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March 16, 2015 – National Defense, Allyson Versprille

The Defense Department should brace for a second “Bloody Monday” during the next presidential administration, said a panel of experts, referring to the day when former Defense Secretary Robert Gates eliminated several high-profile weapon programs.

Monday, April 6, 2009, was when Gates announced a budget proposal that shifted money away from costly, and sometimes troubled programs. Production or development of several programs — including the F-22 fighter, the presidential VH-71 helicopter and the Army’s Future Combat Systems — eventually came to an end as funding was shifted to more near-term needs.

“Looking at the modernization bow wave in the 2020s, we are embarking on a number of programs that, regardless of what we see with the [Budget Control Act] … I just don’t see how we are going to cram all of those major programs into the budget at the same time,” Todd Harrison, a senior fellow for defense budget studies at the Center for Strategic and Budgetary Assessments, said March 16.

The “bow wave” refers to weapon system modernization programs that are progressing at the same time, creating a budget crunch.

As a result, many programs could be cut, delayed or deferred in 2018 or 2019, he said at a forum titled, “The Pentagon Budget: Prospects for Reform,” at the CATO Institute, a Libertarian think tank in Washington, D.C.

Within the next five years a budget realignment similar to Gates’ “Bloody Monday” is likely to occur in order to buy time and defer tough budget choices, said Mackenzie Eaglen, a resident fellow at the Marilyn Ware Center for Security Studies at the American Enterprise Institute. Among these tough choices are whether to trim the civilian workforce, reform military compensation, retire aging weapon systems and close unneeded bases, she added. Many of these initiatives require congressional approval.

“It’s a lot easier, contrary to conventional and popular wisdom, to cut a weapons system in [research and development] or even production than to eliminate a legacy asset sitting out on the rail,” said Eaglen. Politicians would rather take away future jobs than risk losing established ones back in their districts, she said.

Furthermore, Congress and the public have a short-term focus, looking at the present as opposed to the future, said Harrison. Because of higher revenues from a recovering economy and lower spending as a result of the stimulus package created by the 2009 American Recovery and Reinvestment Act and the Budget Control Act of 2011, the deficit is looking a lot better. It has dropped below 3 percent GDP which most economists label as a sustainable level, he said.

However, “we have a demographic bulge moving into a groove in U.S. society,” said Harrison referring to the baby boomer generation. The boomers are moving into retirement and will draw on Social Security and Medicare, increasing both costs and the deficit. This, paired with the Defense Department modernization bow wave, will add to long-term debt, and have an impact on defense spending, he said.

“We are foolish to not be thinking about that and trying to address it right now,” said Harrison.

There’s also an absorption issue in the defense industrial base and the bow wave, Harrison said. It is unlikely industry could effectively execute all of the modernization programs at the same time because it has decreased in size and there are fewer vendors overall.

 

The information above is for general awareness only and does not necessarily reflect the views of the Office of Economic Adjustment or the Department of Defense as a whole.

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