As Military Budget Cuts Loom, Contracting Costs Spiral
If there will be a debt limit deal, I think it’s becoming clear that it will include defense cuts, perhaps even bigger than the $400 billion floated by the President, though I doubt as high as the $1 trillion which Barney Frank and Ron Paul have submitted. The Hill couldn’t find that many House Republicans who would actually oppose the defense cuts proposed by the President. Republicans are opting for defense cuts over tax increases, even though Democrats have called for both pieces to be part of the deal.
But those defense cuts are even more necessary now, because Pentagon costs have skyrocketed, at least according to the CBO.
The Congressional Budget Office on Thursday projected that higher costs for weapons systems and health care will increase the Pentagon budget by $40 billion over the next five years at a time when President Obama and many lawmakers are looking to cut military spending.
The new projection, of $594 billion in spending for 2016, is $25 billion higher than the Pentagon’s estimates.
The report notes that health-care costs for the Defense Department have outpaced those elsewhere. It also says that “the costs of developing and buying weapons have historically been, on average, 20 percent to 30 percent higher” than Pentagon estimates.
Some of this just mirrors rising health care costs throughout the system, albeit at higher rates, which makes sense since war zone injuries are harder to treat, and technological advances come into play there. But the 20-30% increase above estimates of development and procurement costs seems like a deliberate thing to me. The Pentagon lowballs the figure in an appropriation and then allows the contractor to plus-up. We heard stories this week about Boeing overcharging DoD $13 million in spare helicopter parts, including $71.01 for a metal pin worth 4 cents. There’s a lot of winking-and-nodding that goes on in defense contracts.
So the need to cut military budgets is not only to address the extreme overkill in our bloated system, it’s to reduce the clear corruption in contracting that comes with more weapons systems.