Bogus Budget

The White House and its congressional allies have been talking tough about waging war on the deficit. As if to put some military meat on those rhetorical bones, the Pentagon has leaked a 26-page memorandum that inspired hyperventilating headlines from major dailies. ""Pentagon Said to Offer Cuts in Billions,"" the New York Times reported on Dec. 30, while The Wall Street Journal declared on Jan. 4, ""Defense Cuts Would Strike Lockheed, Northrop: Contractors Stand to Lose Billions of Dollars in Orders As Pentagon Tightens Belt.""

What these and other dailies neglected to explain is that the memorandum (officially called ""Program Budget Decision (PBD) #753"") is virtually dead-on-arrival. Regrettably, It is being killed by pork barrel spenders in Congress, narrow-minded and disingenuous civilian and military bureaucrats in the Pentagon.

Indeed, it is not even clear whether the framers of PBD #753 are serious. Its $30 billion in net budget reductions are spread over six years, with many postponed until '08 or '09. Some cuts occur only after the targeted programs receive increases. For fiscal year 2005, which ends Sept. 30, the total reduction is $0.

Also in evidence are the same vapid exhortations Congress perennially adds to appropriations bills to pretend to reduce spending. The Army is told to save $4.5 billion with a plan to ""reengineer its business practices;"" the military services in general are told to save $12 billion by ""reduc[ing] planned contracting support.""

Another $5 billion would be cut from missile defense spending, which until now has been on budget growth hormones in the Bush administration. The reduction would be offered to a Republican Congress, whose party members are not about to start wacking down what they spent decades pumping up.

A poker face will undoubtedly accompany Deputy Secretary of Defense Secretary Paul Wolfowitz, a conceptual father of missile defense, when he testifies before Congress on the proposed cuts. Wolfowitz will be appearing only after advocates in industry and at the Pentagon's Missile Defense Agency have given congressional supporters all the ammunition they need to get the oh-so reluctant witness to confess regret about slowing down the so-terribly vital program. And magically, rationales will be found to restore the funding.

The script will be played out in other familiar ways. Lockheed Martin's new ""J model"" of the C-130 transport, up for a $5 billion cut, was added to defense budgets in the mid-nineties by Congress. Since then, the plane flunked its field testing and showed up late in Iraq where it performs under expectations. It costs multiples of the previous H model. It is a perfect candidate for termination. However, with encouragement – and campaign contributions – from Lockheed, Georgia's Republican Senator, Saxby Chambliss, and others with a piece of C-130 production in their states are charging to the rescue.

Another of Program Budget Decision 753's recommendations is to retire the aircraft carrier ""John F. Kennedy"" in 2006. The Chairman of the Senate Armed Services Committee, John Warner, has already indicated his opposition, hoping to preserve the carrier's $350 million overhaul – to be performed, of course, in the Norfolk Navy Yard in his home state, Virginia. Showing its true hand, the Navy has told contractors to go ahead and submit their bids, but to do so 60 days late.

Air Force Secretary James Roche has publicly opposed the PBD's recommendation to cancel, but not until 2009, his service's crown jewel, the F-22 fighter plane. The F-22 distinguishes itself for its irrelevance to 21st first century warfare and its spectacular price of more than $250 million a copy, assuming no further cost overruns.

Before they are to be reduced in similar ""out years,"" the Marine's new amphibious warfare ship and the Navy's new destroyer are slated for actual increases. Thus, F-22 contractors in 43 states, and relevant shipyards in Pascagoula, Miss. and Bath, Maine, can receive a little extra while working to reverse the future reductions.

There is a puzzle, however. Why does Program Budget Decision No. 753 come from Deputy Secretary Paul Wolfowitz, and not from Secretary of Defense Donald Rumsfeld himself? As of this writing, Rumsfeld has been mum on these cuts, which are so clearly opposed by people in his department and by Congress. Rumsfeld's job is not all that secure these days; perhaps he hopes to acquire political support by rescuing a few programs.

The story is an old one. Another feckless effort at budget restraint recedes fast in the face of political, economic, and personal self-interest. The feeble attempt will be killed in cold blood and, in Washington, no own will mourn. To the contrary, they will tout their heroism and celebrate their conquests. Only the taxpayer will feel the wound."

"This op-ed first appeared in Baron's magazine, p. 31, Economic Beat, Jan. 24, 2005