Earlier today we posted a story about an unusual industry press conference at the National Press Club, where TASC CEO David Langstaff put several Aerospace Industries Association officers on the spot by stating that further defense cuts are possible, and even laying out a $50-150 billion figure for possible cuts. Langstaff went further, saying that industry should be leading the way and making budget sacrifices as part of fiscal cliff discussions.
Given that Langstaff’s comments are likely to draw some attention as the industry has largely held firm to the doctrine that any further cuts would radically harm national security, I thought I’d include Langstaff’s full remarks here. These are the remarks as prepared, but Langstaff did not stray from the text very often. Read his full speech after the break.
I would like to take a few minutes to offer a different perspective and suggest that we need to be having a different conversation.
I’ll start with sequestration. Yes, it is bad! My colleagues have been articulate on these points and I agree. I have yet to run into anyone – businessman or politician; Republican or Democrat – who believes sequestration is good for the country. But, it is in front of us unless action is taken. With sequestration, the more insidious problem stems from four factors:
- The uncertainty caused by our current predicament;
- The indiscriminate way in which cuts would be imposed;
- The waning confidence in our government to responsibly address a problem; and
- The resultant paralysis that has business watching from the sidelines.
To be clear, this observation applies not only to the national security community, but also to businesses throughout many sectors in our national economy.
Let me step back and put this challenge in context, and then look specifically at national security.
Look at what is happening around the world – or most certainly the Western world. Economies are dangerously weak due to excessive debt. In the US, the 2008/2009 recession was triggered in part by excessive home debt. Today, Greece is teetering due to its sovereign debt load, with other European nations similarly challenged. In the United States, our budget deficit as a percentage of GDP, among Western nations, is second to only Greece, and more than Spain, France, Portugal and Italy.
The point is that the entire world economy must de-leverage. The U.S. government – the single biggest player in the world economy – must do so as well, and I am convinced we will. Not to minimize the deleterious impact of sequestration, but in this context, sequestration is only a relatively small, short-term and tactical part of the greater challenge facing the country: the challenge of restoring America’s long-term fiscal integrity. We all need to accept this reality and its implications.
Consider the impact of just a one-percent increase in interest rates on our budgets. One percent on $16 trillion is $160 billion dollars. Over ten years, that is $1.6 trillion. In other words, just a one percent increase in interest rates creates a problem nearly equal to the problem we are talking about today when considering the impact of sequestration.
The reality is that the greatest threat to our national security over the long term is our federal debt. Those of us who stand for national security should be the first to step up, and be willing to sacrifice something. By doing so, we can ensure responsible cuts, not haphazard or assigned without judgment, priority or mission-essential capabilities in mind. National security needs to be holistic, long-term and sustainable. The responsible action for all of us – in industry and in government – is to face the need for reductions, and to get on with it in a manner that protects national security.
When you start there, you know that national security requires deficit and ultimately debt reduction, which in turn requires spending cuts, revenue increases, reform and economic growth measures. And yes, spending cuts will more than likely include defense spending cuts.
Don’t misunderstand me. I am not advocating for additional defense cuts. Reductions to national security budgets will not be the ‘swing factor,’ politically or financially. The Department of Defense is already dealing with $500 billion in mandatory reductions. The ‘heavy lifting,’ therefore, will need to be done in other areas. I believe that when it comes to the national defense budget, we need to understand the realistic alternatives to sequestration and accept that additional cuts will likely be part of a deal between Congress and the Administration.
The real alternative to automatic defense spending cuts under sequestration is not an indefinite extension of defense spending at current levels. The real alternative is a process of strategically targeted, phased and predictable defense spending cuts. Think of this approach as a reasoned and responsible stair-step down – over time rather than all at once – as part of a more complete plan to address our national fiscal challenges. Such an orderly fiscal stair-step reduction is far better than a fiscal cliff. But perhaps most importantly, we need to stop believing – or pretending – that there is a scenario out there that offers no defense cuts. The question is whether we make them responsibly or irresponsibly.
What we have going on is the wrong conversation. We are talking a good game, but are still unwilling to park short-term self-interest. Every trade group, special interest and corporate lobbyist is up on Capitol Hill clamoring that Congress solve the problem, avoid the fiscal cliff and not default to sequestration…. BUT, don’t touch my budgets!
We can’t have it both ways.
There are those on one end of the political spectrum who say that nearly all defense spending is bad, that the Cold War is over, Al-Qaeda has been defeated, and that we face no real threats. That point of view is clearly wrong. Then there are those on the other end of the spectrum who say that any additional defense spending cuts are too dangerous, and in effect, impossible. That point of view is also flawed. In the interests of a broader definition of national security – one that includes fiscal prudence and long-term stability – additional cuts are not only possible, but necessary. Those cuts need to be strategically driven, aligned with our nation’s most essential missions, and not go so deep as to threaten those missions. Our leaders must step up to making these hard choices, based on the best possible intelligence, threat analysis and resource optimization.
In the end, as a country, what we need is real leadership – leadership comprised of straight talk around the real tradeoffs, leadership where we step up to the responsibilities with which we have all been entrusted, leadership grounded in a civil and honest discourse without demonizing those with whom we disagree, and leadership that puts our national goals first.
I don’t know if our elected leaders will reach a long-term agreement before sequestration is forced on us. If they do, I will be the first to applaud. If they don’t, then the question is whether they simply ‘kick the can down the road’ in a continuation of this irresponsible, partisan procrastination and paralysis; or, whether they establish a framework by which talks to find a sustainable solution so the real problems can be addressed in a timely manner.
I believe that by taking the lead now, and acting in a responsible manner with long-term considerations in mind, we will be doing what is necessary to protect national security. We in industry should not hide behind the notion that any cuts are bad cuts, and that the national security community should be completely immune from the pressures on the government to reduce spending. If we do, we are no better than those in our government who won’t come to agreement because they are unwilling to park parochial short-term political interests for the sake of national long-term goals.
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