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“do that again” … “saving $400 billion”


Analysis by Charles Knight of the Project for Defense Alternatives:

Editor’s Commentary

13 April 2011

In today’s “deficit speech” President Obama said:

Just as we must find more savings in domestic programs, we must do the same in defense. Over the last two years, Secretary Gates has courageously taken on wasteful spending, saving $400 billion in current and future spending. I believe we can do that again.

What might “do that again” mean?

Actually contribute $400 billion from projected Pentagon budgets to deficit reduction?

That would require the Pentagon to actually take and spend $400 billion less. But that’s not at all what the Pentagon did with the putative first $400 billion in savings President Obama refers to and believes can be repeated.

Let’s take a quick look at the components of that first $400 billion working backward through time.

This past January Secretary Gates announced $78 billion in cuts over five years. In February when the President’s FY12 budget appeared all but $8 billion of this effectively (as regards deficit reduction) disappeared. $68 billion was in essence transferred to cover the special Overseas Contingency Operations (war) budgeting as the FY11 projected placeholder of $50 billion was replaced by the FY12 real OCO budget of $118 billion. Another $2 billion in the savings appears to have disappeared in the five year budget projections, perhaps due to those pesky “rounding errors” that plague Pentagon budgets.

In 2010 Secretary Gates announced $100 billion in cuts. He was quite forthright at the time, saying that he was keeping all the savings within the Pentagon to pay for other requirements.

So that leaves about $222 billion that presumably is the value of the various program cuts that Secretary Gates made in 2009. Fine, but the Pentagon once again just spent that money on other things. Its budget kept rising, as it continues to do. The Pentagon and the Administration can argue that the Pentagon budget might have grown faster if Secretary Gates had not made those “courageous” program cuts. Possibly. But that is simply not the same as actually contributing to deficit reduction which requires real cuts in the topline of the Pentagon budget.

In terms of cutting the topline of the Pentagon budget, when we remove the long-awaited reductions in war costs, we can count just $8 billion that Secretary Gates has given up to deficit reduction. And even with that paltry sum, we will be waiting until 2016 to see if it materializes.

So what President Obama really offers us in this speech is a repeat of a sleight of hand of making $8 billion appear to be $400 billion.

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