Will Budget Cuts Leave America Defenseless? Hardly

Disaster! Surrender! Appeasement!

Reaction to President Obama's proposed cuts to national defense spending have run the gamut from panic to ... more panic.

According to The Wall Street Journal, for example, proposed cuts will result in a 14% reduction in troops for the Army, and a 13% cut to the Marine Corps. The nuclear arsenal will be slashed, production delays will strike the Air Force's new fighter jet, the F-35, and overall defense spending will fall by 8%.

Sen. John McCain denounced the cuts as representing a "budget-driven defense policy." And to judge from what he and the other talking heads are saying, you'd think the president had decided to outright gut the military. But is it really all as bad as that?

Budget-Driven Defense Panic

The document that sent Beltway critics into a tizzy last week, titled "Sustaining U.S. Global Leadership: Priorities for 21st Century Defense," does in fact suggest that change is afoot. That said, it's almost entirely devoid of actual numbers that would describe these changes. Meanwhile, what it does contain seems to contradict the panicked statements of its detractors.

In a cover letter for the report, President Obama describes a plan to preserve an "agile, flexible" military, and one "ready for the full range of contingencies" that face it. A military that, far from waving the white flag, will "continue to invest in ... surveillance, and reconnaissance; counterterrorism; countering weapons of mass destruction; operating in anti-access environments; and prevailing in all domains ..." So it's hardly a plan for shrinking violets -- or shrinking from violence when it's necessary.

Military Math

The specifics of the plan -- such as we know of them -- tend to support this view. Far from eviscerating America's armed forces, the cuts agreed upon between the White House and Congress earlier this year total $480 billion. That sounds like a lot. But remember that these cuts will be spread out over a full decade, amounting to average rollbacks of just $48 billion a year.

To put this number in context, $48 billion is about 5.4% of the $895 billion budget that the Pentagon requested last year. It's not just a flesh wound to be sure, but it's also not a mortal wound. In fact, it's a correction in spending that might be satisfied by simply following Sen. McCain's advice to eliminate "waste, inefficiency, and ineffective programs."

Waste and Inefficiency in the Old Country

In furtherance of the president's goals, the report points out that Europe is a pretty safe place right now, which should enable the U.S. military to "rebalance" part of the "U.S. military investment in Europe." (Translation: "relocate some of the troops and materiel based there.") Similarly, the end of combat operations in Iraq, and the gradual drawdown of troops in Afghanistan, should reduce costs in these theaters, while permitting the military to increase spending in places requiring more urgent attention -- namely, the Asia-Pacific region, to which "we will of necessity rebalance."

In fact, it's entirely possible the Pentagon will be spending more money in regions such as Asia-Pacific, not less.

Among the several objectives laid out in the report is the need "to ensure [the military's] ability to operate effectively in anti-access and area denial environments." Which roughly translates to places in and around nations with sizable defense budgets (China), advanced air defense and air forces (China), and plentiful reserves of long-range anti-ship missiles (China.)

It's a Long Way to China

This brings us, of course, to the question of effective ways to meet these threats. Cutting 5% from the defense budget might not sound like a lot, but it does sharpen the need to spend what's left more wisely. And to put it bluntly, equipping and maintaining large land armies probably isn't the best way to secure trade routes in the Pacific and South China Sea.

Fortunately, much of the "rebalancing" being discussed involves de-emphasizing land warfare, and focusing on power projection by sea, air and space. That's where the cuts to U.S. troop levels come in.

If the Pentagon spends less money buying main battle tanks from General Dynamics (GD), it will most likely spend more money buying Littoral Combat Ships from ... well, General Dynamics. Boeing's (BA) "Future Combat Systems" project to upgrade American armored divisions may be history, but the company can make up a lot of that revenue building refueling tankers, spy satellites, and unmanned aerial vehicles.

And those stealth fighter jets from Lockheed Martin (LMT) -- the ones that are supposedly being cut? Not a good idea if the Air Force wants to be able to penetrate "anti-access and area denial environments." Unsurprisingly, from what I hear, the actual plan is to just slow down the rate at which we purchase F-35s temporarily. But the goal to eventually buy 2,500 fighter jets? That's still a go.

Motley Fool contributor Rich Smith does not own shares of any company named above, but The Motley Fool owns shares of Lockheed Martin and General Dynamics.

Source: http://www.dailyfinance.com/2012/01/11/will-budget-cuts-leave-america-defenseless-hardly/

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