STOCK MARKET WATCH - Friday, 27 January 2012

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24. A Scalpel, Not a Hatchet

http://www.slate.com/articles/news_and_politics/war_stories/2012/01/obama_s_pentagon_budget_cuts_panetta_s_defense_department_cuts_are_surprisingly_modest_.html

he Pentagon revealed a bit more of its defense budget today, and, really, the proposed cuts in spending amount to no big deal. It would be hard to justify not making these cuts. If Congress winds up wanting to cut deeper, there’s plenty of room for more hacking.

First, a word of caution: There are many ways to calculate a “cut,” and some will no doubt invoke a few to claim that the Obama administration’s cuts are severe. Let’s go to the numbers.

In his press conference today, Secretary of Defense Leon Panetta said that he will request $525 billion for fiscal year 2013—plus $88 billion for “overseas contingency operations” (aka the wars in Afghanistan and elsewhere, the costs for which have generally been considered separately from the baseline budget).

Some hawks will no doubt scream that this constitutes a cut of $45 billion, or 8 percent—a substantial rip for a single year. But this claim is at best misleading. It’s true that, a year ago, the Pentagon projected that the budget for FY 2013 (at the time, two years out) would be $571 billion.