The fiscal cliff's threat to national security

US Air Force/Master Sgt. Mark C. Olsen

Army aviators prepare to go on a search and rescue mission for stranded New Jersey residents following Hurricane Sandy, Oct. 30, 2012.

Article Highlights

  • Even if Congress were to pull off a miracle deal, the military is still largely on the hook for more spending cuts.

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  • Punting on the fiscal cliff only defers problems. @MEaglen

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  • Averting the fiscal cliff doesn’t mean automatic improvement, the silver bullet is a comprehensive debt reduction deal.

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Both candidates for president of the United States are clearly mindful of the potential for a razor-close election next week. Mitt Romney has been talking more about his bipartisan credentials as governor of Massachusetts while President Barack Obama, out of the blue, said the automatic spending cuts set to take effect early next year "will not happen."

This is contrary to many clear public statements from the president over the past year. Obama has repeatedly vowed to veto any legislation that would repeal the spending cuts if the deal does not include tax hikes on the wealthy.

But the president recently doubled down on his statement from the foreign policy presidential debate after his advisers tried to walk it back. Obama told the Des Moines Register, "I am absolutely confident that we can get what is the equivalent of the grand bargain…which is $2.50 worth of cuts for every dollar in spending, and work to reduce the cost of health programs."

Many in Washington, including Speaker of the House John Boehner of Ohio, had long ago written off the likelihood of any sort of major deal. But there have been groups of policymakers meeting to craft the outlines of any-sized bargain to avert the impending fiscal cliff. In the Senate, a bipartisan group of eight senators led by Republican Lamar Alexander of Texas and Democrat Michael Bennet of Colorado has been talking about potential frameworks for a deal targeting up to $4 trillion in debt reduction over the next decade.

One popular point of departure has been the Bowles-Simpson report, recently touted by Democratic Sens. Dick Durbin of Illinois and Chris Van Hollen of Maryland and Republican Sens. Lindsey Graham of South Carolina and John McCain of Arizona. One of the key tenets of their plan is a tax reform program that would lower rates while closing loopholes, thereby generating new revenues from the top income brackets while stimulating economic growth. 

Despite this momentum for a deal, Democratic Sen. Chuck Schumer of New York, chairman of the Senate Democratic Policy Committee, recently rejected this approach. He instead has called for tax rates upon the top two income brackets to be frozen in place after the Bush tax cuts expire at the end of the year. This approach—coupled with his plan to increase capital gains taxes—is likely to be unwelcome among Republicans.

If Schumer's position is the default Democratic starting point in negotiations, prospects for a deal look bleak. Speaker Boehner is not optimistic, recently calling a lame-duck grand bargain "difficult" and "probably not appropriate" given the large amount of retiring members who would have a disproportionate sway on the future of the country.

All of this signals that any solution to the fiscal cliff would be complicated. Congress has been dealing with the same set of problems since the near-government shutdown in the spring of 2011. The reality is that even if Congress were to pull off a miracle deal, the military is still largely on the hook for more spending cuts. As Senate Armed Services Chairman Carl Levin has proposed, defense dollars will surely contribute yet again to any new compromise.

What would prolong the damage is a messy muddle through the fiscal cliff, not fully addressing it or not going forward with it. If Congress, say, tries to buy Washington extra time to negotiate a bigger deal, the economy will linger under uncertainty and consumers and business will continue to show they lack confidence. Punting on the fiscal cliff only defers problems. It does not address the fundamentals of the size, role, and scope of federal spending and debt accumulation.

Worse yet is the possibility that elected officials could choose to deliberately go over the fiscal cliff and then try to patch up the damage after the fact. This would be especially problematic for the defense budget as those in uniform; defense civilians; and shipbuilding, aerospace, and defense manufacturers would all be affected; costs for programs would rise anyway and not save any money; and some projects deferred would become projects canceled regardless of action taken later.

A common denominator in all these scenarios is that averting the fiscal cliff does not mean that things would automatically improve. The only silver bullet remains a comprehensive debt reduction deal. 

Mackenzie Eaglen is a resident fellow in the Marilyn Ware Center for Security Studies.

 

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