Experts see budget crisis hitting Pentagon spending down the road

The country’s deteriorating fiscal situation will eventually affect Pentagon spending, several budget experts predicted on Tuesday.

“There is no way — no way — that the defense budget will be immune to deficit reduction,” said Stanley Collender, the managing director at Qorvis Communications. He spoke Tuesday at a pre-budget discussion sponsored by the independent Center for Strategic and Budgetary Assessments (CSBA).

ADVERTISEMENT
The Pentagon’s budget request for fiscal 2011, to be unveiled on Feb. 1, is not expected to include significant cuts.

The Pentagon also is expected to be excluded from the three-year discretionary spending freeze that President Barack Obama intends to propose in his State of the Union address on Wednesday. The Homeland Security, Veterans Affairs and foreign aid budgets are also likely to be excluded.

But escalating public debt means the Department of Defense will no longer have the “luxury” of postponing making “many difficult decisions,” said Todd Harrison, a CSBA analyst.

He noted that interest payments on the national debt in the next decade will exceed Pentagon spending for the first time in modern history.

By fiscal 2018, net interest payments will be more than $700 billion annually, surpassing projected spending on national defense, Harrison said.

One of the main issues demanding attention in the defense budget is “resolving the disconnect between the plans and programs DoD has put forward over the past decade and the resources available to support these programs in the long run,” Harrison said.

“In some respects this is a trade between funding continued increases in benefits and pay for military personnel — much of which accrues to retirees — and funding the weapons systems troops needs for the conflicts they are in today and must prepare for the future,” he added.

Both the Pentagon and Congress need to consider reining in the labor costs within military services, Harrison said. For example, the total compensation for active-duty troops has 52 percent in deferred and non-cash compensation and the deferred benefits accrue to a small number of people — only to those who stay 20 years in military service, Harrison said. For example, the average Department of Labor statistics show that compensation packages in the private sector are only 29 percent in non-cash compensation.