefore protection of domestic programs) if they refuse to compromise on the second tranche of cuts. As President Obama himself said, "The nice thing about the defense budget is it’s so big, it’s so huge, that, you know, a one percent reduction is the equivalent of the education budget … it’s so big that you can make relatively modest changes to defense that end up giving you a lot of head room to fund things like basic research or student loans or things like that."

The date of the automatic spending cuts is crucial, however: a new president will have the latitude to submit a budget that makes executive choices about spending rather than accepting a system-wide legislated reduction. President Obama has led from behind in the budget crisis; the president in 2013 could make more responsible choices.