DoD Buzz

Report: DoD cuts could total around $550B

There are so many numbers floating around about the Big Crunch that you can't even tell which way is up. One reason is that nothing is settled -- and few things ever are in Washington. Another reason is that Hill and defense industry advocates want to make it sound as though DoD has already given up forfty-ten bajillion dollars, and if it loses any more, G.I. Joe will be boiling his boots to make dinner.

So, with that as a caveat, here are some (possibly meaningless, possibly interesting) new budget numbers:

Mike Allen, POLITICO's army of one, led his morning email tipsheet today with this nugget, in case you missed it:

DRIVING NOVEMBER - "Super Committee: Outline of the Grand Bargain" -- Chris Krueger of MF Global Inc.'s Washington Research Group emails clients: "With the Super Committee entering its middle innings, we suspect that the news cycle will begin to focus on the building momentum for a grand bargain. ... For the grand bargain to work, Republicans need to give on revenue and Democrats need to give on entitlements.

President Obama and Speaker Boehner and Senate Majority Leader Reid are all likely on board for a 'big deal' and it would make the 12 members of the Super Committee look like heroes rather than partisan hacks ... Here is what a grand bargain of $1.2T in deficit reduction would most likely look like, which we continue to believe has about a 25% chance of enactment [PLAYBOOK SAYS: 40%!]: $300B revenue raisers (the likely framework would be a 3-1 spending to revenue ratio) ... $216B interest savings ... $134B-$300B in Medicare/Medicaid ... $60-255B Chained CPI for inflation-adjusted programs ... $200B relatively non-controversial spending cuts ... $100B defense = $1.2T in deficit reduction and NO SEQUESTER TRIGGER."

So -- under this scenario, DoD would absorb the roughly $450 billion or so in reduced growth to which it has already agreed, then an additional $100 billion, just to show it's a good sport. Secretary Panetta and the services might not like it, but they also might prefer it a whole lot more than springing the trap and triggering $500 billion in budget sequestration.

It's difficult to say how likely this scenario actually is, given how much secrecy has lately enveloped the super committee. Armed Services Committee lawmakers won't be happy with any defense spending cuts as part of a grand bargain, but for as powerful as they are, do they have enough throw weight to block this deal? Then again, if nobody is satisfied with it -- one likely outcome -- they may not have to try.

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