During last week's foreign policy debate, Ron Paul won accolades from the crowd when he professed that there are no real pending cuts to the military, just reductions in baseline spending. Here is the full quote:
“Believe me. They're cutting -- they're nibbling away at baseline budgeting, and its automatic increases. There's nothing cut against the military. And the people on the Hill are nearly hysterical because they're not going -- the budget isn't going up as rapidly as they want it to. It's a road to disaster. We had better wake up.”
This statement is absolutely false. Sequestration will indeed reduce military spending from ‘actual dollar amounts’ of FY 2011 spending levels over the next seven years.
In order to understand defense appropriations, we need to distinguish between the two categories of spending; base budget (ships, planes, weapons, troops) and Overseas Contingency Operations (OCO). Using CBO's numbers, roughly $703 billion (the DOD Comptroller's office puts that number at $688 billion) was spent on total defense spending, with $552 billion allocated for base budget (true national defense) and the rest going toward the wars (OCO). When preparing a 10-year budget for defense spending, OCO appropriations are hard to predict because our war spending vacillates with our foreign policy decisions. Only the base budget figures are truly fixed into the budget, just like most domestic non-security expenditures. Consequently, whenever we mention the estimated $1 trillion in defense cuts, remember that they are exclusively incurred by the base budget, aka the military, not the war budget.
So what will the ten-year budget projection of our base defense budget look like after sequestration? Here are the results from the latest CBO report (CBO Testimony, October 26, pages 18-19):
The top line of the chart (highlighted yellow) shows the 10-year extrapolation of FY 2011 base defense appropriations in inflation-adjusted dollars. Note that these numbers do not factor in baseline spending; they factor in merely inflation. Now, scroll down to the fifth row of data (highlighted in red), "if no savings result from Joint Select Committee." These numbers reflect the projected annual base budget appropriations under sequestration. It is glaringly obvious that defense will incur real dollar cuts, not even accounting for inflation. As we noted last week, under the proposed sequestration, defense spending as far in advance as FY 2018 will be lower than that of FY 2011. If we factor in inflation, defense spending will not reach current levels again until sometime outside of the 10-year budget frame. This is a veritable gutting of our military.
Overall, there will be $882 billion in inflation-adjusted non-baseline cuts to core military spending over ten-years (highlighted green). Even if we fail to account for any inflation – a reckless proposition when budgeting for our primary constitutional responsibility – we will still cut $228 billion over the next seven years. No, Congressman Paul, these are not merely baseline cuts.
So where do Ron Paul and some good conservative/libertarian commentators obtain their data to suggest that defense spending will still rise over the next ten years, albeit at a slower rate (baseline reductions)?
The answer is they are including the war spending (OCO) in their calculation. The CBO is forced to score current policy, irrespective of the likelihood of its implementation. Therefore, they not only assume the continuation of the war over the next ten years, they anticipate increased spending on OCO:
If you include those phantom numbers into the equation, then you can arrive at the conclusion that overall defense spending will not decrease over the next ten years, even after sequestration. However, this baseline is bogus because that money will never be spent. In fact, such projected war spending is so universally disregarded that conservatives (rightfully so) will not count "the war savings" as real cuts. The reality is that we will never spend that money, and as such, the baseline is irrelevant.
Moreover, as we explained earlier, 100% of the cuts will be incurred by the base budget, which supports our entire military infrastructure and weaponry. It is intellectually dishonest to include OCO spending, which will never be spent (and even if it is spent, it won't be affected by sequestration), into the equation, in an effort to obfuscate the unprecedented cuts to the ‘nuts and bolts’ of the military. After sequestration, our base military spending will decrease to less than 3% of GDP, well below the historical post-WWII average.
Conservatives of all different stripes might disagree over the prudence of some of our military engagements throughout the world. Nevertheless, any conservative who subscribes to Reagan's three-legged stool model must support the preservation of the military itself. It is the military itself that will suffer real spending reductions, not just baseline reductions.
As we fight to get the budget under control, it is heartwarming to see the public expose the big spenders for their duplicity on phony baseline spending cuts. Nonetheless, it is disingenuous of Ron Paul to abuse this vital distinction by throwing the proposed defense cuts into the mix. Don't fall for the demagoguery.