US Military Spends Billions On Ammunition As Budget Deficit Looms Large
(NEW YORK) MintPress – One week after the elections, and seven weeks after they last gathered in Washington, Republican and Democratic legislators returned to the Capitol on Tuesday to tackle unfinished business, the most critical of which is the impending double whammy of automatic tax increases and spending cuts.
President Barack Obama and members of Congress have just seven weeks to figure out how to avert this so-called fiscal cliff, which includes across-the-board cuts to defense — except for spending on wars — and domestic programs totaling $110 next year, an amount that the Congressional Budget Office has predicted could trigger another recession.
At the same time, Defense Secretary Leon Panetta has warned that slashing the defense budget, which is facing a 10-year reduction of $48 billion in projected spending, would be devastating to the military.
Which raises the question of how the military spends a budget that has nearly doubled in the last decade to more than half a trillion dollars?
The budget funds all branches of the U.S. military: Army, Navy, Air Force, Marine Corps and Coast Guard. In addition to paying for the salaries, training and health care of uniformed and civilian personnel, it maintains arms, equipment and facilities, funds operations and develops and buys new equipment
Last month alone, the Defense Department awarded 310 contracts with a combined potential value of $37.4 billion.
The biggest contract went to Alliant Techsystems (ATK), the world’s largest ammunition maker, with an $8.48 billion deal to upgrade and operate an Army ammunition factory in Independence, Mo.
“We’re very pleased with the outcome,’’ CEO Mark DeYoung said during a conference call with analysts following the release of the company’s better than expected second-quarter financial results. “The award was one of the “key strategic contract wins’’ of the period, he said in a statement later that day.
Military industrial complex
The deal allows ATK to run the facility for up to a decade, although the U.S. military’s demand for ammunition is expected to decline with the drawdown of troops in Afghanistan.
The company has said most of its small-caliber ammunition is used in military training and therefore not dependent on wartime conditions, but DeYoung, the CEO, didn’t say how the withdrawal from Afghanistan will affect orders.
Meanwhile, London-based BAE, McLean-based SAIC and Lockheed Martin of Bethesda were among a dozen companies that won the Pentagon’s second-largest contract last month. The five-year award for software and engineering services is worth as much as $7 billion.
Lockheed, the world’s largest defense contractor, also won the third-largest contract in October, an $890 million award from the Air Force for 13 cargo aircraft.
“It is a big piggy bank,” said former Sen. Alan Simpson (R-Wyo.) of the military budget. Simpson, along with Democrat Erskine Bowles, recommended deep reductions in defense as part of a special presidential commission in December 2010.
“If you can’t get in there and start getting stuff out of there when you have a defense budget of $740 billion bucks — and the defense budget of every major country on earth, 17 of them, including Russia and China, is $540 billion combined. Who is joshing who,” said Simpson. “That’s madness, madness.”
A point well taken, even if his numbers are a little off. According to the Stockholm International Peace Research Institute (SIPRI), the U.S. military budget in 2010 was $698 billion, while the rest of the world’s combined budget in 2010 was $932 billion.
In addition, the annual budget is equal to the combined annual military budgets of the next 20 countries in the world, including China ($119 billion), U.K. ($60 billion), France ($60 billion), Russia ($59 billion), Japan ($54 billion), Germany ($45 billion), India ($41 billion), Italy ($37 billion), Israel, Iran, Pakistan and North Korea.
And if the U.S. military budget was cut by 20 percent, to about $560 billion, it would still be larger than that of the next 10 nations in the world.
The military may just have to come to terms with fewer dollars. Senate Armed Services Committee Chairman Carl Levin (D-Mich.) indicated earlier this year that he would be willing to accept additional defense cuts of $10 billion a year as part of any solution to avoid the across-the-board cuts.
“I think it’s got to be all one package, and defense has to participate. Everything has to be on the table,” agreed former Sen. Sam Nunn (D-Ga.), the former head of the committee.
Several conservatives have also spoken openly about defense cuts. Grover Norquist, president of Americans for Tax Reform, has rejected the Republican argument that defense spending means higher employment.
In a recent interview with the Cato Institute, he talked of combating “the idea that the Defense Department is a jobs program.”
“I think the tide has kind of turned in some ways against defense thanks to the tea party. They’re so much against any kind of spending that they don’t exclude defense from that,” he said.
That may not be the approach that many liberals would take, but at least accepting the notion that the military budget should be subjected to the same kind of cost cutting measures that could decimate social welfare programs is a step in the right direction.
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