Home The Washington Diplomat December 2011

Panetta’s Blind Eye Reveals Disappointing Fiscal About-Face

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Global Vantage Point Op-Ed

In Washington, cabinet secretaries who ask for less funding from Congress are as rare as waiters who ask for smaller tips. Robert Gates, defense secretary to President George W. Bush and President Barack Obama, did not always match his actions to his words. But Gates was at least willing to mouth the obvious, which is that the Pentagon is bloated and overfunded, especially in comparison with the resource-starved State Department.

"As part of America getting its financial house in order, the size of our defense budget must be addressed," Gates said, a theme he continually hit. Gates worked closely with Secretary of State Hillary Clinton to boost America's lagging commitment to diplomacy and called for the State Department to take over some of the jobs that have fallen to the military in recent years, such as nation-building. It was an impressive performance, at least rhetorically, coming from the Cold Warrior Gates.

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Credit: DOD Photo by U.S. Air Force Tech Sgt. Jacob N. Bailey
Defense Secretary Leon Panetta delivers remarks at the Defense Intelligence Agency's 50th anniversary celebration at the Joint Anacostia-Bolling Base in D.C. in September. Over the last few months, Panetta has been warning lawmakers that cutting the defense budget too deeply could jeopardize national security.

All of which makes the tenure thus far of Gates' successor as defense secretary, Leon Panetta, so disappointing. One reason some were excited about Panetta's appointment to the top Pentagon job was that he had often been willing to take on typical Washington ways. In "So Damn Much Money: The Triumph of Lobbying and the Corrosion of American Government," written by veteran Washington Post reporter Robert G. Kaiser, Panetta emerges as one of the few Beltway insiders frank about the corruption inherent in contemporary American politics. "Legalized bribery" is the apt phrase Panetta uses in the book to describe the tremendous influence of money in politics.

"Legalized bribery has become part of the culture of how this place operates," Panetta is quoted as saying. As former House Budget Committee chairman and budget director and chief of staff under President Bill Clinton, he showed himself willing to acknowledge the costs-and-benefits analyses that any serious government official must consider. Kaiser praises Panetta as doing "something that is now rare for Washington players who relinquish their official office: he went home. He turned down several big-money offers to become a Washington lobbyist.... He quit the game."

In a recent article, the Post further highlighted Panetta's about-face. "I think the most dangerous threat to our national security right now is debt, very heavy debt," Panetta lectured then-Defense Secretary Richard Cheney and Gen. Colin Powell, chairman of the Joint Chiefs of Staff, during a hearing in 1992. "I don't question anything you're saying in terms of the role that this country ought to perform. My problem is how the hell are we going to pay for it?"

What the hell happened to that guy? The blunt, occasionally foul-mouthed Panetta is clearly back in the Washington game, and playing it with gusto. President Obama has declared that national security spending will be reduced by $450 billion in the next 10 years. But if the congressional "super-committee" doesn't agree to a deficit reduction of $1.2 trillion over the next decade, the Defense Department faces an additional $500 billion or more in mandatory cuts.

Panetta has described that scenario as a "crazy doomsday machine" and has raised the rhetorical alarm, lambasting the super-committee cuts as a form of "shooting ourselves in the head" that would "lead to a hollow force" and even invite aggression. Panetta also suggested that a very modest trimming of the defense budget would cause unemployment to rise a full 1 percent, a dubious notion even before one realizes that whatever money is cut from defense could be spent on more useful programs supporting employment.

Of course, the adroit Washington insider, respected on both sides of the aisle, is also simply doing his job — protecting the Pentagon's turf. More recently, he's backtracked on some of his more dire warnings, acknowledging that cuts are inevitable and could fall on long-cherished initiatives, possibly reducing the number of American troops based in Europe, closing down U.S. bases, and even revamping the military's generous heath care for retirees.

But Panetta's insistence that further cuts would "hollow out" the military with "a goofy meat-ax approach" glosses over just how inflated the Pentagon's coffers have become. The numbers speak for themselves, and they aren't on Panetta's side. Estimates for the true costs of the post-9/11 "war on terrorism," including the wars in Iraq and Afghanistan, vary from $1 trillion all the way up to $6 trillion — a fortune that's directly contributed to America's explosive deficits. Moreover, defense spending has doubled since 2001, averaging between $500 billion and $700 billion annually in recent years, higher in real terms than at any point during the Cold War — despite the fact that statistically speaking, this period has been one of the most peaceful in world history. Just returning to Reagan-era military spending levels, when the world faced the prospect of nuclear Armageddon, would shave $250 billion a year in savings.

Let's consider how incredible the current U.S. defense spending levels really are compared to other nations. Today, America's military spending accounts for just under half of what the entire world spends on defense. The United States spends on defense about six times as much in absolute dollars than does China, its closest competitor. In fact, China, Iran, North Korea, Russia and Pakistan combined do not equal America's defense spending. And few in the Pentagon seem to consider the provocative nature of America's unrestrained defense budgets in spurring rival nations to beef up their own spending.

The Pentagon currently has 1.5 million active-duty military personnel, the same number of reservists and National Guardsmen, as well as about 800,000 civilian employees. It maintains more than 800 locations overseas, from sprawling army bases to naval support facilities on remote islands, whose tentacles are spread out over nearly 50 nations and U.S. territories — a modern-day military empire.

This financial burden, not surprisingly, means American taxpayers spend the most on defense as a percentage of GDP than any other developed nation in the OECD (Organization for Economic Cooperation and Development). Meanwhile, we spend the least when it comes to foreign assistance. In fact, the United States allocates about 1 percent of government spending toward the State Department and foreign aid budget — yes, our entire non-military outreach to the world clocks in at a meager 1 percent of total spending.

Yet what's striking is that State is poised to take a much bigger budgetary hit than the Pentagon — and is scrambling to preserve a few billion dollars that will make no dent in the national debt, all while being asked to shoulder an increasing global burden. Despite diminishing American influence around the world, U.S. diplomacy must confront a dizzying array of international challenges that don't exactly lend themselves to a military solution, from the Arab Spring to the euro crisis to humanitarian disasters to the rise of emerging powers such as China and India. The State Department is also preparing to take over responsibility for Iraq from the U.S. military this month, which means that strategic hotspots such as Iraq, Pakistan and Afghanistan will take up an inordinate share of State's already-paltry budget, leaving less funds for famine relief, democracy building or nuclear nonproliferation efforts, for instance.

Again, the numbers are revealing. The State Department's annual budget comes to about $50 billion. The Pentagon's is well over 10 times that. For the 2012 fiscal year, Congress has largely proposed freezing DoD spending — a Senate bill would reduce it by $26 billion, for a budget of $513 billion, while the House has proposed $530 billion (the two bills now have to be reconciled). Meanwhile, the House Appropriations State and Foreign Ops subcommittee is aiming to slash 18 percent from State's coffers, including a 27 percent cut to USAID. Even top military officials have warned such deep cuts could jeopardize national security.

Panetta's predecessor deserves credit for trying to reverse this trend. In a rare example of Beltway budgetary teamwork, Gates supported Secretary Clinton's efforts to rebalance America's foreign policy priorities and bolster the prestige of Foggy Bottom. He recognized the growing militarization of foreign policy in a way Panetta has so far failed to grasp.

Beyond the wisdom of putting defense above diplomacy and development in America's dealings with the world, the hard truth is that war can be a profitable business, and there's no doubt that defense spending — one of the few economic drivers in which the United States maintains a global competitive edge — provides desperately needed jobs domestically. Defense contractors also shrewdly plant those jobs in almost every congressional district they can reach, ensuring that defense is the most sacred of cows when lawmakers look to cut spending.

And while the jobs are needed, the results sometimes aren't. The boondoggle of defense contracts — which can be exceedingly difficult to track — has sunk billions into obsolete or unproven weapons programs that even Gates and the military brass have sought to abandon, but couldn't because of congressional opposition. (Democratic lawmakers recently leaked details of a Pentagon report that shows defense companies have defrauded the U.S. military of a whopping $1.1 trillion over the last decade.)

Gates himself admitted that, "Since 9/11, a near doubling of the Pentagon's modernization accounts — more than $700 billion over 10 years in new spending on procurement, research and development — has resulted in relatively modest gains in actual military capability," adding that the days of "no-questions-asked funding requests" were over.

In addition to not always improving the military's capabilities, excessive defense spending can also crowd out more powerful engines of economic growth — and safety nets. Indeed, at the same time he has demanded every dollar he can get for the Pentagon, Panetta has argued against funding the social programs that, even as they are, leave Americans with a level of social support well below that of every other wealthy country in the world. "You cannot deal with the size deficits that this country is confronting by simply cutting the discretionary side of the budget," which includes military spending, Panetta argued. "That represents less than a third of the overall federal budget.... You've got to look at the mandatory side of the budget, which is two-thirds of the federal budget. And you also have to look at revenues as part of that."

To be sure, soaring health care costs are one of the biggest problems facing the nation. But to focus on Medicare, Medicaid and Social Security programs (the latter fiscally solvent in the medium term) that leave Americans with some comfort in a ruthless economy while pushing for more fighter jets and cluster bombs is morally and fiscally wrong. (Do we really need three different versions of a fighter jet that has an estimated $1 trillion price tag over its 50-year lifespan?)

And what Panetta doesn't mention is the fact that within this one-third slice of discretionary spending, more than half is consumed by defense. That means the entire other half — the part that politicians and voters always rush to gut — goes to all those basic functions most people associate with government: education, transportation, law enforcement, energy research, children's nutrition, housing assistance and the entire space budget, among myriad other programs. Ethan Pollack of the Economic Policy Institute describes this underappreciated segment of spending as a public investment — a "win the future" portion of the budget.

The interactive "Cost of War" tool by the National Priorities Project puts the defense-discretionary spending dynamic into stark relief. For the same amount spent on the Afghan war for the 2011 fiscal year, for instance, it shows that this money could have also paid for 1.8 million elementary school teachers for one year or converted 110 million households to all-wind energy for a year.

Moreover, core domestic appropriations have grown by 9 percent in real dollars over the last decade, which is still one-fifth of the rate of increase for the Pentagon — and doesn't even count the additional expenditures for overseas wars.

Panetta is right that shredding non-defense discretionary is passing the buck. But he's wrong to ignore the Pentagon's key role in fueling the deficit that the U.S. government is now struggling to curb.

Over the last decade, the Bush administration launched two wars with borrowed money, while cutting taxes — an unprecedented economic combo in U.S. history. Letting both of those wars wind down and the Bush-era tax cuts lapse would alleviate much of the medium-range debt hanging over the nation.

Yet even with deficits at record levels, Panetta adamantly opposes even the most insignificant of defense cuts beyond the $450 billion rollback over the next decade that Obama has proposed. Many experts agree that there's plenty of wiggle room to cut Pentagon waste, and the institution is ripe for a modernization that could ultimately make the U.S. military leaner, more efficient and more effective — all without compromising national security. (In fact, top brass like former Joint Chiefs of State Mike Mullen say that unsustainable debt constitutes one of the biggest threats to America's national security.)

Few are buying Panetta's newfound tough-guy talk. "I'm amused because I remember Leon Panetta when he was chairman of the Budget Committee in the House and the head of the Office of Management and Budget, and he always said, 'We've got to cut, we've got to cut, we've got to reduce the deficit,' and that was before the deficit ballooned under President [George W.] Bush," Congressman Henry Waxman (D-Calif.) told Politico. "He's taking the view of the Department of Defense and the military. I understand where he is coming from, even though I am amused by it." Characteristically, Democratic Congressman Barney Frank of Massachusetts was even blunter: "That is not the Leon Panetta, the budget guy, that I once knew. He knows better."

If only he did. Lest anyone think that the proposed cuts would endanger the military, as Panetta claims, Republican Presidents Dwight Eisenhower, Richard Nixon and Ronald Reagan all scaled back defense spending to a greater degree than what is currently on the table. And there was a Soviet Union around to defend America against back then, unlike today. Even as Panetta concedes al-Qaeda is nearly nonexistent, he insists America has "vital interests" that require astronomical levels of defense spending. Yet the proposed cuts would take us back to 2007 levels, hardly a starved budget. Even the dreaded automatic trigger of up to $600 billion in additional cuts if the super-committee fails to come to an agreement breaks down to $60 billion a year — that's about 9 percent of total defense expenditures in 2010.

Moreover, it stands to reason that as the wars in Iraq and Afghanistan draw down, the budget devoted to these conflicts should be shrunk correspondingly. A nation's military budget, after all, should presumably be directed at specific threats, rather than being the product of bureaucratic inertia or grandiose ideas about "full-spectral dominance," a favored Pentagon catchphrase.

Not according to Panetta. Perhaps realizing he had begun to discredit himself with his incessant scaremongering, in mid-October the defense secretary took a different approach in a speech at the Woodrow Wilson Center. He spoke of "the thoughtful debate the entire country needs to have on how to sustain the nation's strength ... in a time of growing fiscal constraint" — even though in the same breath he used the phrase "catastrophic damage" to describe what paper cuts would do to the military budget.

In his first appearance as Pentagon chief before the Republican-led House Armed Services Committee, Panetta said any defense cuts over the $450 billion currently approved for the next decade "will truly devastate our national security," insisting, "I don't say that as scare tactics. I don't say that as a threat. It's a reality."

No it is not. Eisenhower, who knew a thing or three about war, warned that America must "maintain balance in and among national programs, balance between the private and the public economy, balance between the cost and hoped-for advantages, balance between the clearly necessary and the comfortably desirable, balance between our essential requirements as a nation and the duties imposed by the nation upon the individual, balance between actions of the moment and the national welfare of the future." The Leon Panetta of just a few years back might have been the first to agree.


About the Author

Jordan Michael Smith is a freelance writer in Washington, D.C., who has written for The New York Times, The Washington Post and The Boston Globe.

Last Edited on June 17, 2014