Defense Cuts Complicate Obama's Second Term

With the election behind him, newly re-elected President Obama will have to find a way to prevent the crippling defense cuts facing the Pentagon beginning early next year, defense analysts said.

Going into 2013, Obama will face extreme fiscal challenges tied to defense spending. The proposed defense strategy stands to cut $487 billion in Pentagon spending, the result of the Budget Control Act Congress mandated last year.

Pentagon leaders supported the plan, but lawmakers couldn’t come to an agreement and tabled it to next year. All eyes will be on the president to push the plan forward in 2013 or make the changes necessary to get the cost-cutting budget passed into law.

An even bigger challenge facing the Obama administration will come if Congress doesn’t find a way to prevent an additional $500 billion in sequestration cuts to defense that are slated to begin in January as mandated by law.

Following Tuesday’s election little has changed in the political landscape with Democrats retaining control in the Senate and Republicans holding their majority in the House.

“The incentive for both sides is to go ahead and work out a deal for the lame duck session,” said Todd Harrison, senior fellow at the Center for Strategic and Budgetary Analysis. “It’s to neither party’s advantage to wait until after sequestration goes into effect and we go off the fiscal cliff to try to work out a resolution they might as well go ahead and do it now .”

Other analysts suggest that Congress will not reach the grand bargain they set out to achieve to reduce the deficit, but they will either reach a “mini bargain” or delay the sequestration cuts, said Mackenzie Eaglen, a resident fellow at the American Enterprise Institute.

Senate Armed Service Committee Chairman Sen. Carl Levin has already laid the “ground work” for a partial sequestration that would add an additional $100 billion worth of cuts above the Budget Control Act over the next decade. That’s a far cry from the $500 billion in cuts outlined under the current law.

“That idea has gained traction recently,” Eaglen said.

In the end, the winner of the presidential election mattered little in determining whether the sequestration could be avoided. Sensing a tight race where the result would not carry a political mandate, both sides of the aisle in Congress started to dig in on their positions even before Tuesday.

“Obama would love to get that grand bargain, but he would need time to build it and he doesn’t have it in a lame duck,” Eaglen said. “But even in a Romney administration you could see a temporary patch or a punt to get a better deal.”

The election did eliminate the excuse for lawmakers to argue that they needed to wait to see the results of the election. Both parties “have a much clearer sense of what their options are for the future and a lot of the uncertainty will go away,” said Loren Thompson, a senior defense analyst for the Lexington Institute. “They will either have to bargain or we will have two more years of partisan paralysis.”

War spending has been cut almost in half from its peak since the exit from Iraq and the coming drawdown in Afghanistan, Thompson said. A few years ago, the U.S. military has gone from spending “160 billion a year to about $88 billion a year,” Harrison said.

Military service leaders have already started to put plans in place to deal with the defense cuts by reducing their forces, and either cutting or delaying modernization programs. The Army plans to reduce its force by 80,000 soldiers while the Marine Corps plans to drop its end strength by 20,000.

“The problem is that doesn’t get us to a balanced budget,” Harrison said. “On our current trajectory we are going to accumulate another $10 trillion in deficits over the next decade and the Budget Control Act and sequestration only reduces that by $1.2 trillion.”

In the short term, though, experts seem to agree that “the president has got to sit down with House Majority Leader John Boehner and say ‘look, what are we going to do’? … and work out a compromise.”

Thompson said he expects that the lame duck session of Congress will delay implementation of sequestration to buy more time to draft an alternative solution.

Michael Hoffman contributed to this report.