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?

The Defense Department wants a rocket ship. Defense planners state we have a valid requirement to blast a small force of troops anywhere on planet earth in less than two hours. According to the 17 October edition of Stars and Stripes

Civilian and military officials held a two-day conference at the National Security Space Office (NSSO) to plan development of the Small Unit Space Transport and Insertion — or SUSTAIN — program…the Marines (need) the "capability to transport small, mission-tailored units through space from any point on the globe to a contingency at any other point on the globe" within minutes of an order, the paper reported, sourcing to a Marine document…Private rocket pioneer Burt Rutan says the plan is technologically possible, “…This has never been done," Rutan told USA Today in an e-mail. "However, it is feasible. It would be a relatively expensive way to get the troops on the ground, but it could be done."

I was just wondering if the Defense Department could invent a rocket ship to bring these “civilian and military officials” from the NSSO back to Planet Earth. If the Pentagon is struggling to acquire more terrestrial, conventional weapons systems how can it hope to build a “Buzz Lightyear” system like this?  

For example, the Air Force takes 20 years just to field new fighters like the F-22. It’s failed to acquire a new aerial tanker after a decade of trying. It took both the Marines and Air Force over 20 years to field the V-22 Osprey, the tilt-rotor aircraft. The Marine’s current new version of the venerable H-1 Huey, the UH-1Y, just entered service with severe performance limitations to the irritation of John Young, the Undersecretary of Acquisitions. According to Inside the Pentagon, Young commented on the likelihood that DOD would have to pay roughly $72 million to fix the UH-1Y’s major deficiency even though the problem prevents the aircraft from maneuvering as required. This was just a Huey upgrade program, the ancient and relatively simple helicopter of Vietnam fame. The Marines aren’t the only ones having problems buying helicopters. The Air Force is still unsuccessful in its half-decade old quest to buy a common, off-the-shelf helicopter to replace its 1980-era H-60s. The Army, perhaps the leading authority in military helicopters, just had the $6.2 billion Armed Reconnaissance Helicopter program cancelled by Secretary Young. The Bell ARH-70, designed to replace the 40 year old OH-58 Kiowa scout helicopter, was 40% over-budget and underperformed.

Helicopters and airplanes are not ‘rocket science’ - NASA’s area of expertise. Has anyone in the DoD talked to them lately? Their Orion spacecraft, an Apollo rehash, is delayed again. From 2010 to 2015 American astronauts will hitch rides with our dear and old friends the Russians. NASA is the world’s leader in rockets and they’re having a hard time getting its “retro” rocket into space; and the Pentagon is seriously entertaining the idea of fielding something this cutting edge beyond the atmosphere?  

It’s funny they call this rocket ship “SUSTAIN,” because we’re having a heck of a time just trying to sustain the run-of-the-mill weapons systems we already have. This week the Air Force announced it will cut a massive portion of its frontline fighter force, about 300 fighters including F-15s, F-16s and A-10s, by 2010. The money will be used to sustain other current programs, including manpower. There’s a technical term for this: cannibalization. The Navy announced it is cutting the purchase of one of its much needed half-billion dollar littoral combat ships, citing budget issues. The new Hollow Force is starting to take shape, and this is before the emerging budget crisis really kicks into gear.  

According to the 17 October The Washington Times: 

The spiraling financial crisis and the ballooning costs of wars in Iraq and Afghanistan will force U.S. military planners to make hard choices about defense spending, which has risen at unprecedented levels since 2001, defense officials and experts say…Jeremy Potter, a senior analyst for federal industry with the government contractor consulting group INPUT, said the full impact of the bailout´s cost would not be felt until fiscal 2010, which begins next Oct. 1…A year from now, "defense program managers are going to be scrambling to get their programs funded," he said.

I know, some of you thinking, “Hey, it was just a meeting, it doesn’t mean we’re serious about building a new rocket.” I think even entertaining the concept shows the lack of serious focus within the Pentagon about where we find ourselves:

The services are starting to cannibalize mainstay programs, the Pentagon can’t buy new weapons systems with the money it already has, money for future force modernization is drying up, and the threats to our nation are growing stronger.

There, I just boiled America’s strategic military position down to one sentence. I, the military equivalent to Joe The Plumber, just did what all the brass, consultants, and think tanks in the Beltway can’t or won’t do. Everything the Pentagon does, every penny it spends, should exist within this strategic prism. Building a multi-billion dollar rocket to throw a platoon from one side of the planet to the other is about as far outside this box as one can get. It’s dangerous because it shows our friends and adversaries an unnerving lack of focus within our defense establishment.

Its time to get serious.

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.

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.  

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.

Last week the US Government absorbed almost a trillion dollars of the most noxious corporate debt imaginable. To put it in perspective, the government has an annual operating budget of about three trillion dollars and only takes in about 2.7 trillion in revenue. This new debt is equivalent to almost three annual defense budgets! Overnight, the US federal debt leapt by at least a ten percent. Whatever budget estimates and expectations Pentagon leadership had up to this point can be thrown out. It’s a new fiscal ball game.

In my article, “Entitlements Threaten Defense Spending” (Townhall Magazine, September 2008) I likened entitlement spending, like Medicare, to a tsunami of red ink poised to crush the defense budget. With this week’s unprecedented corporate bailout packages our nation effectively ran out to meet that giant wave.  If the republic is to survive something will have to give.

That something will be defense, the biggest slice of the non-discretionary federal budget. Congress and the next president will have to cut federal spending in order to service this new debt. If they don’t, they risk potentially destroying America’s currency and credit rating – bad, very bad. 

Those staffers will tell the Pentagon budget planners (those working on something called the ‘POM’) to start planning deep cuts. They’ll give these planners draconian bottom lines and tell them to meet them - period. The planners will start a series of budget drills and the real fun begins.

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 defense budget will be so different next year it as to be almost unrecognizable.

The Air Force will get hit hardest since it’s currently the least favored branch among the political elites. Since the new aerial tanker was punted to the next administration it’s uniquely vulnerable. I believe by this time next year it will be on indefinite hold and some token funds will be thrown at the old KC-135 to extend its life a few more years.  Don’t hold your breath on a new replacement rescue helicopter. I believe that program is doomed now. Expect early retirement for various weapons systems those with high operating costs, perhaps like the B-1 bomber.  

I cannot speak to the specifics of the other services, but they’ll get hit hard, too. Even the Army and the Marines, the most engaged in combat operations, will feel the heat. It won’t just be weapons acquisition programs, either. Personnel program cuts will be close behind.

I’m not talking about tweaks in the system, but sudden and draconian cuts. It will start with pronouncements on cutting travel costs. Then they’ll cut medical costs in new and painful ways. Tricare will eventually pay pennies on the dollar as co-pays for dependant medical care skyrockets. There will be drastic rollbacks in retiree medical benefits and huge shake-ups of the retirement system itself. Then the real cuts will begin.

The Navy and Air Force will resume their downward force cuts to unprecedented levels, perhaps in the range of 250,000 for each service. The additional forces added to the Marines and Army since 2003 will be rescinded. There may even be serious consideration of consolidating the services. I believe in 3-5 years we’ll find the military 25% smaller…at least.

With all these force cuts, how will we fight the wars in Iraq and Afghanistan?

We won’t. With this new, staggering debt load members of both political parties will accelerate our departure from Iraq and even Afghanistan, regardless of the political and military consequences. Only a token naval and air power component will remain in the Gulf Region to protect the oil. Expect withdrawal of forces from most of the Pacific and Europe as well.