In the 2012 strategic guidance released in January, the president and Department of Defense (DoD) admit the global strategy of this country is now limited in reach and power due to the current restrictive national fiscal environment. The fiscal year (FY) 2013 defense budget incorporates this reality, acknowledging that the new strategic guidance and planned budget are driven by “. . . the national security imperative of deficit reduction”.
The Budget Control Act of 2011 was enacted August, 2011 to avert sovereign default on the national debt. It included spending cuts but required a Congressional “super committee” to agree on at least $1.2 trillion in additional budget cuts by that November or face mandated across-the-board cuts, or sequestration, for this amount. The super committee failed to achieve agreement, and sequestration-level cuts are now required beginning in FY2013. DoD’s share is approximately $55 billion annually for the next ten years. DoD, Congress, and industry all predict defense and industrial-base catastrophe, but this paper provides compelling argument that such cuts are achievable without being forced into drastic changes in national strategy, acquisition, or manning.
By March 2012, the United States had accumulated national debt of $15.6 trillion , and 2012 will likely add $1.3 trillion to that figure. Interest on this debt will total $5.5 trillion over the next decade if interest rates rise only gradually from current historically low levels. That is comparable to the total defense budget over the same period. Defense expenditures will decline from $531 billion to $525 billion (FY13 base-level funding), a real reduction of 2.3 percent. This figure already reflects $150 billion in savings over five years beginning in 2010 and new reductions of $259 billion including $60 billion in identified efficiencies plus reductions in manning and procurement.
In the words of Winston Churchill, “Gentleman, we have run out of money. Now we have to start thinking.”