They hailed from near Detroit; a loud and boisterous cast of aunts, uncles, and cousins. Staunch union Democrats all, mom’s clan was tied to the auto industry since my grandfather, an Arkansas hillbilly, moved to Detroit during the Depression. He was the first of four generations of Detroit autoworkers. 

Their life in Michigan was a stark contrast to our lives on a military base. My dad often worked 12 to 18 hours a day in a busy control tower, while my aunts and uncles seemed to have time on their hands. My dad deployed overseas, often a year at a time, and never complained. At the summer get-togethers my aunts and uncles sat around drinking beer and griped about the lousy pay and hours on the assembly line. Our family drove a used car and made do, while my Michigan relatives were never quite satisfied with their employee discounted new cars. As a child I couldn’t understand why they weren’t happy with what they had. Looking back as an adult I know why.

They saw a good paying union job not as a privilege, but an entitlement. The auto industry was a fact of life; an eternal and unmoving colossus. Through them I learned hubris isn’t the sole domain of the white collar worker. That hubris blinded workers and management alike as the seeds were being planted for Detroit’s eventual undoing.  

At one Fourth of July reunion I remember my uncle scoffing at a little Toyota as it puttered by amongst giant Oldsmobiles and Buicks. He cursed the little car. “Rice burner” he laughed and took another swig of Pabst Blue Ribbon. How dare this little car challenge America’s auto industry, the symbol of her might! My dad, just back from Vietnam, remained silent. I think, deep down, he knew the world had already changed.

Detroit didn’t change, and that’s why it died. They wouldn’t, or couldn’t, change their labor practices in the face of the global marketplace. They didn’t heed the warnings of half a dozen energy shocks since 1972 and produce energy efficient cars. Now, the Big Three automakers teeter on the brink of extinction, their good paying union jobs are almost gone, and Detroit is only a shell of the great city it once was.  There is no hubris left in Michigan, only fear. America’s indigenous auto industry will most likely pass into history before our eyes.

Two years ago I worked at a military logistics hub in middle Georgia. The base is a massive installation and the biggest employer in the state. Only a handful of the roughly 25,000 people working there actually wear a military uniform, the rest are government civilians and contractors.  It is a one industry town. I’ve seen many towns like it, survivors of numerous base realignment and closing (BRAC) rounds over the past 15 years. These fortunate military installations, through fate or strong congressional representation, grew and became economic lynchpins for the local communities.

On a humid evening several summers ago in that Middle Georgia town I sat in the bleachers watching my kid’s little league game. I was surrounded by families who depended solely on the defense industry for their livelihoods. The latest BRAC was the topic of conversation. These parents were third and fourth generation employees at the base. In their idle talk I heard the same assumptions, “…the base would always be here,” and “…I can always get a job on base if I can’t make it anywhere else,” and “…our congressman won’t let them close this base, it’s too important.” In them I saw traces of the same hubris my uncles and aunts exhibited all those years ago. The military depot and        it’s good paying government job wasn’t a privilege, it was an entitlement. These people saw the base as a fact of life, an unmoving colossus which would be there forever.

I didn’t know it then, but I believe I was witnessing the rise of a new General Motors - the US Defense Department.

These good people from Georgia were employed by a monolithic industry at the peak of its power, but not changing with the times. The parents in the stands watching their kid's play ball repaired the same aircraft their grandfathers originally built. Other than the Chinese-made computers atop their cubicle desks, little had changed at this base since Reagan was president. And little would change.

Like the Big Three automakers, defense has been inefficient for years. Massive government unions hold sway, ensuring change comes slowly, if at all. Instead of pumping money into new weapon systems, billions are being spent maintaining the status quo. And the status quo works just fine until the rules change. The rules changed quickly and mercilessly for Detroit. The same is happening to the defense establishment. 

First, federal social spending and national debt are beginning to starve the military of the resources it needs to carry out its missions and trillions in bailouts are accelerating the process. Second, the Pentagon’s bloated bureaucracy isn’t helping as it robs the services of the nimbleness they need to adapt and change. This fact has had its most devastating impact on weapons acquisition. Third, the Pentagon’s reliance on contractors puts it at the mercy of many who don’t have America’s best interests at heart. Fourth, congress’s political machinations exacerbate the damage inflicted by all the other factors. And like Japanese car companies of the 1970s, our military competitors see us sowing the seeds of our own demise and are working to accelerate the process. They know our military is the last symbol of America’s remaining might.

This is important because everything which sustains the military (money, personnel, and technology) comes from the economy, not government. Government only allocates those resources and sets policy, the economy creates the resources. I think our generals and defense secretaries might have forgotten this important point. If America is the economic engine of the Western world then those professionals who defend it should know how that engine works.  

This is why I stand on my Townhall soapbox and preach to the few readers who stumble in here about the dangerous road our government is taking. If I’m becoming a one-note blog, so be it. I can’t think of anything more important to talk about.  

The mainstream media (MSM) is talking about the mounting pressures to cut the defense budget based on the slowing economy and massive bailout spending. I point to the two articles below as examples.

From the 10 November Boston Globe:

A senior Pentagon advisory group, in a series of bluntly worded briefings, is warning President-elect Barack Obama that the Defense Department's current budget is "not sustainable," and he must scale back or eliminate some of the military's most prized weapons programs…It contends that the nation's recent financial crisis makes it imperative that the Pentagon and Congress slash some of the nation's most costly and troubled weapons to ensure they can finance the military's most pressing priorities…

And a few cuts here or there won't do the trick, they add. "Taking cuts at the margin won't work this time, nor will pushing things off to later years."
     

And this is the 3 November New York Times:  

After years of unfettered growth in military budgets, Defense Department planners, top commanders and weapons manufacturers now say they are almost certain that the financial meltdown will have a serious impact on future Pentagon spending.

Across the military services, deep apprehension has led to closed-door meetings and detailed calculations in anticipation of potential cuts. Civilian and military budget planners concede that they are already analyzing worst-case contingency spending plans that would freeze or slash their overall budgets...

In all, the Defense Department now accounts for half of the government’s total discretionary spending, and Pentagon and military officials fear it could be the choice for major cuts to pay the rest of the government’s bills…

Some critics, citing the increase in military spending since Sept. 11, 2001, say it would be much easier to cut military spending than programs like Social Security and Medicare at a time when most people’s retirement savings are dwindling because of the financial crisis. Representative Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, has raised the idea of reducing military spending by one-quarter.

I’m glad the MSM is finally paying attention to the subject, but I think they’re missing the real point. It’s not that the current spending spree and recession will hinder defense spending; its quite possible America might be wrecking her currency and economy to the point we cannot sustain basic government functions like defense at all. If you think I’m exaggerating, read this article from CNBC:

The United States may be on course to lose its 'AAA' rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche…"The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system" and the bankruptcy of the government is not out of the realm of possibility, Hennecke said…In order to solve or stem the economic slowdown, Hennecke suggested the US would have to radically reduce spending across all sectors and recall all its troops from around the world. As for a stimulus package, there is not much of an industry left to stimulate back into life, Hennecke said.

Tyche, a respected international finance corporation, goes further in this online article, “The Coming Cash Crash” by comparing the US to Zimbabwe. Both nations are destroying their currency with out of control debt and by relentless currency printing. In Zimbabwe it resulted in reduction of its national bonds to less than AAA status and panic selling of its debt and currency. Bankruptcy. 

America’s bankruptcy is a real and imminent possibility. What happens in a bankruptcy? Simple, an entity is reorganized in a way which allows it to function in the best interest of it creditors. Who are America’s creditors? I’ll let the reader answer that one and then ponder this question…

Can a bankrupt nation defend its international interest at home and abroad?

This weekend and over the next month they’ll send their high-powered lobbyist to gain assurances from their pet senators and congressmen that their key programs will remain safe from any future cuts.  Our legislators will try to put on their best face and tell them all is well. All the while they’ll quietly send their staffers to the Pentagon...Those staffers will tell the Pentagon budget planners…to start planning deep cuts. They’ll give these planners draconian bottom lines and tell them to meet them - period...Over the next few months rumors of the deep budget cuts will seep outside the Pentagon. Small programs, big programs – nothing will be sacred...The Air Force will get hit hardest since it’s currently the least favored branch among the political elites.... Don’t hold your breath on a new replacement rescue helicopter...Expect early retirement for various weapons systems...

Let’s see where we stand one month and over a trillion dollars later:

(Leaders) will assure defense contractors defense spending will remain strong: According to Rueters, "U.S. Defense Secretary Robert Gateson Tuesday struck an upbeat note about the future outlook for U.S. defense spending, citing strong bipartisan support for U.S. national security goals." 

Deep defense cuts: I guess Sec. Gates hasn't been talking to the movers and shakers in the upcoming Democratic congressional super-majority. Two weeks ago this story hit the papers:  "After the November election, Democrats will push for a second economic stimulus package that includes money for the states' stalled infrastructure projects, along with help paying for healthcare expenses, food stamps and extended unemployment benefits, U.S. Rep. Barney Frank said Thursday...(He) also called for a 25 percent cut in military spending, saying the Pentagon has to start choosing from its many weapons programs..."

Congress is already looking for offsets to pay for the bailout and stimulus packages.

 'Big programs, small programs, nothing will be sacred'…expect early retirement for various weapon systems’: According to Inside Defense and the Air Force Times, the service will cut over 300 frontline fighter aircraft by 2010, almost a decade ahead of schedule. This is about 15% of the services fighter force, significant by any standard.

Don’t hold your breath on a new rescue helicopter:  On 23 October the Washington Times reported the Air Force postponed awarding the CSAR-X helicopter until sometime next year, leaving it for the next presidential administration. The tanker is also now delayed until the next administration is seated.

1. After the election the Pentagon likely faces an openly hostile congress and administration in time of active war. Rep. Barney Frank’s 25% cut comment is a clear message of things to come.
2. Never has the Pentagon had to maintain a sustained forward force posture and active combat operations while America was so deep in debt (public and private).
3. Never has so much of that debt been held by potential hostile powers. He who holds the debt makes the rules.
4. Never has America experienced a deep recession as a consumer, not manufacturing or farming, economy. The Pentagon keeps many of America’s remaining heavy industry on life support, what happens to them in a shrinking economy and lower defense spending is uncertain.
5. The Pentagon has yet to factor in the new realities of global free trade into its acquisitions or defense posture. Its current budgeting and acquisitions framework hasn’t fundamentally changed since America was a creditor nation and General Motors ruled the world.
6. Never has the Pentagon had to rely of foreign sources, many potentially hostile for three critical items: funding (via investment in US debt), energy, and critical technologies. This is the true national security issue of our time.
7. What happens if we enter a period of increased inflation due to our current massive bailout and stimulus spending? This is a real possibility. A severely weakened dollar will discourage foreign (i.e. Chinese) investment in the debt & dollar. Inflation makes everything more expensive – like fuel for fighter jets or computer chips for guidance systems. A defense budget passed one year may assume a 5% inflation rate, but face 10% inflation when executed. Though the government doesn’t officially factor it in, energy is one of the biggest drivers for actual inflation.
8. Never has the Pentagon had to rely on an all-volunteer force during times of sustained combat operations. This has resulted in enormous personnel costs for a relatively small force. The only good news here is a poor economy makes for good recruiting and gives the Pentagon more flexibility in reigning in benefits.

All of these factors will come into play in the next 24 months and beyond to reshape how America defends herself and her global interests. I won’t venture anymore predictions other than hold on…its going to be a bumpy ride.

Few alive can recall when our nation faced such unsettling times. Servicemen watch the financial turmoil battering our nation with grave interest. Obviously, their most immediate concerns are how the crisis affects their wallets. However, in recent days I’ve been approached by concerned young officers asking, “How will this impact the military?” They’ve been at war for years and now another level of uncertainty has been dropped upon them. They understand the military doesn’t exist in a vacuum and are hungry for straight answers.

The straight answer is the budget outlook is grim, won’t get any better, and it will effect defense.

The short term outlook is dark. According to February 2008 Office of Management and Budget (OMB) estimates, the government took in about $2.6 trillion and spent about $2.9 trillion.  That resulted in an annual deficit of almost $300 billion dollars, or roughly the equivalent of half the defense budget. Add that to America’s growing 10 trillion dollar debt, a conservative estimate. (It’s important to note these OMB figures assumed a healthy economy and unemployment under 5%.)

Those February assumptions are now worthless. The feds just spent over $850 billion of money it doesn’t have to save the global economy. Unemployment raced to 6.1% and most agree we’re heading into, at minimum, a deep recession. Tax revenues will fall and the pool of money available for the federal government to borrow will shrink in the face of the deepening global credit crisis. This year’s deficit has doubled and may top one trillion dollars before all is said and done. This bodes ill for a nation at war.

The Pentagon budget would face substantial challenges even in the best of times. The Navy and Air Force are struggling to modernize Cold War era equipment while the Army and Marines must grow and replace equipment worn out by a decade of combat. Healthcare costs are rapidly eroding the defense budget from within. Seldom has the need for defense dollars been so great, nor has the budget outlook been so bleak.

The long term outlook is even darker.

Many in the military have never heard of Mr. David Walker. He was U.S. Comptroller General under Presidents Clinton and George W. Bush.  As America’s former senior bookkeeper his message to America is simple: we’re way over our head in debt, it’s getting worse, and time is running out. Here’s why.

If one took the 3 trillion federal budget and condensed it into one dollar, defense spending would be about 20 cents. Mandatory spending, mostly interest on the national debt and entitlements, take about 50 cents; by law these take precedence over everything else, including defense. Starting in 2010 mandatory spending will begin to devour the entire dollar until, somewhere between 2020 and 2030, there will be no revenue left over for defense or anything else. Even worse, these OMB estimates are based on rosy economic forecasts and don’t account for anything approaching the scale of our current crisis.

I believe global economics and the colossal pressures on the federal budget are the true defense issues of our generation. Our entire strategic outlook must revolve around this new reality. Leaders of every service should level with us about the impact these challenges will present in the coming years.

Entitlements have not drained the economy because they drained the only part of federal spending that Washington was willing to reduce: defense. This was endurable because conventional threats were decreasing - primarily due to a strong defense commitment. However, as Sept. 11 demonstrated, reduction can not be an indefinite exercise.

...Despite a tax system more onerous than anyone now is willing to countenance, the taxes raised are insufficient to sustain entitlements and the rest of the federal budget...

...For many the entitlement tidal wave is a new story. In fact, it is merely the retelling of an old one. Both stories reach the same conclusion: uncontrolled spending. There is no longer a silent spending cut to offset entitlements and even the most draconian of tax codes and tax levels can not produce enough revenue to support it and the rest of the federal government.