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Deficit-cutting deal may not dent defense spending as much as anticipated

WASHINGTON -- The new deficit-cutting law appears to reduce defense spending by $350 billion up front and perhaps by as much as $850 billion over 10 years, but in fact that's highly unlikely to happen.

Sen. Michael Bennet
Sen. Michael Bennet, top left, is answering questions about the federal budget, the recent debt-ceiling agreement in Washington, and America's future during the Town Hall meeting at Auraria Campus on Wednesday. (AP Photo/The Denver Post, Hyoung Chang)

WASHINGTON -- The new deficit-cutting law appears to reduce defense spending by $350 billion up front and perhaps by as much as $850 billion over 10 years, but in fact that's highly unlikely to happen.

The initial $350 billion cut calls for slicing that much money over 10 years not from the Pentagon alone but from a broader group of funds labeled "defense and security." That includes programs such as homeland security, border enforcement, foreign aid and even veterans' benefits as potential targets.

And the new law's threat of an additional $500 billion in 10-year cuts from Pentagon budgets is thought to be so unacceptable to most lawmakers that they're likely to come up with alternatives that spread the pain far more broadly over the full range of federal programs.

Shaped in part by Rep. Howard "Buck" McKeon, R-Calif., the influential chairman of the House of Representatives Armed Services Committee, the complicated budget deal disperses the initial $350 billion in so-called "defense and security" savings well beyond the Pentagon. Consequently, weapons-makers could be the winner in what comes next.

The provision centers on the fact that any budget deal was going to have to confront defense and non-defense spending. The negotiating key turned on how those terms were defined.

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McKeon and other defense hawks had voiced alarm that defense might suffer unduly if the deficit-cutting package bit too much into the Pentagon's $663 billion-a-year budget. Deep cuts could "break the force," McKeon warned.

House Republican negotiators responded by insisting that defense-related spending cuts be taken from an expanded category labeled "defense and security."

The negotiators then roped into the expanded security category the Department of Homeland Security, the Department of Veterans Affairs, the National Nuclear Security Administration and various intelligence agencies. The negotiators also included all international operations, whether run by the State Department, the Commerce Department or the Agriculture Department.

"They wanted some lambs in the cage with (the Pentagon) when it comes to cutting," Winston Wheeler, an analyst at the Center for Defense Information, said in an interview Wednesday, and "they probably will be much more kind to defense than to foreign aid."

Bluntly put, the legislation throws warplane contracts into the same budget-cutting arena as aid to Armenia and Israel, agricultural border inspections and research at the Lawrence Livermore National Laboratory. While it's unlikely, even the nation's 152 VA hospitals could be dinged to protect a favored defense program.

"The chairman came around to support the deal after seeing the expanded defense and security category, and the possibility that we can retain our defense equities," House Armed Services Committee spokesman Claude Chafin said Wednesday.

Twenty-one of the committee's 35 Republicans joined McKeon in voting for the deficit-cutting package.

The tradeoffs that will occur could prove poignant, if not paradoxical. The Peace Corps and the Food for Peace program, for instance, will be competing against major weapons systems such as the F-35 fighter plane.

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The playing field isn't entirely level. Last year alone, the defense industry reported spending $146 million on lobbying, according to records compiled by the Center for Responsive Politics, a research center that tracks money in politics. Still, White House officials say they want the Pentagon to take the brunt of the cuts.

"We see those savings coming on the defense side," said Gene Sperling, the director of the White House National Economic Council.

Sperling acknowledged, though, that Republicans "might make (the) case" that other types of spending considered security-related should be cut first.

The Defense Department's budget amounts to about 80 percent of the "defense and security" spending category. The deficit-cutting deal doesn't specify whether the reductions must come in the same proportion.

The expanded "defense and security" category applies only to the first round of budget cuts anticipated as part of the deficit-reduction deal.

The next round of up to $1.5 trillion in savings doesn't lump defense and broader security spending together. If a "super-committee" of 12 lawmakers can't amass a majority to recommend that much in cuts for Congress to consider in up-or-down, no-amendment votes, then the law mandates across-the-board cuts of $1.2 trillion over 10 years, with half of that explicitly from the Pentagon.

There's a political reason for this. It gives defense hawks an extra reason to avoid the across-the-board cuts by cooperating with the super-committee in spreading the pain around more broadly, and thus is a big incentive for lawmakers to compromise -- and spare the Pentagon.

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(c) 2011, McClatchy-Tribune Information Services.

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