Inside Defense, 21 Sept 2011
Roman Schweizer, MF Global defense analyst and former chief editor of Inside the Navy, today honed in on a key point about the military budget raised during yesterday's Pentagon press briefing by DOD's top civilian and uniformed leader. In a note to Wall Street investors, Schweizer writes:
Defense Secretary Leon Panetta and Joint Chiefs Chairman Adm. Michael Mullen yesterday disclosed that the first round of DoD cuts required under the Budget Control Act's discretionary caps is actually higher than the widely reported $350 billion.
We expect mainstream media to start adopting the "$450B-plus" terminology even though it has been discussed by defense trade press and experts in recent weeks.On Sept. 2, InsideDefense.com reported the actual size of the spending cuts the Pentagon was working to adopt was $460 billion:
The Office of the Secretary of Defense, eying what a senior official says is a White House-directed cut of "about $460 billion" over the next decade, has instructed the services to deliver by Sept. 16 their revised spending plans in accordance with the Budget Control Act of 2011.The explanation for the higher number -- nearly one-third higher than the widely reported $350 billion figure -- is the $110 billion difference between the lower Congressional Budget Office forecast and the Obama administration's long-range budget plan outlined in February along with the FY-12 spending request.
The larger figure underscores the likelihood that the first round of DOD budget cuts will be “much worse and immediate, even without sequestration and particularly when compared to the previous budget plan that had modest real growth for research and development and procurement,” Schweizer notes. “It also makes it harder on those accounts because implementing money-saving reforms in other areas takes time -- but cuts are real for the FY-13 budget, sequestration or not.”
Lastly, he argues:
While there are various political scenarios that make sequestration a possibility but never implemented, we think the Pentagon's FY-13 budget will show significant program changes. That's assuming the budget that is released is not under sequestration. If the Pentagon must release a "doomsday" budget in February because Congress and the administration cannot find $1.2T in savings, it'll show draconian cuts that will have to wait until January 2013 to actually be implemented.