Contributed by Ike Skelton and Russell Orban of Husch Blackwell’s Government Affairs Practice Group
The United States Department of Defense is the world’s biggest purchaser of goods and services, spending some $381 billion on contracts in FY 2011. But serious changes are on the way. The Iraq war is over and the Obama Administration is planning to withdraw from Afghanistan in the near future. Last summer’s hard-fought budget agreement requires $487 billion in cuts to the defense budget over the next 10 years. The President will soon recommend a defense budget that shaves $51 billion from its previous 2013 projections.
In addition to the cuts already in the defense budget for 2013, the budget deal from last summer set up a “Super Committee” that was supposed to find more cuts in government spending to avoid a drastic round of new mandatory cuts. The Super Committee’s failure to reach agreement on specific cuts means that another $500 billion in mandatory military spending cuts will go into effect in 2013. Mandatory across-the-board cuts under the sequestration process could mean as much as an additional $50 billion in annual cuts to the defense budget.
Should all of the expected budget cuts be put into effect, the military will have to reduce spending by $80 to $120 billion per year over the next decade. A good portion of the cuts will come from reductions in government-awarded contracts. Every contract, every major weapons program, and every installation commitment will have to be reviewed and perhaps pared down to meet the reduced spending goals. There will be fewer new ships, planes, and other major weapons systems. Existing weapons systems will have to be scrapped. Research-and-development efforts will be rolled back. Overseas bases will have to be closed, and there will have to be another round of base closings and realignments here at home.
Needless to say, cutting all expenditures equally without reviewing the merits of the underlying programs is not the best way to draw back the military or to reign in spending. It could even hamper the military’s ability to respond to threats that we do not yet know about. Congress could avoid the automatic cuts by putting an alternative plan in place this year. Unfortunately, recent history and the fact that 2012 is an election year means that such a plan is unlikely.