I have been saying for some time that we are in a defense drawdown. It has already begun. Including war costs, overall DOD budgets are down more than 10 percent in constant dollars from the FY 2010 peak.
While some will immediately say that is because we left Iraq and drew down in Afghanistan (which is true), the so-called "base defense budget," which is largely interchangeable with the war budget, has also come down. It was flat in FY 2011 (no gains for inflation), down about 1 percent in FY 2012, and seems very likely to go down even further this year, with negotiations over sequester between now and March 1 likely to arrive at an agreement that includes more defense reductions.
A drawdown is realistic. What is unrealistic is the Pentagon's current expectation and planning projection that defense budgets will keep up with inflation over the next ten years. While Secretary Panetta likes to claim (he did so just last week in Europe) that he has cut $487 billion from future defense budgets, he fails to say that these "cuts" actually brought projected budgets down to where DOD would still keep up with inflation, or, in other words, continue to grow in current dollars.
We will go deeper. We have always gone deeper after a war. And the defense community in Washington, D.C. is substantially more realistic than the Pentagon leadership in projecting deeper cuts. The latest sign comes from the National Journal, which polled its large and highly diverse group of "national security insiders" last week, asking them how deep they thought the defense budget could go over the next decade.
Eighty percent of this group, which ranges from left to right, thought the budget would go down at least another $100 billion over the next decade. Thirty-five percent expected cuts of $100-300 billion; 21 percent thought they would range from $300-500 billion, while 24 percent (including yours truly) thought they would be at least $500 billion.
Those would be real cuts, below inflation. And a surprisingly large unanimity of view exists that such cuts are inevitable. Moreover, they would not be "doomsday." A $500 billion reduction in currently projected defense budgets would be one of the most shallow drawdowns in our military history, below those after Korea, Vietnam, and the end of the Cold War. It would leave the Pentagon with $5.3 trillion in discretionary funding over the next decade (excluding any residual funding for overseas contingency operations, which could be as much as another $500 billion).
If sequester hits, these cuts will start right away. Even without sequester, such cuts are realistic and a form of budgetary discipline DOD has not had for more than a decade. It would be good for the Pentagon and likely Secretary of Defense Hagel to focus on this number as the budget negotiations move forward and as planning for the next Quadrennial Defense Review get under way.
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