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Five Reasons The Congressional Super Committee Won’t Matter To Defense

Posted by Loren Thompson on

If you are in the defense business, then you’re probably getting tired of speculation about how the so-called congressional “super-committee” is going to decide the fate of America’s military posture. That bipartisan panel of 12 lawmakers was established by the Budget Control Act to recommend $1.5 trillion in savings by November 23, and if it doesn’t succeed — or Congress fails to enact what it recommends — then automatic cuts will be imposed on domestic and defense programs.

The defense cuts triggered by “sequestration” in the absence of a political agreement could reach $600 billion over ten years, and that’s on top of the $350 billion already being implemented under the law.

These aren’t just cuts from some hypothetical spending plan. They are reductions to the Pentagon’s base budget below the level of funding enacted in fiscal 2011. Secretary of Defense Leon Panetta says they would be devastating to the nation’s security, and could destroy so many jobs that the economy shrinks by 1 percent. That has made the deliberations of the super-committee a focus of endless musings in defense circles, because it seems to be the only mechanism available for averting real damage to the joint force. Policymakers, military planners, corporate executives, investors and everyone else with a stake in the level of military spending are hanging on each new piece of news about the super-committee, convinced that the outcome of committee exertions will reveal what the future holds.

They’re all wrong. Two years from now, Washington will barely remember what the super-committee was, and a whole new array of issues will occupy center-stage in the policy arena. The committee’s recommendations aren’t going to matter over the long run, for five simple reasons.

1. It’s only a law. The legislation that created the super-committee and mandated deficit reduction goals wasn’t brought down from the mountaintop by Moses. It’s just another law, and like any law it can be repealed or amended. History reveals few examples of federal laws adversely affecting millions of voters that aren’t modified soon after passage, and today’s legislators have no power to constrain the actions of future Congresses. So if you think that the mandates set forth in the Budget Control Act are going to set the level of U.S. military spending for the next ten years, guess again. America’s political system is the binary opposite of the old Soviet central-planning system. We don’t do 10-year plans in Washington. Everything is subject to change, and well-organized minorities almost always get their way in Congress. Thus, the Budget Control Act as we know it today is not long for this world, no matter what the super-committee recommends.

2. Elections are coming. The second wave of defense cuts potentially triggered by the law doesn’t begin to take effect until January of 2013, after the next presidential election. There’s a high likelihood that election will put a Republican in the White House who has no use for the spending priorities he or she has inherited. Even if President Obama manages to eke out a meager electoral victory despite high unemployment and low approval ratings, he will face a Congress dominated by Republicans (the GOP already controls the House and only needs to pick up four seats to control the Senate). The political stalemate that led to the Budget Control Act will thus be either broken or altered, and new measures will take its place. If Republicans win everything, they can satisfy the deficit-reduction aspirations of the Tea Party without cutting defense, and most of the candidates for the party’s presidential nomination are signaling resistance to any defense cuts at all. It’s exceedingly improbable that the current law would remain intact through a shift in partisan control of the government, and the most likely scenario is that mandated defense cuts will be repealed just as they are beginning to bite after inauguration day.

3. Threats trump deficits. Former joint chiefs chairman Adm. Mike Mullen was exaggerating when he said the deficit was the biggest threat the nation faces. Being out of money is nowhere near as bad as being dead. So if major new security challenges arise in the years ahead, Washington will quickly forget its commitments to cut military spending. And they will arise. From Korea to Cuba to Vietnam to Iraq to 9-11, there’s always some new danger waiting in the wings to stimulate defense outlays. Judging from Secretary Panetta’s recent speech at the Wilson Center, the leading candidate to fill that role circa 2013 is China, which is doing so many things to antagonize Washington — from currency manipulation to computer hacking to threatening neighbors to developing new weapons — that it’s just a matter of time before the U.S. decides some sort of military response is required. Not a war, mind you, but more spending in areas like sea control and long-range strike. Of course, the new threat could come from some unexpected quarter, as it often does. Either way, the record shows that when Washington feels threatened, it spends money on the military like there’s no tomorrow. And given the kinds of threats we now face, there might really be no tomorrow unless the Budget Control Act is set aside to deal with the latest danger.

4. The economy, stupid. When Bill Clinton was running his successful campaign to unseat the first President Bush in 1992, political strategist James Carville popularized the slogan, “It’s the economy, stupid.” The point being that when business conditions are weak, the economy and jobs are almost always the biggest issue on the minds of voters. Budget deficits are usually far down the list of voter concerns, and although they are a hot topic today, it’s mainly because of concern with America’s flagging economic performance. So what does that tell you about a law that threatens to wipe out a million jobs by slashing defense budgets? It tells you there’s not much political mileage in actually implementing the law, because it won’t get at what’s really on voter’s minds — creating jobs. Right now, the Obama Administration is pursuing contradictory goals by seeking to borrow another $447 billion for a jobs program at the same time it is proposing to wipe out a huge number of jobs associated with national defense. Once we get to the general election and voters start focusing on the job-destroying consequences of cuts recommended by the super-committee or mandated by the budget act, neither party is going to be interested in sticking with the current plan. You don’t win power in Washington by destroying jobs, no matter how high-minded your purposes may be.

5. Borrowing is easy. One reason why politicians and the public don’t really care much about the deficit is that borrowing is so painless. Although Washington has accumulated the biggest national debt in the history of the world, the carrying cost of that debt at today’s interest rates only adds up to about six-percent of the federal budget. It is actually getting easier to borrow over time, because fear about volatility in overseas financial markets is increasing the demand for federal debt instruments. In other words, Washington is paying just about the lowest interest rates on record to borrow money. So the natural inclination of the political system is to just keep borrowing rather than making the painful cuts that the super-committee will have to contemplate. The Tea Party temporarily changed that equation after the midterm elections, but only because the cutting hadn’t actually begun. Now that the human dimensions of proposed cuts are coming into focus, both on the defense and on the domestic side, the appeal of borrowing more money “until the economy recovers” will grow fast and the appeal of fiscal discipline will recede correspondingly. It would be different if Washington was paying the interest rates Greece is paying, but right now it’s a snap for the Treasury to place new debt at rock-bottom rates.

The bottom line is simply this. Our current preoccupation with the deliberations of the super-committee is based on a misreading of how deficit-control efforts are likely to play out in the years ahead. This political system is not ready to impose draconian budget cuts on anybody, and it will find multiple excuses going forward for not doing so. Defense spending is unlikely to fall at anything like the rate that many analysts expect, and if Republicans win the White House in 2012, military budgets will probably rise. The super-committee is a useful exercise in assessing fiscal alternatives, but whether it finds the savings required by the Budget Control Act or not, the big cuts currently being discussed aren’t going to happen, because almost nobody in Washington supports them.

What do you think?