K.S. Rajan (28 Jan 2012)
"Pentagon to cut $485bn over next decade"

The Pentagon to cut its spending is some areas but to increase it in others such as cyber technologies.

From today's FT, FYI,
Last updated: January 26, 2012 11:58 pm
Pentagon to cut $485bn over next decade
By Geoff Dyer in Washington and Jeremy Lemer in New York
F-35 fighter jets
The US military will cut $485bn from its planned spending over the next decade but will still maintain a larger force than it had before 9/11.
After 11 years of significant budget increases, the Pentagon started to outline on Thursday measures to restrain the growth in its spending, including lower pay increases and higher health insurance premiums for the serving military, base closures and the scrapping of some smaller weapons programmes.
However, despite a political furore about the reduced military budget, the navy will still maintain all its 11 aircraft carriers and the Pentagon will continue to invest in a hugely expensive and controversial new fighter jet, although at a slower rate.
“We are retaining our full spectrum capability,” said General Martin Dempsey, chairman of the Joint Chiefs of Staff.
Under the new budget plans for the next five years, defence spending will actually increase in nominal terms by 7 per cent, although it will fall in 2013 from this year. The Pentagon has been forced to cut $259bn from what it had planned to spend over the period and $485bn from its forecast budget over the next decade. In real terms, spending is estimated to drop by 5 per cent over the next five years.
“The Pentagon is taking a hit, but it is not as devastating as it once seemed,” said Daniel Wasserbly at consultancy IHS Janes in Washington. According to the Project on Defense Alternatives, the 2013 budget will be 46 per cent above 1998 spending.
The measures prompted a sharp rebuke from some Republican members of Congress. Senator John McCain said the new budget “ignored the lessons of history”. The Obama administration’s intention to push for new military base closures is also likely to prompt political pushback.
With the winding down in the wars in Iraq and Afghanistan, some of the biggest cuts will be felt by the army, which will be reduced from 547,000 troops now to 490,000 in 2017. Two combat brigades based in Europe will withdrawn.
The new budget underlined the strategic themes the Pentagon outlined earlier this month, including greater emphasis on Asia-Pacific and on the use of special operations forces.
Defence contractors appeared to have escaped relatively unscathed. Leon Panetta, defence secretary, said he would to implement more “aggressive” contracting practices as part of $60bn in planned efficiency savings. One of the few programmes to actually be cut will be one of four versions of the Global Hawk surveillance aircraft that are being developed.
Instead, the Pentagon opted to phase out some older equipment, including cargo aircraft and some older ships, and to delay certain expensive and risky projects. Purchases of Lockheed Martin’s F-35 fighter jet, the Pentagon’s biggest ever procurement project, will be slowed and a replacement for the current fleet of nuclear-missile submarines will be delayed for two years.
The Pentagon also offered suppliers some notable carrots. In addition to extra spending on cybersecurity, the department will fund a next-generation bomber, a potential boon for aircraft manufacturers, and will upgrade certain submarines to carry additional cruise missiles, which will probably benefit US shipyards.
“The budget recognises that a critical part of our ability to mobilise is a healthy industrial base. Maintaining the vitality of the industrial base and avoiding imposing unacceptable costs or risks on our critical suppliers will guide many of the decisions that we have made,” Mr Panetta said.
Copyright The Financial Times Limited 2012.