The Federal Deficit Is Shrinking. That’s Bad News For U.S. Defense Sector.

The federal deficit dropped significantly from 2012 to 2013, and analysts project it will, shy of changes to existing law, drop further later this decade. (Chart courtesy of USGovernmentSpending.com)

The federal deficit dropped significantly from 2012 to 2013, and analysts project it will, shy of changes to existing law, drop further later this decade. (Chart courtesy of USGovernmentSpending.com)

The primary goal of sequestration was to scare Congress and the Obama administration into forging a long-term deficit deal with less-painful cuts. The secondary objective was to shrink a federal deficit that, at the time, surpassed $1 trillion.

In terms of the paring the federal deficit, which remains Washington’s top domestic issue, sequestration is working. Sure, it’s a taboo statement in defense circles. Try uttering it in Rosslyn, Crystal City or Tysons Corner. See what happens. We bet your co-workers would be less than impressed.

The downward trajectory of the deficit is bad news for the US defense sector because fiscal Republican hawks insistent that sequestration’s deficit reduction, while imperfect, is better than any alternative congressional Democrats and the Obama White House might come up with.

The Treasury Department announced Wednesday that the federal deficit has fallen to $680 billion, an eyebrow-raising $409 billion decline from the 2012 level.

“As a percent of Gross Domestic Product (GDP), the deficit fell to 4.1 percent, representing a reduction of more than half from the deficit that the Administration inherited when the president took office in 2009,” the Treasury Department said in a statement, referring to President Barack Obama.

To be sure, congressional Democrats desperately want to replace sequestration with other deficit-slashing measures — particularly to safeguard domestic programs they so cherish. And they say sequestration already is an anchor on a struggling economy.

But Republicans are skeptical about such claims. More to the point, Republicans are experiencing plummeting poll numbers after the government shutdown, and are collectively in need of an ideological win.

So they’re not about to give in on the amount of deficit reduction the sequester cuts delivered — and will deliver — even if they also find the across-the-board, non-prioritized nature of the cuts distasteful. And, as our new friends at USGovernmentSpending.com show in the above chart, the deficit, after growing again briefly next year, is projected to shrink further as the decade goes. Fiscal hawks in the Republican Party will fight to the death to keep that trend line headed south.

Just take what Sen. Roger Wicker, R-Miss., said of sequestration at Wednesday’s opening budget conference hearing: “I can live with it.” Wicker is a pro-military Republican. He’s a Senate Armed Services Committee member. But, for him and other conservatives, it’s all deficit and spending all the time.

In short, the steeper the line on the below chart gets for a smaller federal deficit, the steeper the climb for the U.S. defense sector in its quest to get rid of its part of sequestration.

A chart from the Center for Budget and Policy Priorities is on par with data released Wednesdday by the Treasury Department showing a shrinking federal deficit. (Chart: CBPP)

A chart from the Center for Budget and Policy Priorities is on par with data released Wednesdday by the Treasury Department showing a shrinking federal deficit. (Chart: CBPP)

John T. Bennett

John T. Bennett

Bennett is the Editor of Defense News' CongressWatch channel. He has a Masters degree in Global Security Studies from Johns Hopkins University.
John T. Bennett
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