DEFENSE SPENDING
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January 12, 2012
Editorial: U.S. should approach next defense cuts with caution
The Dallas Morning News
1/8/2012
The future of world conflicts will tell us whether President Barack Obama’s plan to cut about $480 billion over 10 years from U.S. defense spending is indeed a pivot to a smarter, leaner strategy or an indefensible hollowing-out of a vital constitutional function.
Predicting that future is risky. Who saw 9/11 coming, for instance, which led to more than a decade of extensive, expensive military involvement in Afghanistan? Iraq, widely considered a mistake, nevertheless chewed up manpower and material.
These were just the top-line fights, the simultaneous conventional wars for which the military was supposed to be prepared.
The new Obama strategy — smaller ground forces, emphasis on counterterrorism over counterinsurgency, heightened focus on Asia while maintaining vigilance in the Middle East — is only the known.
The not-yet-known? Congress faces an additional $500 billion over 10 years in defense cuts from the so-called supercommittee’s failure to agree to deficit reduction targets. Unless Congress can compromise on a way to avoid such a bite, it’s not unreasonable to worry about catastrophe.
Taken together, the Pentagon faces about $1 trillion in cuts over 10 years. Defense spending is 73 percent higher than it was in 2001, but it’s also true that the military, over that time, has improved its war technology, often more expensive but also safer for the actual fighters. And the military, like the civilian world, contends with increased pay, medical and retirement costs.
Even with savings from Iraq and Afghanistan, the U.S. military could find it difficult to prosecute even one major conflict.
And these are just the military considerations. Cutbacks in the launch or production of new weapons systems — part of that push toward better technology — ripple far past the uniforms.
Stephen S. Fuller, director of the Center for Regional Analysis at George Mason University, estimates massive job losses among primary defense contractors if significant reductions in research and development come to pass.
Fuller performed his study for the Aerospace Industries Association, a trade group representing Lockheed Martin, Boeing, Northrop Grumman and dozens of other contractors. Despite their obvious bias, it’s not surprising that direct and indirect job losses from stops or stalls in defense-related industries would move the needle on the nation’s unemployment rate.
Texas would be especially hard hit, behind only California and Virginia. North Texas, and especially Tarrant County, would feel the brunt.
The argument isn’t whether, amid trillion-dollar annual deficits and a $15 trillion federal debt, the U.S. budget should funnel a jobs program through defense contractors. Inefficiencies in Pentagon spending are legendary, and streamlining is long overdue.
Obama clearly heard out his national security team in calibrating his new defense strategy to the world as we know it and America’s budget pressures. It’s important that he and his advisers do the same in evaluating this next round of cuts, with the low-hanging fruit now off the tree.
The impact of a $45 billion reduction in spending for acquisition of military equipment in fiscal 2013:
For each $1 in spending reductions, other businesses will experience an additional $2.64 in sales losses, primarily from decreased consumer spending.
The U.S. employment base would lose more than 1 million full-time jobs, including more than 350,000 directly or indirectly from prime defense contractors.
10 states would account for 58.5 percent of the job and income losses, reducing these states’ gross product by $50.6 billion.
One-third of these impacts would occur in three states: California, Virginia and Texas.
Analysts: Manufacturers of F-35, ships, subs should win under Obama plan
By John T. Bennett
The Hill/DEFCON Hill blog
1/9/2012
President Obama’s new defense strategy should be good news for the makers of fighter jets like the F-35 and Navy ships and submarines, according to analysts.
Defense analysts have begun closely parsing the sweeping new plan, which was released Thursday when Obama made the first visit to the Pentagon briefing room by a sitting U.S. president.
The new plan is something of a departure for the Pentagon, as it casts aside the planning premise that the military be capable of fighting two simultaneous large land wars. It also calls for a smaller Army and Marine Corps.
The plan envisions a more “widely” dispersed fight against al Qaeda, and vows to buy the weapons necessary to counter Iran and China militarily. On the latter, the plan describes a shift of U.S. foreign and national security policy from the Middle East to Asia, where U.S. officials believe much of the 21st century’s history will be written.
Obama’s plan was crafted with what senior Pentagon officials called an “unprecedented” amount of collaboration between the White House — including the president himself — and military officials.
Officials have used words like “leaner” and “agile” to describe the kind of military they intend to build. In fact, Defense Secretary Leon Panetta said the envisioned force’s “greatest strength” is that it would be “more agile, flexible, ready to deploy, innovative and technologically advanced.”
While officials say details on what programs and how many troops will be cut to meet Obama’s vision for the military will come in the next budget plan, defense analysts are starting to weigh in early.
“At first blush, a pivot to the … Pacific seems like good news for makers of warships and aircraft, bad news for makers of armored vehicles and helicopters,” said Loren Thompson of the Lexington Institute, an industry consultant.
That should be welcome news for firms like General Dynamics and Huntington Ingalls Industries, which make submarines and surface ships for the Navy.
The strategy also seems to suggest the troubled F-35 fighter program will remain mostly intact. Three models of the jet, made by Lockheed Martin, are being developed for the Air Force, Navy and Marines, as well as more than 10 U.S. allies.
The shift to the Pacific, including the Chinese military threat, means fielding plenty of the advanced fighter — and selling hundreds to allies in that region — will be a key enabler of Obama’s Pacific plans, analysts said.
Jim McAleese, who operates a defense-aerospace consultancy, placed the F-35 under the “favors” category in a chart he crafted showing his take on winners and losers under the new strategy.
Thompson said the most likely outcome for the F-35 under Obama’s plan is a “slower production ramp, but [a] secure future.”
The strategy’s mention of buying weapons to deal with adversaries’ electronic and cyber warfare systems, as well as sophisticated missile systems, means the F-35’s stealth and other performance metrics should help it avoid big cuts, McAleese wrote.
Developing and buying bomber aircraft appears an Obama priority, and that is good news for firms like Boeing, Lockheed Martin and Northrop Grumman. All have expressed interest in eventually seeking what stands to be a multibillion-dollar contract.
The strategy talks of addressing “emerging threats” and taking the fight to al Qaeda in a “wider” number of nations — that will be good news for top-secret “black programs” and mean a further expansion of America’s special operations forces, according to McAleese.
“Northrop Grumman’s Global Hawk high-end surveillance drone would seem to be another vital part of the Pacific mix, given its unique combination of payload and range,” Thompson said.
The strategy also states the military will soon shed parts of its ground forces best-suited for the kinds of stability operations that it has been waging in Iraq and Afghanistan for a decade.
That should leave the makers of large combat trucks firmly in the loser category, according to McAleese. It also should mean fewer Abrams tanks, Bradley Fighting Vehicles and the new Ground Combat Vehicle, meaning GD, BAE Systems and other combat vehicle manufacturers could take a hit, McAleese said.
Analysts also have been quick to note that the strategy’s intention to keep a robust presence in the Middle East will mean more U.S. war plane sales to allies there as a hedge against Iran’s aggression.
