The Defense Department is slated to trim almost $500 billion in spending in the next decade. Depending on how Congress and the White House interact, our military may be required to make additional cuts of that much more. It is early to assess how spending cuts are going to affect the U.S. military in the long run.
It may also be early to say how the cuts will affect the overall U.S. economy. Defense makes up 4.2% of GDP now and projected to fall to about 3.1% in 2015. That’s about where Pentagon spending was for a few years before the 2001 terrorist attacks. Geographically, those areas most heavily saturated Defense suppliers are going to feel these cuts the deepest.
Then Secretary of Defense Leon Panetta warned sequestration’s mandated cuts would be “devastating” to the military. If you have not read Panetta’s letter to Senator McCain (Ranking Member of the Committee on Armed Services), you should do so. http://armedservices.house.gov/index.cfm/files/serve?File_id=9692f972-eb86-46da-bc8d-ff4d461e6c00.
Current Defense Secretary Chuck Hagel is downplaying the effects of sequestration. While acknowledging there will be pain, Hagel expressed optimism that the White House and Congress would come to agreements that would head off the most serious consequences. It remains to be seen what sort of compromise the two political parties can work out.
Here are some examples of how the military is currently changing because of sequestration and because of the pressures being exerted to reduce the federal deficit:
- Cuts in the civilian workforce. Notices go out later this month for thousands of civilian furloughs, reducing pay by 20 percent. Hagel announced steps have already been taken including a hiring freeze, terminating or laying off some contract employees, and cutbacks in maintenance.
- Declining troop levels. Expect a troop-level reduction of 150,000, mostly from the Army and Marines. Military pay scale should not be affected, but expect reductions for health care coverage and pension changes. For example, more years of service will likely be required to qualify for full retirement benefits.
- Reduction in Air Force and Navy aircraft. Not only are there going to be fewer new aircraft produced, the procurement of next generation aircraft is getting a long and hard look. The Air Force is set to trim five A-10 tactical squadrons and two other squadrons as well (a National Guard F-16 unit and an F-15 training squadron). There will be fewer aircraft training missions and patrols. The C-27J cargo plane is being discussed as a program on the chopping block.
- Increased use of drones. This strategy is designed to reduce wear and tear on aircraft and to reduce the number of aircraft needed. Some defense experts estimate that within a decade unmanned aircraft will make up more than half of the U.S. air arsenal.
- Fewer overseas bases. To deal with China, some facilities will be shifted from Europe to southern Asia. More and more, Europe will be left to take care of itself except in times of deep crisis. There will be a reduced U.S. presence in Western Europe.
- Fewer ships in the Navy and the Coast Guard. Not only are the number of ships to be reduced, but the frequency and duration of patrols and missions could be dramatically reduced as well. Reduction doesn’t mean absence of funding—the U.S. Navy recently ordered four new littoral combat ships as part of their 2013 budget.
- Reductions in all Defense procurement, estimated at $30 billion from the current annual $120 billion. Defense contractors are likely to find offsets by getting bigger orders from allied countries. Saudi Arabia and India are identified among the biggest customers. Contractors will tighten their belts a bit. The industry will likely experience some layoffs.