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Wednesday, September 12, 2012

What To Do With Defense Spending

Over at the The New York Times, Sunday, was a collection of opinion pieces that looked at the future of defense sending.  As our national debt goes north of $16 Trillion and we face Sequestration in January we will find increasing calls for trading off defense spending (to include Department of Defense, Department of State, perhaps even Department of Homeland Security, plus intelligence agencies of several stripes) to pay for social security forces.

The US Congress will meet in September and October and there will be a lame duck session(s) in November and December.  And then automatic cuts to budgets loom at the beginning of January 2013—four months from now.

We do have to be careful of plausible, but unsophisticated arguments.  For example, in one of the OpEds, Mr Larry Korb said:
Third, ending this indiscriminate growth will force the Pentagon to manage its funds more carefully. Over the past decade, the Pentagon squandered $46 billion on weapons it later canceled, and let half its procurement programs balloon beyond their original budgets.
Part of developing defense programs is that some will survive and some will not.  In the 1940s and 1950s there were competitive programs, an approach that was used to achieve the best products through competition.  It did result in cancellations.  The other side of the problem is the ballooning of cost.  As we look at the Big Dig we see something that started out at about $5.5 billion and ended up at around $15 billion.  Private industry doesn't do much better.  Cost growth is endemic.  Most social programs also see cost growth over time.

In doing this we have to go back to basic political references.  What is it we are trying to achieve domestically and then what are we trying to do in terms of foreign policy.

Regards  —  Cliff


JoeS said...

It's time to step up with a total picture effort to revise budgets and taxes. The Simpson-Bowles proposal may be the good place to start, and the best place to end.

Mr. Lynne said...

Tried to post this earlier, but apparently it didn't go throug.

It should be noted that the vast vast majority of the Big Dig cost escalation was due to the addition of scope. This context is very important for accurate impressions because people see the numbers and mistakenly think the 'inflation' is so huge the original price had to be a scam. In the real world, when you ask for more stuff, the price goes up.

C R Krieger said...

Mr Lynne (Hi Chris) is correct about scope change.  An expression I have heard is that with a contract you can get it on schedule, you can get it for the agreed cost or you can get it to the specification—pick any two.  Changing scope only adds to the chaos.

Because defense projects are often very long in gestation the level of "what can be done" grows.  Thus "scope" grows.  Thus price increases and delivery date moves out.

It is one thing to go to the store and buy a kitchen sink strainer.  It is another to redo your kitchen, especially if your spouse is always coming up with new ideas.

Unfortunately, improving military capability means pushing the technology envelope.

Regards  —  Cliff