Renewed warnings about the US Federal Government's budget deficit hit the front page of the New York Times today.

The Federal Reserve chairman said Wednesday that the government must begin to make “difficult choices” to address its gaping deficits and warned that “postponing them will only make them more difficult.”

Bernanke continued:

"Although sizable deficits are unavoidable in the near term, maintaining the confidence of the public and financial markets requires that policy makers move decisively to set the federal budget on a trajectory toward sustainable fiscal balance."

The United States needs to spend less money. Period. But that is the easy part. The hard part comes when specific cuts must be made.

(I should add that this post is written under the assumption that no further tax increases are politically feasible/possible/desirable in the short- or medium-term)

The American reaction to potentially cutting Social Security benefits is representative of the difficulty of cutting domestic social benefits - Americans react with visceral disdain to any suggestion that their Social Security benefits might be cut and politicians are wary of running on benefit-cutting platforms. Social Security is rightly called the "third rail of American politics."

If social benefits can't feasibly be cut, where to next? Foreign aid is a favorite target of budget-cutters (71% of Americans would cut it), but it accounts for less than 1% of the total federal budget.

One idea, until recently thought to be tantamount to political suicide, is to make cuts in the US Defense Budget, which represents the largest single piece of the discretionary budget. Why is it not political suicide now? Matthew Yglesias has some interesting analysis that examines the political feasibility of defense cuts.


(Graph courtesy of Anne Lowrey of the Washington Independent - In blue, the number of people who say something should be cut with. In red, the percent of the budget that these programs account for)

Yglesias calls defense spending "the least-unpopular cut" of "the major budget items," but correctly identifies that "it’s very politically difficult for a president to do anything that provokes the ire of the defense establishment whether or not it polls well in the abstract."

When remarking on the DoD's Quadrennial Defense Review (QDR), the esteemed think tanker Anthony Cordesman once remarked that it was "the most pointless and destructive planning effort imaginable...[and that] if God really hates you, you may end up working on [it]. So what is this document that all of DC and the security community at large is eagerly awaiting the release of and is it of any real significance?

First some quick background. The QDR is a document that was first conceived of in 1993, then referred to as the "Bottom-up Review" and was an attempt by the DoD to address the international security environment in the wake of the fall of the Soviet Union. In 1996 Congress legislated that the Department of Defense conduct a "Quadrennial Defense Review" to address the U.S. military's strategic objectives and identify future security threats. To put it simply, the QDR is meant to be a time when the Defense leadership (Office of the Secretary of Defense) takes a step back from the day to day operations and attempts to think long term and answer the BIG questions. Who do we see as our enemies today and in ten years? Are we investing in the right technologies to fight these enemies? Do we possess the appropriate strategies and doctrine to face the current threats? Is the enemy we are fighting today going to be the same enemy we will be fighting in ten years?

Word on the street is that the Obama administration will be coming out with its QDR sometime in the next month. The QDR will be the most important document that the DoD puts out this year and in my opinion will likely be the most important document that the Obama administration generates as a whole, short of the budget, for some time to come. It may seem at first that I am disagreeing with the comments made earlier by Anthony Cordesman, however, I assure you that while the author does think quite highly of himself, he is not that foolish. I completely agree with Dr. Cordesman (who by the way is a Fletcher Grad) that every QDR done to date has been a collasal waste of time and resources. If you have had the unfortunate pleasure of reading all three QDR's you will notice that good chunks of them were simply copy and pasted from the previous QDR. You will also notice that they are devoid of any real strategy. The QDR was thought of as a strategy document that would supply direction to the entire armed forces, but instead it has mostly devolved into a petty fight between the services over who gets the bigger share of the budget.

Ironically, the years before the QDR existed were the years that the US military actually had a series of set strategies that for the most part worked. For the majority of the Cold War the U.S. military had a strategy of containing the spread of communism and despite dragging us into Vietnam, the strategy did manage to prevent the expansion of the Soviet Union. In the late 70's to early 80's, the U.S. military also adopted an "off-set strategy" whereby the DoD recognized that it could not produce nearly as many troops and weapons as the Soviets but would instead off-set their superiority in numbers with superior quality troops and high-tech weaponry (JDAM's, GPS, Star Wars etc). Finally, in the 90's the U.S. adopted the strategy of planning to be able to fight two conventional wars at the same time. Less of a detailed plan but a strategy none the less. However, despite jumping in head first into two wars in Afghanistan and Iraq the DoD has yet to come up with a defined strategy in over 9 years of war.

That was the depressing part. I now have high hopes that the next QDR will offer up a concrete strategy for the DoD that moves it beyond the "war on terror". A basic question that the QDR will have to answer is who is the enemy? Is it local insurgencies, global jihadis, state sponsors of terrorism or all of the above? On an even more basic level I strongly believe that this QDR needs to firmly define "terrorism," specifically stating whether or not it is a criminal act or an act of war. Finally, the QDR will need to clearly state whether or not counterinsurgency is going to be the name of the game for the foreseeable future and if it is, how will be be changing the makeup of our forces to better reflect the enemy we face. This will undoubtedly mean making some very unpopular and very large cuts in the defense budget specifically things like next generation fighter planes, mid air refueling tankers and new super aircraft carriers (any of these ringing a bell!!)

Anyway, I hope you have enjoyed reading about the QDR, its not the most fun document in the world but lets just hope the next one is actually worth reading. And if you happen to be walking down the halls at the Pentagon and you see someone with an ID card that reads "Kathleen Hicks" go ahead and give her a hug because despite being a great lady she is the one that God has chosen to to run this years QDR....

And that's my fifty cents (inflation)