The Pentagon Needs to Cut Spending. Stop Fighting the Inevitable.

Virginia politicians from Republican Gov. Bob McDonnell to Democratic Senators Mark Warner and Jim Webb are mobilizing to block the closing of the U.S. Joint Forces Command, which could result in the loss of 6,100 military, civilian and contractor jobs in Hampton Roads. (Read the Washington Post story here.)

At the risk of incurring universal opprobrium among my fellow Virginians, let me stake out a contrarian view: Let it go, guys. Do what’s best for the country. The Defense Department is trying to shave $100 billion a year in spending, which it needs to do, and Virginia is going to share in the pain. Accept the cuts with good grace. Let Defense Secretary Robert Gates do his job.

Massive cuts in federal government spending are coming sooner or later. As I argue in my book, “Boomergeddon,” the feds will go into default within 15 to 20 years, at which point private investors will be unwilling to lend to the government, and spending will be limited to the amount of money generated by taxes (about 60% of spending) plus whatever the Federal Reserve Board can provide by cranking up the printing presses. As the state with the highest level of federal employment and federal spending (excluding only Washington, D.C.), Virginia will get hammered.

We can start taking relatively small lumps now and start diversifying our economy away from its extreme dependence upon federal dollars, or we can be flushed down the sewer drain when Uncle Sam goes broke. Our AAA finance rating and our “best state for business” encomiums will avail us little then.

Now is as good a time as any to start coping with the inevitable retrenchment in military spending. As the Wall Street Journal reported, only three metropolitan areas among the Top 50 last year saw rising wages and rising average incomes: Washington, D.C., Hampton Roads and San Antonio. The common thread: All have strong ties to the federal government. Washington and Hampton Roads have prospered while the rest of the country has suffered. (I would add that the economy of the Richmond region has been bolstered by massive spending around Fort Lee.) Stop bellyaching and take the cuts like real men!

The shuttering of the U.S. Joint Forces command is a warning sign of what lays ahead. Virginians had better start preparing now for the inevitable. Failure to wean ourselves from our dependency upon federal spending — maintained only by federal indebtedness — will lead to the Old Dominion’s downfall.

Repent. Boomergeddon is coming. The end is only 15 to 20 years away.

Update: Norm Leahy with the Tertium Quids blog questions McDonnell’s response to the news. Rather than wean the region from dependency upon the federal government, he notes, the Governor’s Office has created a Commission on Military and National Security Facilities with the objective of bringing in more military-related development to the state.

Uh, oh. Wrong direction. As Leahy points out, we need “private endeavors that do not depend upon the whims of bureaucrats and politicians.”


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29 responses to “The Pentagon Needs to Cut Spending. Stop Fighting the Inevitable.”

  1. James A. Bacon Avatar
    James A. Bacon

    I wrote this post before I noticed Peter's previous post on the same topic. OMG, I can't believe it. It's like we almost agree. I'm sure Peter will find some reason, though, to take issue with what I have written!

  2. The Pentagon isn't trying to shave $100 million in spending. It is freeing up money to spend in Afghanistan.

  3. ..diversify our economy from its dependence on federal dollars…"

    ==================================

    Aren't all dollars federal dollars? Are you suggesting we have Virginia scrip?

    😉

  4. Groveton Avatar

    I am not so sure about this particular cut but, overall, I agree with Jim. The military lagrasse for Virginia is waning.

    Sadly, I don't think Virginia has done much of anything to prepare for Boomergeddon. The social misfits in the state house have played politics with the higher education system to the point that our colleges provide very little leverage to the non-government economy. Meanwhile, transportation has been so neglected that it is a major inhibitor to quality of life. The high technology talent now working for the government will go elsewhere when those government jobs disappear.

    In 1790 Virginia was the pre-eminent state. After almost 200 years of incompetent governance we had another chance to be a dominant force in America. But the same attitudes and incompetence that sank us through the 1800s and most of the 1900s are sinking us again.

    What a shame.

  5. Well, we've got a lot of land preserved. There is always soybeans at $25 gross profit per acre.

  6. Groveton Avatar

    Hydra:

    We have a lot of things we could do. We just need to get off our butts and do them. McDonnell's 63 person "jobs commission" is very unlikely to get us where we need to be.

    I am anxiously awaiting Boomergeddon to see how Jim's ideas might be applied to Virginia.

  7. Gooze Views Avatar
    Gooze Views

    Jim,
    I generally agree with your post but I don't think it is wise to push all news of changing political and defense situations and resulting funding changes as falling into some "Boomergeddon" Armageddon.
    To do so cheapens the argument.
    We don't now what is around the corner defense-wise just as we couldn't predict 9/11.

    Peter Galuszka

  8. Larry G Avatar

    what do you guys think of fiscal conservative, Bob McDonnells view of this.

    Did he even give lip service to the idea of the Feds working to cut spending?

    or did he just squeal like a piggy?

  9. Larry G Avatar

    this is going to be a test of the Virginia Republicans govt philosophy.

    Will they fight to keep their "joint" …."stimulus" or will they stick to their smaller, leaner government principles?

    anyone want to be a buck?

    I love the way that some of them are saying they need to "look into it" – like Mr. Gates himself has not?

    Bob McDonnell is going to tell Robert Gates how to run DOD?

  10. Groveton Avatar

    I see the Boomergeddon analogy as reasonable. The premise that you can base the growth of your economy on increased defense spending assumes that there is a growing tax base for spending on defense. This, in turn, depends on having more money to tax or taxing the money which is earned at a higher rate. Of course, you could also get the increasing money for defense by cutting something else.

    My version of Boomergeddon (Groveageddon) goes something like this:

    1. The days of each generation being financially better off than the generation which preceeded it are probably over in the US for the forseeable future. Lots of reasons for this. So, the hope of having lots more money to apply taxes against is forlorn.

    2. Increasing taxes is always a challenge. However, let's assume that happens. Everybody seems to think that are defecits are too high (except, perhaps, Paul Krugman). The new taxes can't just be earmarked for additional defense spending if we want to trim the defecit.

    3. Cutting other expenditures is a possibility although it really gets hard due to the costs of supporting a mountain of long – lived retired boomers. Plus – the boomers paid into the various entitlement plans while they worked and old people tend to vote.

    Virginia's Groveageddon play needs to focus on capitalizing on the inevitable economic changes which come with Groveageddon. for example, all those retired boomers are going to live somewhere. They pay taxes and don't have school aged children. They are probably net surplus citizens if you assume health care is a national problem. How do we attract relatively wealthy boomer retirees to Virginia? What do they want? I've been down to Naples, FL plenty of times. It seems to me that Florida is benefitting from the influx of retirees to Naples. No?

    Hopefully, McDonnell and his 63 person committee on jobs is thinking about things like that.

    P.S. – I will stop using Groveageddon once I read Boomergeddon (assuming we are talking about basically the same thing).

  11. Groveton Avatar

    I see the Boomergeddon analogy as reasonable. The premise that you can base the growth of your economy on increased defense spending assumes that there is a growing tax base for spending on defense. This, in turn, depends on having more money to tax or taxing the money which is earned at a higher rate. Of course, you could also get the increasing money for defense by cutting something else.

    My version of Boomergeddon (Groveageddon) goes something like this:

    1. The days of each generation being financially better off than the generation which preceeded it are probably over in the US for the forseeable future. Lots of reasons for this. So, the hope of having lots more money to apply taxes against is forlorn.

    2. Increasing taxes is always a challenge. However, let's assume that happens. Everybody seems to think that are defecits are too high (except, perhaps, Paul Krugman). The new taxes can't just be earmarked for additional defense spending if we want to trim the defecit.

    3. Cutting other expenditures is a possibility although it really gets hard due to the costs of supporting a mountain of long – lived retired boomers. Plus – the boomers paid into the various entitlement plans while they worked and old people tend to vote.

    Virginia's Groveageddon play needs to focus on capitalizing on the inevitable economic changes which come with Groveageddon. for example, all those retired boomers are going to live somewhere. They pay taxes and don't have school aged children. They are probably net surplus citizens if you assume health care is a national problem. How do we attract relatively wealthy boomer retirees to Virginia? What do they want? I've been down to Naples, FL plenty of times. It seems to me that Florida is benefitting from the influx of retirees to Naples. No?

    Hopefully, McDonnell and his 63 person committee on jobs is thinking about things like that.

    P.S. – I will stop using Groveageddon once I read Boomergeddon (assuming we are talking about basically the same thing).

  12. Anonymous Avatar
    Anonymous

    Isn't it expected that Virginia's elected officials of both parties would put up a fight to save this installation and its jobs? The question is whether Gates will hang tough.

    TMT

  13. Groveton Avatar

    Oh yes, TMT, I think our elected officials should put up a fight for this. In fact, a command that tries to get the services to work more effectively together is perhaps cost saving vs. costly. I see no reason for altruism here.

    My points were more about working the alternatives in the mid to long run. Even in the unlikely event that the Virginia boys win this one – what about the next one and the one after that. The writing on the wall seems inevitable to me.

    Do we have a Plan "B"?

  14. Anonymous Avatar
    Anonymous

    Oh this gets better. What's not being discussed is the 30 percent reduction in defense contractors over the next 3 years. Many of them have clearances that will drop dead if they can't find a job with another agency, or if those agencies also dump jobs. Add in any adverse issues with personal finances because of job loss in a recourse state and many of those former workers could be unemployable with government because they may be unable to get a new clearance.

  15. Gooze Views Avatar
    Gooze Views

    Groveton,
    Does Groveaggedon mean YOU self destruct?

    Peter Galuszka

  16. Groveton Avatar

    PG-

    I feel like I pretty much do every time I write a column for BR.

    However, to make the matter final I will write my next article about the need to suspend presidential term limits so that we can get George W Bush back in office in two years.

    Boom. Boom. Out go the lights!

  17. Larry G Avatar

    The use of contractors has been the dirty little secret of DOD in the last 10 years.

    They even have an official moniker – "Beltway Bandits".

    Imagine for a major corporation that you'd have management folks spending money on pet projects – uncoordinated with other senior management.

    Like putting money on some technology that the rest of senior management were spending money on other technologies that they liked better.

    This is how DOD "works".

    This how you end up with multiple "joint" operations – all claiming to be performing similar work… they simply hire a contracting outfit to do the work.

    Instead of a corporate top-down operation – DOD is more like a 100 different fifedoms – any high level Military guy/gal who has an operating budget – can and does use that money to see if they can get a leg up on other competing agencies inside of DOD.

    Gates is an experienced and savvy DOD guy who is well aware of these issues and he' striking at the heart of the problem.

    In the meantime, it's interesting to see and hear the " the govt is wasting money on stimulus" folks … squealing like stuck pigs over the proposed cuts.

    Make no mistake. There will be a virtual army of DOD insiders working to undermine Gates and in the end – what actually happens might well be a whimper of what Gates had in mind.

    And it's a good thing that Gates is a white male Bush Republican holdover… if DOD were an Obama black-appointed dude who suggested this – the right wing propaganda machine would be in full hissy-fit mode.

  18. Larry, it is worse than that.

    If you look in the pentagon budget to find out how much the spent on, say, cruise missiles, you cannot find out. That budget is dispersed among many commands and operations. The warheads are in one place the missiles in another, the guidance in another, maintenance in another, training in another, continuing development and R&D in anther, and software someplace else, joint requirements development, budget plannning, command and control, intelligence and mapping, all separate fiefdoms, each defending their own budget.

    No one knows the true cost every time you fire one of those things.

    On top of that you probably have a dozen contractors out there dreaming up new ways to make the cruise missile better: stealthy, faster, more accurate, more deadly, etc. and because those are generalized technologies that may be officially unrelated to the cruise missile, none of that shows up as program costs

  19. Larry G Avatar

    anyone who has worked for DOD or it's contractors knows what Ray and I are taking about.

    DOD is one giant money eating machine.

    What DOD proves to a certain extent is that you CAN achieve results if you DO throw enough money at the problem!

    I'm quite sure, for example, if we took the DOD approach to education – that we could have one teacher for each 5 students and we'd get wonderful results.

    Or we could have 10 times as many border patrol people and lock down the border.

    I conclude that people don't really want a smaller govt at all.

    They only want a smaller govt for the things they don't like.

    For things they like – the govt can be gigantic – like DOD.. and they're just fine with it..especially if it makes NoVa and Hampton Roads powerhouse economies.

  20. Groveton Avatar

    LarryG –

    I think you are taking an extreme position. Conservatives have always said that national should be the top priority of the federal government. They have always agreed that paying taxes to defend the US was a good reason to pay taxes. I remember the 500 ship Navy debate back in the 1980 election. Guess who wanted the big Navy? The conservative.

    I am not saying that the conservatives are right. I am not saying that the DoD is too small or even the right size. However, I am saying that the conservative position on this has been consistent.

    I am also not sure that, relative to its size, the DoD is any more or less efficient than other departments in the federal government.

  21. Anonymous Avatar
    Anonymous

    "I conclude that people don't really want a smaller govt at all. They only want a smaller govt for the things they don't like."

    Generally true, but so is: "I conclude that people don't really want a LARGER govt at all. They only want a LARGER govt for the things they like."

    We need a super-majority requirement to pass any federal budget. This way, the left could stop the right, and the right could stop the left. The federal government would only spend money on programs that had broad and bi-partisan support.

    TMT

  22. The problem with defense is that it is always too big until you need it.

    But when you figure the Navy is bigger than the next five largest navies, combined, you start to wonder how big is big enough. Especially when the next five are supposedly allies.

    This is not about defense, it is about force projection. We have taken the position of thinking it is our place and our destiny to globally proselytize democracy and we are willing to use force to do it. As a result, we find ourselves in a continuous state of war, somewhere.

  23. Larry G Avatar

    which suits the NeoCons just fine and of course anyone who benefits from the Military Industrial Complex….

    life is good in Nova and Hampton Roads… especially when we are are on the warpath.

  24. Larry G Avatar

    I'm of the opinion that the legislative environment has become so complex and so dependent on experts, lawyers and lobbyists that the average person has no hope of understanding the process.

    I don't even think most of the legislators have enough background to understand and are dependent on their own staff to interpret the essence and intent of the legislation and even then – the process is subject to inventive and creative wordsmithing so that unintended/intended consequences are also typical.

    We heard much about the HC legislation but anyone who really wanted to find out the truth could go look at other legislation done over the last decade and if you do that – you'll find that 1000+ page legislation is not that unusual much less the inability for the average lay person to read it an derive from it the actually impact of it.

    Wall Street is way, way ahead of us.

    They employ entire office buildings of people whose sole job is to not only interpret and understand legislation but, in fact, to shape it.

    The right wing propaganda machine gets people all riled up about legislation they oppose but the reality is – that virtually ALL legislation is just as thick and wordy and full of whatever provisions are negotiated.

    Groveton makes the point that Va's part time legislators don't have enough time on task to keep from creating messes like 3202… and used to use the phrase "clown show" which he has since discontinued… since Republicans took control (I assume).

    The sad truth is that most elected people are… guess what? POLITICIANS … not policy wonks…

    People who actually know what is going on are seldom elected.

    When the politicians are using the FAUX News soundbites – word-for-word… what does that mean?

  25. Dave Stockman must have read Boomergeddon.

    Stockman says you might as well migrate to another country. The R-Party wrecked our economy with expensive debt-financed wars ($3 trillion for Iraqistan) and rural lard.

    Recent Bumper Sticker.

    "We live within our means. Please tell Obama."

  26. Larry G Avatar

    the truth is that a lot of Americans have NOT lived within their means at all.

    They maxed their credit cards and maxed the amount of loan for their home.. and then used the equity in their home as a credit card.

    and when bad times came – they were in trouble.

  27. Groveton Avatar

    LarryG goes 1 – 1 …

    "I'm of the opinion that the legislative environment has become so complex and so dependent on experts, lawyers and lobbyists that the average person has no hope of understanding the process.".

    Truer words have never been written.

    "Groveton makes the point that Va's part time legislators don't have enough time on task to keep from creating messes like 3202… and used to use the phrase "clown show" which he has since discontinued… since Republicans took control (I assume).".

    I also stopped calling a certain soemone Dear Leader at the same time. Nothing to do with McDonnell's election.

    I have occasionally sinned against my self-imposed commandment not to personalize attacks. Sometimes, old habits are hard to break.

    The lobbyists and Wall Street are men against boys when compared to politicians. That may be the single biggest problem facing America's political system today.

  28. Larry G Avatar

    Groveton – please be true to yourself and please….
    p a l e e z e

    don't do a Jimmy Swaggart apology for your sins!

    these days legislation is for real men not weenies and you're right – we say what we want – and the corporations and big boys tell us what we get.

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