During his campaign stop in Mount Vernon, Iowa, on Wednesday, President Obama hit Gov. Mitt Romney for the dubious math surrounding his plan to combat the deficit and debt. In particular, Obama noted that Romney would increase defense spending by $2 trillion over a decade.
Obama’s comments get at a crucial debate encompassing domestic and foreign policy: how best to handle defense spending as the war in Afghanistan is winding down and the national debt continues to grow at home.
Romney proposed establishing a baseline for non-war defense spending at 4 percent of the American gross domestic product. Currently, non-war defense spending equals approximately 3.4 percent of the GDP. Making up the difference would require spending to increase by around $2.1 trillion over the coming decade. Basically, Romney would reallocate the money saved by reducing war expenditures in Afghanistan — and more — to the Defense Department.
The Romney campaign argues that falling war costs will offset increases in non-war defense spending, meaning that in an ideal financial scenario the Romney plan would make wartime-level defense expenditures a permanent feature of peacetime. An imperfect financial scenario would make those expenditures permanent but also increase the deficit.
According to White House budget projections, war-related expenditures — assuming the 2014 withdrawal timetable from Afghanistan remains in place — are projected to fall from $126.5 billion in fiscal 2012 to $44.2 billion in fiscal 2014 and remain fixed. Using fiscal 2012 as a baseline, the end of the war in Afghanistan will reduce war-related spending over the next decade by about $770 billion, not enough to make Romney’s spending increases revenue neutral.
Compounding the fiscal problems with the Romney plan, no one in the defense community or the military has asked for such a dramatic increase in funding. In fact, Secretary of Defense Leon Panetta and leaders from all five branches of the military have spoken in support of Obama’s plans for modestly reducing defense spending.
Obama’s plan involves slowing the growth of defense spending, thereby saving $487 billion by 2021 and putting some of those savings toward deficit reduction.
For Obama, however, the issue of defense spending is complicated by the looming “sequestration” cuts that could slash “non-exempt defense discretionary funding” by 9.4 percent at the end of the year. These across-the-board cuts were built into the Budget Control Act of 2011, the legislation that ended the debt-ceiling crisis in August 2011, to motivate Congress to pass a less draconian deficit-reduction package by the end of 2012.
Efforts to pass bipartisan deficit-reduction legislation have been stymied in large part by unwillingness on the part of some House Republicans to accept a deal that includes provisions to increase tax revenue. Obama and the Congressional Democrats, for their own part, have balked at entitlement reforms proposed by the Republicans.
The consequences of these massive, abrupt cuts would be, as a legislative report from the Office of Management and Budget puts it, “deeply destructive to national security.” The report notes that only pay for military personnel is exempt from sequestration cuts; nearly $55 billion in immediate cuts to appropriations and direct spending would have to be absorbed by the United States defense community.
As it stands, there are three possible alternatives for the future of American defense spending: Romney’s deficit-inflating spending increase, Obama’s plan for a measured reduction in defense costs, or draconian sequestration cuts.
Obama’s plans to slow the growth of defense spending and wind down our war costs represents the best path forward, but the president must strike a deal to stop the budget sequestration cuts scheduled to occur at the year’s end.