On Fire Late Ignition in DC Hamlet of Damascus

More than a year since this writer urged him to drastically slash defense spending Barak Obama has decided to just that.

The president's new resolve to sharply reduce America's military presence in Europe, to shrink the Marines and the Army, and to slash over the next decade an estimated $1 trillion in defense spending will be good for America, economically and strategically, and for Obama politically. The problem is that the defense cuts, even if they survive the Via Dolorosa that awaits them in Congress, should have opened rather than sealed this presidential term.

Whatever the defense cuts' fate, they allow us to sketch the entire presidential term's economic contours, which look roughly like this: three years of energetic spending, a fourth hopefully dominated by a big cutback, and in between them a traumatic credit downgrade.

The spending initiatives, highlighted by the $787 billion stimulus package of 2009, the $940 billion healthcare reform of 2010, and last year's derailed $447 billion job-creation program, reflected Obama's convictions and his voters' expectations. The planned defense cuts do not. Rather, they loom ominously as an admission that things went wrong; that the budget must be cut because the artificially stimulated economy never delivered the new jobs and consequent windfall in tax returns that the fiscal expansionists' brochure promised.

Obviously this cannot be openly admitted by the White House. That is why the proposed cuts are being portrayed as stemming from reduced activity in Iraq and Afghanistan. Well if that's the case, then why did Obama not introduce his defense-cuts vision 16 months ago, when he announced the retreat from Iraq?

US military spending has been astronomical regardless of Iraq and Afghanistan, and even after Obama's cuts it will still be larger than the world's next 10 defense budgets put together. Washington is emulating the military overspending to which the USSR became addicted before its demise. Fortunately, the US does not face political disintegration of the Soviet sort, but its military overextension is weighing on its economy and therefore also sapping its geopolitical clout. The need to cut US defense spending is therefore not circumstantial; it is historic.

America's defense spending is bigger than its strategic needs. It has been such since the day the Cold War ended, and cutting it cannot be mere political stucco; it requires historic perspective, an understanding that D-Day types of Armageddons involving thousands of tanks, planes, and artillery batteries, millions of troops, and billions of dollars are the call of the past. Sadly, the 9/11 attacks made US politicians assume the opposite, that the war on terror demanded things like 11 aircraft carriers constantly cruising the Seven Seas and bombers that cost $2 billion each. In fact, such size, weight, and ubiquity are the antithesis of the agility and stealth that fighting terror begs.


JUST LIKE he did not arrive at the White House with a healthcare reform bill, but asked instead congress to prepare its blueprints, there is also no indication that Obama arrived in office with a defense-cut vision of the sort he is now seeking.

Rather than be part of a preconceived game plan, it comes as a belated epiphany that followed the shock of last year's credit downgrade, a massive setback that caught Obama unprepared, and according to polls made thousands of his voters abandon him.

Ironically, besides having served America's strategic and economic needs, Obama would have also benefitted politically had he cut defense spending the day he took office.

In Israel the business press spends a new prime minister's first year in office scrutinizing his ability to resist budgetary demands. Cutting budgets requires a political backwind that is usually available early in a new administration's life, and then quickly dissipates. The needs, meanwhile, work the other way around.

Economically, a new administration must first display fiscal responsibility and political control, and thus convince financial markets to keep credit affordable and investments attractive. Politically, the need to spend grows the more election approach. Administrations that started off cutting spending were rewarded with financial stability, improved internal revenues, and surplus resources with which to play politics just when elections came. Some would call this attitude cynicism, but none would deny that it strikes a reasonable balance between economic concern and political expediency.

Though America is entirely different in its size, form of government, electoral cycles, and fiscal outlays, the principle nonetheless applies: cut at the beginning of your term and spend toward its end. Obama has reversed this order.

Why this happened to him – is clear. Back when he joined the presidential race as a junior senator, he did not expect to win, and therefore arrived at the White House unprepared. The best proof of that were the extravagant celebrations over which he presided upon entering the White House. Highlighted by a Bruce Springsteen concert, a colorful parade, and a slew of glitzy balls, the inaugural festivities reportedly cost more than any ever, $170 million, most of which came from taxpayer money.

Now the question arises: When Obama ran his extravagant inauguration celebrations, did he know he would later seek the most drastic cuts in postwar defense spending? If he did, then how could he show such bad personal example, throwing out the window in several days more than what he now intends to demand from the military to save annually over a decade?

And if Obama did not know he would ultimately demand such defense-spending cuts, then what else did he not know when taking the world's most sensitive position? Perhaps he didn't fully grasp the gravity of the financial meltdown that brought him to power in the first place? Otherwise, how did he think that his healthcare reform and stimulus package could be financed without deep fiscal surgery? And if that's what he thought initially, then what has changed his diagnosis now that he is out to perform the surgery himself?

A lot can still happen between now and November; new events, local or foreign, good or bad, might still change his economic situation beyond recognition. Still, as Obama prepares to fire the last economic arrow in his quiver, it is difficult to avoid the impression that his economic presidency has been a series of mistimed, miscalculated, and contradictory improvisations.
(Wall Street Journal/MarketWatch January 23)