Sept. 21, 2014 SIGN IN | REGISTER

Gates to Pentagon: Prepare for Budget Pain

Most of the attention last week may have been paid to the gyrations in the stock market, the debate on Wall Street reform in the Senate, the continuing efforts to clean up the oil in the Gulf of Mexico, the election in the U.K., and the continuing competition between “American Idol” and “Dancing With the Stars” to be the most-watched program.

But as a budget guy, for me the real story was that the fiscal 2012 federal budget debate, that is, the plan that technically will start to be debated next January, actually began last week when Secretary of Defense Robert Gates was widely quoted as saying his department’s health care costs were out of control, pay raises for the troops had been too generous and Pentagon overhead had to be reduced.

Gates was delivering four budget messages.

First, Gates clearly was saying that he has been told that the deficit will be a big issue for the White House next year.

Second, he was telling the military community that, because of the deficit, the Pentagon will not be immune from budget pressures. To the contrary, Gates was saying in no uncertain terms that the deficit will have an effect on the DOD’s spending plans and that the department is very likely to be required to come up with savings in 2012.

Third, he was telling the White House and everyone in the budgeting community that large immediate spending reductions from the Pentagon budget will be very hard to achieve. Published reports indicate that Gates thinks he can come up with $10 billion to $15 billion in savings for 2012.

By any outside-the-Beltway standard, that is a great deal of money. But it is also a less than 3 percent cut from the current level, would come close to freezing but not actually reducing the DOD budget, and would have little immediate effect on a baseline budget deficit that could be close to $1 trillion.

Fourth, Gates was telling both those inside the Pentagon and those who do business with it that the military budget pie is not going to be getting bigger and, therefore, that the fiscal 2012 military spending debate will be more of a zero-sum game than it has been at any time over at least the past decade. Not finding the $10 billion to $15 billion in administrative savings will mean that the other parts of the department’s budget will have to take the hit: He specifically cited weapons procurement and personnel benefits as two areas that will likely be the alternative place to look.

In effect, Gates was telling everyone that they should either help him find the savings through efficiencies or it will be every man, woman, service and contractor for themselves.

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