DoD Buzz

The year that never was

Everyone involved likes to say Congress has "time" to save the Pentagon from the guillotine, but after another gloomy week of hearings, it's clear that everyone actually believes something very different: The fix is in.

The top Democrat on the House Armed Services Committee, Washington Rep. Adam Smith, was asked Thursday whether he thought there were only two options when Congress tries to resolve sequestration in December: Get behind a short-term plan like the one proposed by HASC Chairman Rep. Buck McKeon or do nothing and let the blade fall.

‘Well there’s a third option,” Smith said. "All of the Bush tax cuts expire in December. What I would do at that point is take $1.2 trillion of them, say, 'This isn’t gonna happen' and at that point stop sequestration. This is not an ideal outcome. Waiting until December to resolve this I don’t think is a good idea. But the problem with proceeding is that I" -- and most other Democrats -- "think revenue has to be part of the equation and Republicas insist revenue cannot be part of the equation, and that is at the moment a deal-stopper."

And it will continue to be right up until the wire, Smith suggested, even as he argued Congress should not wait until the last minute to do its job. But he was not optimistic about what could happen next:

"We get to December, you’ve got those expiring tax cuts, and typically Congres would do what it always does: At the last minute, extend everything and pretend at some point in the future we’ll deal with the deficit. I don’t vote for those things, so when I say 'Congress,' I am talking broadly, and not about something I would support. But in this case, the vote to extend the Bush tax cuts in their entirety would in essence be the vote to lock in sequestration. And that’ll be an interesting little conversation, won’t it."


Smith could be wrong -- he is in the minority in the House and it'll be majority Republicans who drive what happens in the coming months. They could offer a new proposal, or play ball with Democrats, or something could happen to make both parties rally around $1.2 trillion in deficit reduction over the next 10 years, which is the antidote to the slow-acting sequestration poison.

In the end-of-the-year scenario, Smith was asked, would it be cricket to count the new "revenue" from expired tax cuts toward the $1.2 trillion goal? Oh yes, he said, and told a wonky anecdote about how Congress had given itself a sly out in last year's much-maligned budget control act.

"I love this stat," he said with a grin. "This amuses me; it doesn’t amuse a lot of other people – early on in the super committee thing, we said, OK, well, y’gotta come up with $1.2 trillion in savings. I was like, 'From what? What’s the baseline?' There is no baseline. I love that. There is no baseline! The BCA says you have to find 1.2 to 1.5 over 10 years from nothing.  You can make it up. Literally, to a certain degree, if we wanted to pass something [we could say] we’re spending less money on the [Overseas Contingency Operations accounts] ---  so look at the next ten years, say, 'OCO must go down,' we can say 'Good, let's go home.'"

This kind of numbers conjuring is how the defense budget can both grow slightly and reflect a $487 billion reduction over the next 10 years -- because the Pentagon is cutting against what it was planning to spend, not actual numbers from the past. It's why all the charts in all the slide decks have multiple lines in different colors going out into the future, to account for the different scenarios.

Defense advocates have tried to exploit this fuzziness as much as possible, and the numbers talked about for DoD's "reductions" have ballooned from $300 billion to $400 billion to $450 billion to $487 billion. Some defense officials were throwing out $489 billion in last month's budget rollout. These scary numbers have given Republicans an opening to continue their attacks on President Obama for letting the budget drive his "strategy," rather than the other way around. These talking points, developed within the Armed Services world, are spreading out into the general population: House Budget Committee Republicans tried them out this week in their hearings with Secretary Panetta and Joint Chiefs Chairman Gen. Martin Dempsey.

(Smith, for his part, mocked this narrative: "I hear this and I want to say, 'What color is the sky in your world?'" he said. "Every discussion that I've ever been a part of, the budget is always a factor.")

Republicans also have leaned more heavily on the Why Aren't You Planning For Sequestration gambit. How do I go back to [insert my home state] and tell the good people of [home state] that their Defense Department isn't at least preparing for this ... this ... catastrophe?

"There isn't a hell of a lot of planning I can do!" Panetta told South Carolina Republican Rep. Mick Mulvaney. The whole point here is that everything gets cut equally across the board, Panetta said -- no planning needed.

That's not the whole picture, though: Congress could use the oodles of time its members are always talking about to authorize the Pentagon to reprogram money across its various accounts in case of sequestration. But that would be a concession that sequestration was manageable, that DoD could withstand the additional $500 billion in reduced budget growth, and everyone involved would look foolish for the months spent predicting armageddon.

So we're back where we started -- nothing on the horizon between now and the end of the year looks like it could save defense. As we've observed, the military-industrial-congressional complex has become like the Bottle City of Kandor, or Lisa Simpson's genesis tub, a microcosm of multitudes entirely dependent on the larger forces without.

Defense advocates in both houses, in both parties, agree with the Pentagon and the defense industry that sequestration must be stopped. But if Smith is right and this depends on December's vote on the Bush tax cuts, it could turn everything on its head. Would defense hawk Republicans permit the tax cuts to expire if it meant finally pulling the Pentagon off Big Ben's gears? Or would national politics force an extension and doom the Defense Department?

There's no way to know, and so much could happen between now and then and it's no use attempting predictions. The only thing that seems certain is that lawmakers may have effectively given up trying anything on their own for the next nine months.

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