The armed forces of the U.K., the U.S.'s biggest military ally, will need billions of dollars more than they have to spend, according to a government audit report, requiring what analysts say will be fundamental cuts to operations...

With Britain battling a record budget deficit, many political analysts say funding for the armed services will fall rather than increase...

The report underscores an evergreen criticism of modern British governments: that they ask their armed forces to project a global military presence without giving them the financial backing to do so.

Is America under funding our military while expecting them to maintain a global presence? At first glance, the answer is no.

Page one of Defense News reported on yesterday President Obama and the congress added $100 billion dollars to the defense budget to...

...cover the rising cost of operations, personnel and pressing modernization needs, officials said.

If approved by Congress, the money would allow defense spending to rise about 1 percent above projected inflation, analysts said.

DoD’s 2010 budget request called for $534 billion, plus $130 billion to cover the wars in Afghanistan and Iraq...

Among other procurement efforts, the money will pay for new Air Force global strike programs — including work on new manned and unmanned systems — Army brigade combat team modernization, a Navy attack submarine and the Navy’s new Carrier Long-Range Strike system, sources said...

Analysts called the decision a victory for Defense Secretary Robert Gates, who has lobbied the White House for more funding.

At first blush, this appears to the act of a government backing its resolution with teeth as it sends men and women abroad in harms way. However, a closer look reveals this spending bill does not include...

...the estimated $30 billion that will be needed to fund President Barack Obama’s recent decision to send 30,000 more troops to Afghanistan.

Now the Hill reports there is even less in this spending bill for the Pentagon to accomplish its missions...

The defense-spending bill written by Congress ignores cuts to several high-profile Pentagon programs proposed by the Obama administration...includes money for the General Electric-Rolls-Royce alternative engine for the F-35 Joint Strike Fighter and for 10 additional Boeing C-17 cargo planes...It also includes a lifeline of sorts for the VH-71 presidential helicopter, which the administration has canceled due to cost concerns.

The Pentagon did not ask for money to continue any of these programs. The funding for the three programs makes up about $3.1 billion in the $636.3 billion Pentagon-spending bill agreed to by congressional negotiators.

Gates also told the Senate that he strongly opposed the $2.5 billion for 10 additional C-17s....But Democrats are also looking to the defense bill as a vehicle to raise the country’s debt ceiling and to extend unemployment benefits and healthcare insurance subsidies for the long-term jobless.

So it is unlikely that Obama will end up vetoing the bill, despite the previous threats.

There it is. These initiatives won’t fund the president’s war surge or critical programs identified by the Pentagon and Secretary of Defense. This bill is one big pork-barrel trough for initiatives already rejected by the president, the Secretary of Defense, and the generals in the Pentagon. Its also a domestic spending bill disguised as a defense bill. After this bill is signed a few contactors in key districts will benefit and the troops will get equipment they don’t want or need.  

The U.K. is only a few paces down the road to Hell ahead of us. In a few more budget cycles we’ll be in the same place. Every precious dollar congress spends on pork and not on real defense requirements is a bill our troops will pay later - when they’re stranded overseas and no one has their back. 

Our economic collapse will quickly be followed by our military collapse...unless the citizens of this nation reign in the mafia we call Congress.

These similarities are striking and instructive. Oversimplification aside, the meltdown of financial markets and global economies arose from a combination of overstretch and overreach; policies too often driven by ideology removed from reality; and denial. None of this happened overnight.

In the United States - and this radiated across world markets - overstretch and overreach produced too much cheap money that led to too much unsecured credit that induced an excess of leverage. Leverage meant accepting huge multiples of debt to assets or cash in hand ranging from between 30 to 100 to 1. Many jumped aboard this gravy train as billions of dollars were made, unsuspecting of the looming wreck.

Ideology evoked both too much and too little oversight. The left embraced the siren call of extending the American dream of home ownership beyond sensibility. The right shoved deregulation over a cliff first by ending the separation of investment and commercial banking; allowing hedge funds freedom from any oversight; and then legalizing credit default swaps that had been illegal since the 1907 financial crash.

As a result, banks, insurance companies and hedge funds made billions by slicing and dicing this explosion of mortgages into derivatives that few on Wall Street understood, particularly the down side risks. The subprime mortgage market was the fuse for the explosion. Main Street is still recoiling from the impact. One banker put it this way: "We may only be in an economic recession but we surely are in a psychological depression."

Now look at the Defense Department. The Pentagon is suffering from huge cases of overstretch and overreach in terms of commitments it is fulfilling; money it needs to sustain them; and strategy it is meant to carry out. Overstretch and overreach, as with financial markets, can be measured in invertible budget and dollar deficiencies. The Pentagon has an annual appetite of about $650 billion to 750 to sustain the military. A good chunk of that has been appropriated through emergency supplementals to support the wars in Iraq, Afghanistan and against terror but in which a great number of other programs have been funded.

With our national debt approaching $12 trillion, the annual federal budget deficit ballooning to more than half a trillion dollars and tax revenues shrinking, the chances of maintaining this level of defense spending, let alone increases, are about zero. Over the coming years, defense will be facing crippling shortfalls of possibly $100 billion to $200 billion a year. Intensifying this potential implosion are other time bombs.

Virtually all of the Pentagon's major weapons programs have at least doubled in costs in real terms; are taking about twice as long as planned to procure; and will be bought in roughly half the original numbers. Furthermore, there is no agreement over strategy. Will the military be largely shaped to fight "small wars" as are being waged around the world in crucial regions? Or will "big wars" against a resurgent Russia or China provide the military's main rationale?

Many of these implosive forces were ideologically driven. The war in Iraq was largely about spreading democracy to pacify the greater Middle East. Because the rest of the U.S. government lacked the tools to support this vision, the Pentagon was leveraged to undertake these tasks that should have been the responsibility of other departments, exerting further pressure on its ability to carry out its basic missions. There was both too much and too little oversight. Congress was AWOL in the way it rubber-stamped these huge spending increases. Yet, it still tried to micromanage the spending it authorized.

What does this mean? Because spending for "things" such as weapons systems and infrastructure are long-term, immediate large-scale savings cannot be derived from cancellation or reduction of these programs. Current operations will take the biggest hit as American families and businesses have been forced to cut back drastically in spending. But given the size of defense, this contraction can be implosive.

We have seen this movie before. After every war, we downsized. And as Vice President Dick Cheney famously remarked, each time "we screwed it up." The Obama team needs to know that if we are not careful, what happened to Wall Street and Main Street will happen to the Pentagon. Denial is not an option.

No, Mr. Ullman, denial is not an option.

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?

According to CQ.com the Pentagon wants $450 billion in more spending over the next five years:

The new estimate, which has not been publicly released, would raise the fiscal 2010 budget number announced by the administration this year from $527 billion to $584 billion, not counting operations costs for the ongoing wars. 

Experts note that releasing such documents in the twilight of an administration is a well-worn tactic, and that incoming presidents often disregard such guidance in order to pursue their own priorities…

But the numbers also seem to contradict the National Defense Strategy released recently by Defense Secretary Robert M. Gates, which called for tough tradeoffs in spending in an environment of limited resources…

The numbers also contradict reality. America is hemorrhaging wealth and the tax base will not support increased federal spending – defense or otherwise. The only way to raise new revenue is to borrow it or print it. Either option is bad news for inflation, interest rates and jobs.

I fully stand by my analysis Pentagon planners are most likely conducting serious budget cutting drills in expectations of massive roll-backs in discretionary spending in next budget cycle. My assessment is backed up by a 9 October Miami Herald news story:

With the U.S. economy in crisis and military spending at its highest level since World War II, military officials and experts are worrying that America may have to start reining in defense spending…

Eight years of borrowing to pay for the Iraq and Afghan wars, coupled with an aging baby boomer population, growing healthcare costs and a push to enlarge the Army could force legislators to make tough decisions about which needs should take priority, and the next president to reassess how much the military can do…Congress' decision earlier this month to approve a $700 billon bailout for the financial industry adds to the strain on the federal budget, and the stock market decline and the credit crunch could slow economic activity and eliminate jobs, which in turn could reduce tax revenues.

Pay close attention to the sentence “push to enlarge the Army.” If they Army adds 30,000 soldiers over the next 24 months as originally planned I believe the Pentagon will slice portions of the Air Force and Navy to pay for it. The only other place to find additional cash is medical and retirement benefits…and congress won’t let that happen

Air Force modernization and re-capitalization is about to come to a sudden and brutal halt.