Defense cuts hurt, but Graham misses the target

Published 12:00 am Wednesday, November 28, 2012

By Matthew Leatherman

Sequestering the defense budget is troublesome. No hype is needed to explain why taking a blind cut from almost every Pentagon activity, as sequester currently is set to do on Jan. 2, is a wrongheaded idea. But that hasn’t stopped Sen. Lindsey Graham of South Carolina from pushing well past hype into caricature.
Some of the Republican senator’s assertions needed to be busted in short order. As the sequester date approaches and industry considers its risks, our businesses and communities deserve to hear it straight.
In mid-October Graham told the press that sequestration’s 9.4 percent cut means the U.S. would “reduce the Army by 180,000,” a 33 percent slice of the Army’s planned strength for 2013. By contrast the Budget Control Act allows the president “to exempt any [military] personnel account from sequestration.” Obama exercised that authority on July 31, and in doing so he stripped sequester of any effect on the size of our force.

Reductions to the Army and the Marine Corps still are coming, but the reason is because both services offered them as part of the Pentagon’s strategic guidance. Trimming 20,000 Marines and 80,000 soldiers (not 180,000) will roughly reverse the surge ordered during our counterinsurgency campaigns, a reflection that war has ended in Iraq and is ending in Afghanistan. This will restore the Army and Marines to their strength from 2005, and the services have a five-year implementation plan to manage the associated stress on service members.
None of this means that sequester does right by our forces. Defense health care, for instance, is budgeted separately from salaries, and it appears to be exposed to sequester. Our defense infrastructure and materiel are critical tools for military personnel, and cuts to those accounts would affect them as well. Defense public servants — civilians who support military missions and work on installations like Fort Bragg and Camp Lejeune — also would be subject to the cut.
Graham’s assertion about sequestration’s impact on military personnel does a disservice to these real issues. Meanwhile our communities should expect to continue hosting forces similar to the ones they have today, and businesses should know that they can continue to meet the demand coming from those military personnel.
Personnel policy isn’t the only problem for Graham, though. In late May he commented that sequester means “no F-35s, I don’t see how [Marine Corps Air Stations] Beaufort and Cherry Point survive.”

To the contrary, the Budget Control Act stipulates that sequester “reduce each account … by a uniform percentage.” The Office of Management and Budget has determined that share to be 9.4 percent. Across-the-board cuts of this sort would impact the Pentagon widely but without being specific to any installation, acquisition or service.
Procurement contracts truly are especially exposed to sequester — but for reasons related to process rather than statute. The Pentagon manages major purchases over multiple years, and money not yet obligated from previous budgets is wrapped into sequester. Yet, for the same reason, the defense industry still benefits from past years’ resources that are just starting to flow through the system.
That would soften sequestration’s short-term blow. So, too, might an Office of Management and Budget decision to backload the cut in 2013, a possible maneuver to give Washington more time to strike a substitute deal.
Again, sequestration’s badness needs no hyperbole. Cutting government spending on defense contracts or anything else costs jobs even as employment remains weak. The sequester mechanism doesn’t even permit strategic choices about how to spread this pain.
North Carolina’s defense businesses face important choices about if and how to diversify. Graham’s habit of crying wolf obscures them. It also dramatically overstates the more general economic risk. Nearly 60 percent of North Carolina’s defense economy — $14 billion out of $24 billion — comes from the military salaries that have been exempted from sequester.
Graham does make one point that badly needs to be heard, though. He told ABC News in June that “we’re $16 trillion in debt. We need new … more revenue.”
Graham is right to anticipate that everything has to be on the table in order to escape sequester. Talking taxes often is toxic for a Republican, and Graham is courageous to raise this tough issue. Washington most likely will strike a deal to replace sequester, and both businesses and communities should expect this to include fewer writeoffs and the expiration of temporary tax breaks for the wealthiest Americans.
Today’s budget circumstances are sobering. Yet Graham’s caricature of sequester aggravates the planning challenge and adds to our risk by allowing us to be surprised by circumstances that largely can be foreseen. Focusing on the facts would be far more helpful.

Salisbury native Matt Leatherman is with the Budgeting for Foreign Affairs and Defense Project of the Stimson Center in Washington, D.C.