Cuts to US defense budget look inevitable

It's bigger than Wal-Mart, employs more people than the United States Post Office, and far outspends all its competitors.

It's the US Department of Defense. Next year, though, budget cutters in Congress and the White House will probably begin cutting it down to size in order to slash America's outsize budget deficit.

There are related reasons: The US war effort in Iraq is winding down; President Obama may start pulling out of Afghanistan; NATO allies are moving to slash their military outlays. Most of all, budget cutters can't afford to ignore an area as vast as defense.

The need for serious deficit reduction and a loss of political support for high defense spending make cuts inevitable, says Gordon Adams, a defense expert at American University.

If budget deficits aren't seriously tackled, US spending on interest on the national debt will exceed its defense budget by fiscal 2018, says Todd Harrison, a senior fellow at the Center for Strategic and Budgetary Assessments. He predicts large defense cuts within three years.

It won't be easy. With 2.25 million full-time civilian and military personnel (not including part-time Guard and Reserve members) and thousands of contracts with firms, the Defense Department is a major economic engine for hundreds of communities and enjoys huge political clout.

Nonetheless, major defense cuts have happened before. Between 1989 and 1993, the active defense force shrank from 2.2 million to 1.5 million and civilian personnel slimmed down from 1.04 million to 700,000, Mr. Adams notes. With the end of the cold war, and by congressional budget cuts, defense spending fell 26 percent in constant dollars between 1985 and 1993 – presided over by none other than Dick Cheney, then Defense secretary, who prided himself on having ended more than 100 military acquisition programs.

Today, defense expenditures amount to about 4.9 percent of US gross domestic product, the nation's total output of goods and services. That's well above the less than 2 percent of GDP spent by such allies as Canada, Germany, Britain, and France. The latest news suggests more cuts by allies are ahead.

Add in what Homeland Security, Veterans Affairs, and the Energy departments spend on defense and total US military spending will reach $861 billion in fiscal 2011, Mr. Harrison calculates, exceeding that of all other nations combined.

Already, defense outlays in Iraq are falling. The number of American military personnel in Iraq has fallen from a peak of 170,000 a couple of years ago to 86,000 now and perhaps 50,000 by Sept. 1. The number of bases and facilities there has been cut by nearly half since peaking at 370 in 2008. Military spending in Iraq has dropped by half – from $90.6 billion in 2009 to an expected $43.4 billion in fiscal 2011. By the end of next year, the US hopes to have only a training-size force there.

By contrast, operations in Afghanistan are still growing, with some 94,000 US troops expected on the ground by late August or September. Costs are climbing rapidly – from $51 billion in 2009 to $110 billion projected for fiscal 2011.

But Adams suspects that before Mr. Obama faces reelection in 2012 he will move toward ending the Afghanistan mission. "The politics are devastating," Adams says.

Employment at the Defense Department probably won't shrink to the levels at Wal-Mart (1.4 million) or the post office (599,000). But a difficult switch from guns to butter – or guns to deficit reduction – is about to get under way.

•David R. Francis writes a weekly column.