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Gates Defense Cuts Not Major June 4, 2010

Posted by Gordon Adams in Analysis.
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by Gordon Adams

The defense “cuts” proposed today by Deputy Secretary Bill Lynn are largely notional, not a major change of course.  As the chart below indicates, prepared by the Defense Department, they are so small in the first two years, in the framework of a $700 b. defense budget, as to be notional at best. Moreover, the “savings” from these cuts will be retained in the services and applied to other needs.

Most of the proposed cuts are likely to happen in Operations and Maintenance (O&M) spending, which is over $200 billion in the FY 2011 budget request, still a small proportion.  Moreover, the cuts do not affect O&M spending for the wars, which is another $117 billion.  This matters because O&M for the war and O&M for the “base budget” are largely fungible, meaning funds provided through the war budget can be used to fund activities in the base budget, rendering the proposed cuts even less significant.

In the “out years” (2014-16) the cuts are notional, at best, because the real defense budgets for those years are far from written and are likely to vary widely from current projections.  The biggest variation is likely to be much steeper overall budget cuts than what the Secretary proposed today.  As deficit reduction efforts kick in and we draw down in Iraq and Afghanistan, defense budgets will end up on the deficit reduction table, leading to much more significant, and real, reductions in defense spending than those being discussed today.

$ Billions FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Total
Individual Military Dept Goal

(Army, Navy, Air Force)

2 3 5.3 8 10 28.3
Defense Agency/Field Activity Wide Goal 1 2 3 4 7 17
Combined Goal 7 11 18.9 28 37 101.9
DoD Top Line(in Total Year $) 566.3 581.8 597.8 616 635.1 2,997


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