Pentagon's budget cuts could signal future Homeland Security cuts

Published 7 January 2011

National security budgets are no longer safe from cuts; lawmakers are increasingly targeting military, veterans, and Homeland Security budgets for cuts despite agreements and precedent to the contrary; on Thursday the Pentagon announced over $150 billion in savings that include $78 billion in budget cuts and a potential increase in fees for veterans’ healthcare; DHS cuts could be on their way next

In a sign of lawmakers’ increasing determination to reduce the deficit and rein in spending, the previous agreements to exempt military, veterans, and Homeland Security programs from broader discretionary spending freezes are becoming increasingly tenuous.

At the behest of the president, the Pentagon has identified over $150 billion in savings over the next five years. As Politico reports, the Pentagon will reduce its budget by $78 billion and reinvest the remaining $70 billion as it sees fit.

In previous budget agreements, defense budgets have most often avoided reductions, but yesterday’s announcement by Secretary Gates that the Pentagon was reducing its spending due to the nation’s “extreme fiscal duress” is a signal that broad cuts across the government are ahead.

The budget cuts, as addressed at Gates’s press conference on Thursday, might allow for the Pentagon to focus more on prioritizing and making difficult decisions, according to Adm. Mike Mullen, chairman of the Joint Chiefs. Gates addressed the sustainability of unwieldy budgets: “We must come to realize that not every defense program is necessary, not every defense dollar is sacred and well-spent.”

As in accordance with the uncertain future of the American armed forces in Afghanistan, Gates’s plan to reduce the Army by 27,000 troops and as many as 20,000 in the Marine Corps starting in FY 2015 should save about $6 billion.

The $70 billion Gates proposes to use for new purchases will come to benefit certain defense contractors, as suggested by Patrick McCarthy, an analyst at Arlington, Virginia-based FBR Capital Markets & Co., “Northrop Grumman, Boeing, and General Dynamics come out of this in the best shape.”

In a particularly controversial move, the Pentagon proposes to increase fees in Tricare, the military’s health care system to save $7 billion over five years. It is expected that Gates will only request increases in health insurance premiums and fees for working-age veterans, while maintaining existing fee levels for those on active duty or are sixty-five and older.

Veterans’ groups and Congress are likely to oppose such a plan, citing the fact that these benefits were promised to them in return for the sacrifices they have made for their country.

Tricare fees have not increased since 1995, while the Pentagon’s health care costs have risen dramatically. According to the New York Times, the Defense Department currently spends $50 billion on healthcare, a dramatic rise from just ten years ago when it spent $19 billion. Health care costs are projected to continue rising dramatically with estimates that the Pentagon will spend $65 billion in five years.

As the 112th Congress begins its session and seeks ways to reduce the deficit, departments, agencies, and programs across the government face an uncertain future, and now for the first time since the Cold War, defense and security spending could be cut.