While the U.S. economy continues to struggle, the biggest part of the federal budget—defense—is facing scrutiny and cuts by U.S. policymakers determined to get the U.S. deficit lowered.
"I think the biggest threat we have to our national security is our debt," said Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, at a recent speech in Washington.
Bipartisan commissions are drafting deficit reduction plans and their recommendations are likely to cut into the $700 billion annual defense budget.
The Defense Business Board task force recently recommended a series of cuts to Defense Department Secretary Robert Gates including cutting the civilian work force by more than 111,000 people and drastically reducing the military’s combatant command structure in order to save billions of dollars. The task force also suggested Gates implement a hiring freeze for the Office of Secretary of Defense (OSD), all Joint Staff directorates and all combatant commands. It requested that the DoD close OSD’s Networks and Information Integration (NII) directorate and the contractor-heavy U.S. Joint Forces Command (JFCOM).
Gates requested from the board ways the DoD can cut $101 billion over five years and transfer those savings to weapons programs. The Pentagon is also looking to reorient its spending for weapons geared towards insurgent groups in places like Afghanistan or rogue states like North Korea, said Brian Ruttenbur, analyst from Morgan Keegan as reported by the Associated Press. Because of this, the Pentagon recently requested Congress to shift $3.9 billion set aside for other areas into programs like missile defense radar, spy aircraft and surveillance systems.
“The DoD finds these capabilities so important that it is not just planning to shift future spending in those directions, it is trying to reallocate money from previous years already dedicated for other purposes,” Ruttenbur said. “We believe this trend will continue and that the companies best able to align themselves with the new set of priorities will experience the highest growth rates and return on investment going forward.”
The cuts have sent spending ripples across the defense industry, with Northrop Grumman Corp announcing it would sell or spin off its shipbuilding unit, Lockheed Martin Corp announcing plans to divest two units and offering buyouts to senior managers to reduce executive payrolls, and Boeing Co restructured its defense unit last year.
