Panetta Leading Charge in Guns vs. Butter Battle
The Pentagon does not expect to be sheltered from painful spending cuts that are needed to reduce the nation’s crushing debt, Panetta said Aug. 4 during his first Pentagon news conference. But the recent debate that led up to last week’s debt-ceiling agreement is putting too much emphasis on cutting the discretionary portion of the federal budget, and not aiming at domestic social programs that consume the largest share of U.S. government spending, said Panetta.
Given the mounting national debt and rising deficits, “you have to look at the mandatory side of the budget, which is two-thirds of all federal spending,” said Panetta. “You also have to look at revenues as part of that answer.” Social Security, Medicare and Medicaid make up the bulk of non-discretionary spending.
Non-entitlement spending, of which Defense makes up more than half, already has taken “pretty serious cuts” as a result of last year’s standoff in Congress over the 2011 budget and in last week’s debt deal, he said.
As part of the debt-ceiling bill that the president signed this week, the Pentagon will be revising its 2013-2016 budget to include a portion of the $350 billion to $400 billion worth of cuts that Defense must make over the next decade. But the agreement also contains a trigger mechanism that would set off up to $600 billion of additional defense budget reductions if a congressional “super-committee” of 12 House and Senate members fails to identify $1.5?trillion in overall federal cuts by the end of this year.
“I hope this committee will exercise its responsibility to look at other areas of the budget other than just discretionary,” Panetta said.
The deficit-reduction plan that is now in place puts Panetta front and center in the guns-vs-butter fight that will engulf Washington in the coming months. Panetta characterized the trigger scenario as an "unpalatable" option. "This potential deep cut in defense spending is not meant as policy," he said. "This outcome would be completely unacceptable to me."
Panetta is overseeing a sweeping review of military strategy that is intended to inform the budget debate and help the Pentagon head off budget cuts that are not supported by a reduction in missions.
The trigger — or as Panetta calls it, a “doomsday mechanism” — in the debt-ceiling agreement exposes the Defense Department to “catastrophic” risks, he said. Asked how he can be so sure of that before the strategic review is completed, Panetta said he is comfortable drawing that conclusion from conversations he has had with the chiefs of the military services.
There are no contingency plans for how the Pentagon would absorb additional cuts if the doomsday device in the bill is activated, Panetta said. “I am going to give Congress an opportunity to have this [super] committee work.”
For Panetta to avert reductions beyond $400 billion, he not only will have to hope that the super committee spares defense, but he also has to wish for the political winds to blow in the Pentagon’s direction. The American public in recent opinion polls is showing less willingness to support a large defense budget if that means losing health or retirement benefits. War weariness after a decade of conflict also will be a factor in how Congress proceeds with any further anti-deficit measures.
Historically, there has always been a natural tension between defense and non-defense spending, said Amy Belasco, a budget analyst at the Congressional Research Service. “If the numbers are too painful on the non-defense side, it will become more acceptable to cut defense.
As a chief architect of the defense budget drawdown in the 1990s when he was in charge of the Office of Management and Budget, Panetta oversaw major reductions in military procurement spending, including a 13.4 percent decline in fiscal year 1994.
His predecessor, former Defense Secretary Robert Gates had somewhat predicted the scenario that appears to be now unfolding: The Pentagon is likely to have to make cuts without a "strategic framework" and no time to set big-picture spending priorities or make well thought-out policy choices. Panetta may soon have to begin the dreaded salami slicing — across-the-board cuts that preserve overhead and bureaucracy, but potentially undermine military readiness.
Analysts have dismissed both Gates’ and Panetta’s dire warnings that budget reductions will “hollow out” the military as political posturing, and have noted that several studies have shown that defense spending could be cut by a trillion dollars over 10 years without compromising national security.
Panetta, known as a savvy political operator, may be choosing to keep a poker face until the debt hysteria settles down. Most likely, he is working quietly behind the scenes and is not going to show his cards, said retired Navy Capt. Wayne P. Hughes Jr., a resident of Monterey, Calif., Panetta’s hometown. Hughes has watched Panetta’s rise since the latter was a congressman, and speculates that the secretary is trying to buy time until he can do some “orderly thinking and planning” before big budget cuts are forced on him.