Save now, pay later

The following article first appeared as the leading Comment in the 16 April issue of Flight International.

The US government needs to get its financial house in order – plain and simple. The consequences of failing to avert the sequestration package of automatic budget cuts as mandated by Congress have become more apparent in the past few days. The US Air Force is standing down nearly one-third of its combat aircraft strength. Meanwhile, the US Navy has reduced one carrier air wing to minimal readiness status, while a second prepares to do the same. All this comes as tensions are rising with the unpredictable and unnervingly bellicose hermit kingdom of North Korea.

Worse, senior leaders in the Pentagon say that there could be further damaging cuts in the current 2013 budget. One example is the USAF’s purchase of Lockheed Martin F-35A Joint Strike Fighters. The service had wanted to buy 19 jets in this year’s budget, but as a result of sequestration, may have to reduce that purchase by anywhere from three to five aircraft – but they do not know for sure. That is only one programme, and similar uncertainty pervades the entire budget.

One can plan to mitigate bad news if that information is correct and not a moving target. When one does not know how much money will be in the coffers, planning becomes nigh on impossible. This is the conundrum that the Pentagon faces; the Department of Defense has no idea of exactly how much money it will have.

In essence, uncertainty renders President Barack Obama’s 2014 defence budget request little more than a placeholder. As it stands right now, that $527 billion proposal does not take into account the sequestration cuts, which would automatically lop off another $52 billion – and more every year for eight years afterwards, totalling $500 billion. Nor does it include funding for overseas contingency operations; that request is going to be submitted separately in about a month.

But while sequestration has not been taken into account, the president’s budget proposal does cut defence outlays by $150 billion over 10 years, with most of the cuts coming after 2018. That delaying move affords the Pentagon time to absorb the reductions and reflects Obama’s hopes that Congress will repeal the sequestration law. But it also punts real reduction beyond the five-year planning window and well beyond the end of the president’s term in office. In effect, it renders any proposed cuts meaningless.

Regardless of politics, this financial rollercoaster must stop. It damages the industrial base and sends the wrong signal to America’s friends – and enemies.

Leave a Reply