The Debt Deal and Defense Spending
Aug 6, 2011

The Debt Deal and Defense Spending

Defense spending factors into the recent deal to avert the entirely political debt "crisis" in a couple of ways. Firstly, amazingly, the deal actually increases defense spending in a certain sense. Given the wind down in Iraq and proposed end of Afghanistan, Obama back in April had proposed 400 billion in unspecified corresponding "cuts" over the next decade as part of a deficit reduction package. Without justification, or media notice, in the debt deal proposed the Republicans rewrote this as 350 billion, hence a 50 billion dollar increase in defense spending as a result of the deal. Of course, this whole business is a bit vacuous given how starting a new war, opposed to winding down old ones, would easily result in all kinds of new defense spending; nonetheless, the increase over previously budgeted levels is telling. To put that 50 billion into perspective, this is approximately the level of annual defense spending that all the next biggest spenders outside of China each spend in total: UK, France, Russia, Japan and Germany.

The more commented on aspect of military spending is that the budget deal is structured so that the so called Super Commission that has been created to determine the specific cuts has a punitive incentive attached to it should it fail to make these cuts. The idea was to find a punishment that is so unpalatable to both sides that they would almost definitely be forced to make a deal. These triggered cuts upon failing cut equal parts from military and nonmilitary spending of a half trillion each. While we were never given the exact logic (it was all done behind closed doors after all) it isn't  that hard to guess the conventional wisdom: Democrats don't want the non-military spending cuts and Republicans don't want the defense cuts. Or do they?

If there is one issue which the Tea Party has managed to push into the public conversation that I think is beneficial it is the idea, oh so rare in American politics, that cutting defense spending is actually something to be considered. This is the honest response to believing in the need for fiscal restraint and cutting the size of government, very unlike establishment Republicans whose fiscal responsibility rhetoric is proven vacuous time and time again as they support massive increases in defense spending, tax cuts on the rich and the maintenance of the major entitlement programs.

In contrast, despite the conventional wisdom that Democrats are the ones more willing to cut military spending it has been proven, time and again, utterly false. As Glenn Greenwald quotes: "Yesterday, President Obama's Defense Secretary, Leon Panetta, donned his Dr. Strangelove hat and decried these prospective cuts as a "doomsday mechanism" -- doomsday! -- warning that these would be "very dangerous cuts" that "would do real damage to our security, our troops and their families, and our military's ability to protect the nation.""

The problem here is about the negotiations and the perception of who can lose most. With the entire debt deal there was a narrative (at best partially true, I think) that the Republicans were more willing to risk a "doomsday" default. Hence, Democratic apologists seem to say, the Republicans were able to get more out of the deal than Obama was (let's not forget how the baseline of this deal over the last 70+ times the debt ceiling has been raised was usually but a procedural motion).

So now let us see how this applied to the next round of negotiations mandated by this deal and consider which side is more willing to accept the doomsday scenario. On the Republican side, they have a vocal minority of the Tea Party totally willing to accept this scenario. They actively want the non-defense cuts and don't seem to even mind the defense cuts. On the Democrat side, however, while they will obviously maintain that they don't want the massive non-defense cuts, they also are making it abundantly clear they really don't want the defense cuts either. Personally, a half trillion in defense cuts spread over a decade is something I would support and one could easily do this without risking any of the doomsday scenarios Panetta envisions.

My thesis is this: this asymmetry between the parties on how willing they would be to face the triggered cuts should they not make a deal is going to result in an asymmetry in the result of the deal. The outcome will be much closer along the lines of stuff the Republicans want than what the Democrats at least claim they want. Or, at least, there is an asymmetry in perception. I am not convinced this asymmetry actually existed in the last negotiations (nobody wanted to default with no relevant further gradations) but the perception that there was an asymmetry probably did contribute and so to is it likely that the perception of an asymmetry in willingness to have the doomsday cuts will matter.

Previously on the debt limit debate: A not so clever move in a broken political system

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