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November 22, 2011 7:05 pm
The failure of the US Congressional supercommittee to strike a deficit reduction deal has set off a fierce political dispute about the future of the defence budget, amid high-level predictions that national security could be put at risk by planned cuts.
Under the existing terms of the budget, the failure of the deficit panel means that the defence department will face automatic cuts of $600bn over the next decade starting from 2013, on top of the $450bn that the Pentagon is already looking to save.
The collapse of the supercommittee is now likely to turn the defence budget into an important issue in the 2012 elections and will intensify the debate in Washington about exactly what sort of global power projection the US can afford in the coming decades.
As the talks on Capitol Hill broke down, Leon Panetta, the defence secretary, cautioned that the new cuts would create a “hollow force incapable of sustaining the missions it is assigned”. Earlier, he warned that the extra cuts would lead to the smallest ground forces since 1940, the smallest number of ships in the navy since the first world war and the smallest air force in its history.
Congressional Republicans with ties to the military immediately pledged to find ways to avoid the extra defence cuts. “I will not be the armed services chairman who presides over crippling our military,” said Howard “Buck” McKeon, a California Republican who chairs the House armed services committee.
In the Senate, John McCain and Lindsay Graham said they were working on a plan to “minimise the impact” of the cuts. However, President Barack Obama said on Monday he would veto any attempts to unwind the automatic spending cuts.
Still, many within the industry expect the Pentagon to wriggle out of its current straight jacket as it did in similar situations in 1988 and 1990, when Congress ultimately dropped earlier requirements for automatic cuts. John Shephard, chief strategy and corporate development officer at ITT Exelis, the defence company, said ahead of the supercommittee deadline that Congress had a number of options to avoid the extra cuts, including counting reductions in wartime spending towards the required totals.
“What I am counting on is that I don’t think the leaders in the administration and Congress are going to allow an artificial ‘doomsday mechanism’ to determine our national security spending and needs,” he said.
Yet contractors are preparing for the worst, as Dennis Muilenburg, the head of Boeing Defense, Space & Security, and one of the largest defence companies in the US, noted at a conference earlier this month. “From an operational standpoint … we’re assuming that worst case scenario. So we are designing our cost structure to accommodate [a] $1,000bn budget reduction,” he said.
Marion Blakey, head of the Aerospace Industries Association, a lobby group, expects more job cuts. “Our factories are already laying off people, boardrooms are making very difficult decisions about cutting research and development spending,” she said.
If the automatic cuts are applied, the defence department said it could be forced to cancel the F-35 fighter aircraft, much of its shipbuilding programme, all ground combat vehicle modernisation programmes as well as plans for a European missile defence system.
However, not all independent analysts believe the new cuts will have a significant impact on national security strategy. “These apocalyptic scenarios do not make a lot of sense,” said Lawrence Korb, who was an assistant secretary of defence in the Reagan administration.
The defence budget had increased for an unprecedented 13 years in a row, he said, and was now 50 per cent higher in real terms than it was in 2001. Significant cuts could be made by increasing pension and healthcare contributions, reducing the number of ground troops and by cutting some weapons programmes. “The Pentagon will have to make some tough choices, but the truth is that the military got a bit spoilt,” he said.
Some analysts believe that Mr Panetta miscalculated by painting such a stark picture of the impact of the new cuts because some members of Congress concluded there was no chance they would actually be implemented.
Among Congressional Republicans, there is a hope that if they can win the presidency and control of the Senate in 2012, they can avoid the extra defence cuts by finding new savings in the budget.
Republican presidential candidates could use the cuts to attack Mr Obama for being weak on defence. However, analysts said that the issue could also prompt a more open dispute between those Republicans focused on national security and those who think budget cuts are more important
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