There have been many warnings in recent years about a "perfect storm" threatening U.S. defense spending. These dire predictions so far have not been taken seriously as military budgets doubled during the past decade.
But the storm is coming, and now it's time to brace for a big one.
A confluence of processes and events is creating the conditions for a severe fiscal crisis that will affect all aspects of the nation's finances, and the impact on defense will be more acute as the U.S. military continues to fight costly wars.
The wars in Iraq and Afghanistan are now consuming in the neighborhood of $200 billion a year, which despite a defense budget just north of $700 billion, have dragged funds away from needed modernization. Recall that Congressional Budget Office projections from 2005 even then indicated that Defense Department funding was running $100 billion a year short of what it needed to fund the modernization programs planned at that time.
Then came the 2007 recession, now extending past 31 months, which is the most protracted since World War II. Along with the downturn are unsustainable federal budgets and projections of more than $1 trillion in annual deficits out through 2020. The national debt is approaching $20 trillion and interest on the debt will be around $900 billion per year in 2020--larger than the "projected" defense budget that year. The unsustainable nature of this budget projection has now been recognized as a national problem that can no longer be ignored.
In response, President Obama this year appointed a National Commission on Fiscal Responsibility and Reform. The so-called Deficit Commission is due to report in December. In anticipation, Congress has deferred action on the 2011 budget, which is normally scheduled to become law Oct. 1.
Meanwhile, the $37 billion defense supplemental, that was requested by the Pentagon for prosecution of the ongoing wars, is stalled in Congress, Defense Secretary Robert Gates said in the absence of funding by the July 4 recess, the department would have to "do something stupid." The recess came and went, with no bill. The House passed a $58 billion bill--$37 billion for defense and $21 billion for domestic spending. The Senate has so far not acted, but leadership there opposes domestic spending in the supplemental.
The Office of Management and Budget issued a "statement of administration policy" which promises a veto "if the final bill presented to the president includes cuts to...