Rebuttal of WSJ’s lies on defense spending

On December 3rd, the Wall Street Journal published a “Review and Outlook” article which was essentially a litany of lies on defense spending and American politics based on utterly false budget numbers. In it, the WSJ urged defense conservatives in Congress and House Appropriators not to break the Budget Control Act’s extremely low caps on defense spending and to keep the sequester mechanism, even though it is gutting the US military.

The WSJ falsely claims:

“The main obstacle to GOP political gains in 2014 would be another stupid, futile budget standoff—and Republicans are just the party to try.

This time the insurrection isn’t coming from the Heritage Foundation-tea party caucus, but from defense hawks and appropriators who want to break the annual spending caps in current law. This would be another act of political masochism, handing budget leverage to Senate Democrats and frustrating the GOP’s fiscal conservative base.

The defense rebellion is led by Armed Services Chairman Buck McKeon, who wants Congress to cancel the $20 billion Pentagon spending cut for fiscal 2014. Many of the 34 Republicans on his committee are threatening to vote against a fiscal 2014 budget that keeps the caps and automatic sequester in place. (…)

Republicans would be wiser to stick to the Budget and Control Act’s spending caps, which have been highly effective in controlling discretionary spending. (…) The appropriators and defense hawks exaggerate how severe the cuts are. The budget caps forced deep cutbacks in fiscal 2012 and 2013, but those were off the inflated spending baselines from Mr. Obama’s first two years in office. The nearby table shows that after 2014 the caps start to rise again and merely require slower than usual spending increases. Domestic spending increases by $88 billion, or 19%, from 2014 to 2021. Defense spending in particular takes a hit in 2014 but increases in 2015 and keeps rising by $92 billion to $590 billion, or 18%, in 2021.”

All of the WSJ’s claims are blatant lies.

Firstly, contrary to their utterly false claims, under sequestration defense spending will NOT rise to $590 bn, or anything close to that, in FY2021, or at any point in the next few decades for that matter. They’re using utterly false nominal dollar figures, i.e. ones NOT adjusted for inflation – which renders these figures utterly false and meaningless. Inflation is a serious problem in the US (mainly thanks to the Fed’s “Quantitative Easing”), and it erodes the dollar’s value over time.

(What’s worse, the WSJ uses the liberal “Committee for a Reponsible Federal Budget”, a far-left group, as a source.)

In REAL TERMS, i.e. inflation-adjusted dollars, defense spending won’t even reach $500 bn by FY2021, nor for several years afterwards! By FY2022, it will still be at a very low $493 bn in real terms. (Figures from the CBO’s July 11th, 2012 on the nation’s fiscal outlook and the sequester’s fiscal consequences.)

I repeat: in FY2022, eight years from now, defense spending will STILL be below $500 – and nowhere close to $590 bn – at a paltry $493 bn. (See the graph below.)

And the defense spending cuts that occurred in 2012 and 2013 were NOT, by any means, cuts from an “inflated baseline” – they were real-term spending cuts. In FY2013, virtually overnight, the DOD had to cut its budget from $525 bn to $469 bn, i.e. by $66 bn (this was later softened to $37 bn by Congress). This fiscal year, because of sequestration, the DOD has to cut its budget all the way down to $475 bn. These cuts ARE very severe, and they amount to far more than the mere $20 bn the WSJ claims.

By the way, the WSJ is completely contradicting itself. It falsely claims that the sequester’s cuts are merely cuts to federal spending growth and further claims that “Mr. Obama calls this overall spending increase of about $800 billion a “cut” because of the annual automatic baseline increases that Washington invented to ensure that spending always rises.”

But just a few paragraphs earlier, the WSJ says (this time correctly) that the sequester is a real spending cut:

“Federal outlays declined to $3.45 trillion and 20.8% of GDP in fiscal 2013 from $3.6 trillion and 24.1% of GDP in 2011. In 2010 discretionary spending peaked at 9.4% of GDP, but in 2013 it was down to 7.6% and in 2014 will fall to 7%.”

So which is it, WSJ editors? Is the sequester a real spending cut or not? You can’t have it both ways.

And these are NOT the first cuts to defense under Barack Obama. He targeted defense for big cuts as soon as he took office. In 2009 and 2010, his first SECDEF, Robert Gates (one of the worst Defense Secretaries in US history), killed over 50 crucial weapon programs, including the F-22 fighter, the MKV and KEI missile defense programs, the Airborne Laser, the Zumwalt class of DDGs, and C-17 production.

In 2011, he instituted $178 bn worth of further cuts and “efficiencies.” And later in 2011, under the first tranche of cuts (pre-sequester) required by the Budget Control Act, the DOD was required to cut $487 bn from its budget from then until FY2021.

The sequester is not the first or even the second, but the FIFTH series of defense cuts under President Obama.

And the sequester IS gutting the US military. Entire squadrons are grounded, training has been cut, dozens of ships and hundreds of aircraft are inactive and awaiting maintenance that has been delayed by the sequester, and pilots are leaving the military in droves – despite record bonuses – because their birds are grounded for a lack of funding.

Eventually, if the sequester persists, the DOD will have to dramatically cut force structure AND cancel key modernization programs, a finding that the DOD and all non-leftist think-tanks agree on. The CSBA, for example, proposes accepting a deep cut in readiness and force structure to fund modernization, while the AEI and Heritage think all three will inevitably have to be cut.

Those are VERY severe cuts, coming on the heels of previous recent defense cuts totalling $1 trillion, contrary to the WSJ’s lies.

Indeed, the WSJ itself says:

“Mr. McKeon is sincere in his concern for U.S. national security, and in normal budget times we would support his priorities. It speaks volumes about Mr. Obama’s priorities that he devised a sequester that requires 50% of total cuts to come from national security that is 17% of the budget, but no cuts from income-transfer programs that account for well over half the budget.”

Excuse me? In normal times? Now is the worst possible time to make dramatic cuts to defense spending (this would be foolish at anytime, but especially now). Russia and China, two hostile superpowers, are arming themselves to the teeth and behaving aggressively – Russia in Europe, China in the Pacific. Both have already equalled or surpassed the US in most military capabilities. Moscow is also conducting a huge nuclear arsenal buildup. Iran is marching steadily towards nuclear weapons. North Korea has miniaturized warheads and ICBMs able to reach the US, and is building a new missile site.

Yet, the US military still has to use hopelessly obsolete and worn-out equipment dating back to the 1950s, 1960s, and 1970s. Washington has been on a procurement holiday since 1989. Decades of that procurement holiday, of underinvestment in defense, are taking a heavy toll and the bill for them is now due.

Now is the worst time ever to underfund America’s defense.

The WSJ says, for its part, that

“But budgeting is a political act, and at the current moment the caps and automatic sequester cuts are the only negotiating leverage Republicans have with Democrats.”

It also claims, several paragraphs earlier, that “the Budget and Control Act’s spending caps, which have been highly effective in controlling discretionary spending.” But controlling discretionary spending is utterly meaningless if you can’t control and reduce mandatory (entitlement + debt interest) spending – and that, the BCA’s sequester utterly fails to do, because mandatory spending is completely exempt from its budget caps, including the sequester’s.

Without dramatic reforms, entitlement programs (mandatory spending) will completely overcrowd and cut into discretionary spending, eventually eliminating it completely. That’s right: absent entitlement reform, in a few decades there will be NO money for defense, airport and border security, the postal service, or any other discretionary federal program.  And the national debt will balloon to over 200% of GDP as Baby Boomer retirement causes a tsunami of entitlement (mandatory) spending.

Even with the sequester, the federal budget deficit stands at $680 bn this fiscal year – and will only grow each year as more Baby Boomers retire.

So the sequester’s cuts are very destructive to America’s defense and completely useless in balancing the federal budget.

Last but not least, the sequester was NEVER intended to be policy. It was NEVER intended to be implemented. It was designed to scare the Supercommittee (does anyone else still remember it?) into reaching an agreement.

The WSJ is completely wrong on all counts. Republicans should not “stick” to the sequester – they should scrap it completely.

Shame on the WSJ for lying so blatantly and for supporting such deep, destructive cuts to America’s defense.