From the time that the ink was dry on the deal to raise the debt ceiling was done just about a year ago, the calls began for Congress to start undoing the deal. Chief among the objections were the second round of budget cuts that were put into the deal that would take effect in January 2013 unless Congress was able to reach a deal through the so-called “SuperCommittee” process. The Pentagon immediately started saying that the cuts would be devastating to the defense budget and the defense hawks in Congress, principally people like the Republican members of the House Armed Services Committee and Senators such as John McCain and Lindsey Graham quickly joined them in the doom and gloom. In reality, of course, the cuts to the defense budget, which represent 50% of the total agreed upon cuts, would come nowhere close to devastating the defense budget. Facts don’t really matter in these debates, though, and when the SuperCommittee failed to reach an agreement by it’s November 2011 deadline, the drumbeat of calls to suspend the sequestration cuts began, mostly from Republicans. Now, it looks like Mitt Romney is joining them:
NORTH LAS VEGAS, Nev. (AP) — Mitt Romney says Congress and the president should delay looming cuts in military and domestic spending for at least one year.
The Republican presidential contender said Friday during a campaign trip to Las Vegas that the cuts would be “terrible,” particularly for the military.
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Romney says he wants President Barack Obama and lawmakers to work together to put, in his words, “a year’s runway,” in place to give the next president time to reform the tax system and ensure the military’s needs are met.
Here’s exactly what Romney said, as reported by Time’s Mark Halperin:
“Well, let’s go back first to the sequestration. I would like to see the President and Congress come together and say we’re going to put a year’s runway from where we are right now, through the next several months, into the term of the next president, hopefully me, but if not me, President Obama, and give me or the next president the capacity to reform our tax system and make sure that our military plans are consistent with the needs of American leadership. I think the idea of massive cuts to our military is a terrible idea. It is going to cause layoffs. It’s going to cause the cessation of various programs essential to American workers and, I presume, to our defense capabilities as well. The Secretary of Defense called these cuts “disastrous.” And, so, I think the Congress and the President, clearly – with the President’s leadership, he should step forward and say, look, these sequestration cuts are unacceptable. The kinds of cuts to our military are unacceptable and the uncertainty caused by the tax changes – some call it a tax cliff or Taxmaggedon – these things don’t help the American economy. We need to have stability here so let’s have at least a year of runway or even six months of runway after the new president is elected so we can have the tax reform and the military spending plans and the budget plans that are consistent with that individual self-leadership and views.”
You’ll notice that Romney only talks about the defense side of the sequestration cuts rather than the cuts in general. That’s because it’s really only the defense cuts that the hawks in the GOP care about. They repeat, mindlessly, the claim that the cuts will put America’s national security at risk despite the fact that, even after the cuts are taken into account, the United States will still spend more on its military than any other country in the world by orders of magnitude. Additionally, the cuts themselves have been blatantly misrepresented in regard to how they would actually impact defense spending. And, finally, the concerns over the long term impact on the defense budget are largely misplaced, as Cato’s Christopher Preble explains:
[T]here’s little likelihood that sequestration will significantly reduce the defense budget long term. That’s because sequestration cuts the defense budget only in the first year. Every year after that, defense spending will increase. Spending levels will indeed be lower than the Pentagon last year expected them to be. But only in Washington is that considered a cut. So, under sequestration, instead of spending $5.7 trillion on defense over the next decade, as the FY2013 budget suggests, the government will spend about $5.2 trillion.
That $500 billion difference may not actually materialize. Congress has a few options to mitigate the effects of the initial $55 billion slice off the budget. They could reprogram funds after the sequester, change the definition of “programs, projects and activities” (the budget level at which the cuts are implemented), or take advantage of the flexibility within operations and maintenance (O&M) funds. In fact, because the Office of Management and Budget has declared that war spending is eligible to be sequestered, the total cuts to O&M can be spread out across a bigger pot of money. Beyond all that, sequestration does not affect outlays or funds already obligated, which means it will not affect existing contracts. So, the real story is that should sequestration actually happen, Congress and the Pentagon will have much more flexibility than they’re willing to admit.
Preble discusses sequestration in more detail in this video:
The opponents of the defense sequestration cuts have shifted there arguments significantly in recent months, thanks in part to all the on going talk about the “Fiscal Cliff” that has been a hot topic in Washington circles for months now. Now, they’re arguing, with the helpful assistance of defense industry lobbyists that we need to halt the sequestration cuts in order to preserve jobs. It’s quite a tempting argument. Here we are in the middle of a very weak economy that keeps threatening to dip back into recession and these smart sounding analysts are telling us that allowing these defense cuts to go through is going to cause millions of people to lose their jobs. It’s a smart play by the lobbyists, really, because if you’re not a defense hawk you certainly want to think of yourself as someone who doesn’t want to cause people to get fired, right? Well, as I said several weeks ago, there’s a big flaw in that argument:
[W]e need to stop looking at the Defense Department budget, or indeed any Federal spending, as a jobs program. The purpose of defense spending should be to provide an adequate defense to defend the national interests of the United States. Once of the main reasons that defense spending has grown so much over the past decades has been the fact that it was viewed by Congress as a way to pass out pork to their districts and states. Indeed, there’s been more than one example over the years of a weapon’s program that the Pentagon doesn’t even really want, but which it is forced to accept because Congress insists on funding it, often for reason that have next to nothing to do with national defense and a whole lot to do with getting re-elected. Until an independent commission was established, it was next to impossible to shut down or reduce the size of a military base anywhere in the United States because Members of Congress would work together to prevent closure. Their constituents liked it, I’m sure, but it wasn’t doing the country any good, and the same goes for spending money on the military not because we need it for our defense, but because a Congressman doesn’t want to get his constituents, or his donors, angry at him.
In a post today, Preble presents a far more interesting argument that the defense sequestration cuts will be good for the economy:
In a new paper released today, economist Benjamin Zycher outlines some of the economic rationales for such cuts. He shows that cuts on the order of $100 billion per year over ten years can be reasonably expected to reduce economic costs by $135 billion — provided that the funds are redirected to the private sector and not simply plowed into other government spending. Zycher concedes that the demand for U.S. military spending has declined, and its value (measured in what we actually spend) should also decline. At a minimum, he concludes, “These potential savings in real resources are sufficiently large to justify a detailed analysis of U.S. national security needs and the outlays required to defend them.”
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The conceptual problem of proclaiming that defense spending is good for the economy, and cuts are bad, flows logically from the different assumptions about the multiplier. Fuller and others focus narrowly on the particular industries either affected by cuts. But these cuts should free up resources elsewhere. To be sure, there are likely to be temporary dislocations for some workers and businesses. These will be difficult for the individuals and firms affected, but the economy as a whole will benefit as skills and resources are redirected to more productive activities.
These conclusions shouldn’t really surprise, and they should be common-sense for Republicans who are generally skeptical of Keynesian arguments for using government spending to stimulate the economy. After all, every dollar spent by the government — federal, state or local — is extracted from the private sector. Advocates for higher taxes and more government spending claim that individuals in Congress, state capitols and city halls are wise enough to know where these resources should be spent. Conservatives and libertarians point out that this attempt to pick winners and losers will fail more often than it succeeds, and the net result is a less productive economy. The principle applies equally when the money is spent by government agency A (e.g. the Department of Agriculture) vs. government agency B (e.g. the Department of Defense).
What Preble’s comment here really does, of course, is demonstrate the hypocrisy of many Republican lawmakers when it comes to spending cuts. They talk a good game about fiscal responsibility and how everyone is going to need to sacrifice something to get our fiscal house in order. When the rubber meets the road, though, and the tough decisions actually have to be made all they come up with is nonsense. There’s the phony earmarks battle, which accounts for an incredibly infinitesimal part of the Federal Budget. There are the constant calls to cut out “waste and abuse.” There are attacks on those tiny, tiny parts of the budget that fund scientific research, NPR, and other such things. All of those are legitimate targets, but none of them amount to a hill of beans when you’re talking about a $3 trillion budget, and when it comes to the big targets, like the defense budget, many of these “budget hawks” suddenly becomes doves, perhaps because many of them have campaign coffers generously filled by the defense industry. In fact, I will be so bold as to say that if you are a Republican who regularly campaigns on the issue of fiscal responsibility, like much of the House GOP caucus does and like Mitt Romney does, and you oppose the sequestration guts, then you are nothing more than a hypocrite.
