The last rites have now been pronounced over the great rearmament boomlet of 1981. Its demise had been expected by the diagnosticians for some time. Like Halley's comet, it visited us and then departed quickly, trailing only a long (though quite insubstantial) tail deserving further observation.
For the past six months the defense debate has focused on the wrong issue: could the "immense" funds ostensibly being made available to the Department of Defense be usefully spent in significantly enhancing the security of our international position. With the Soviet Union outspending the United States by some 50 percent on defense generally and by a disturbing 85 percent in the critical area of military investment (procurement), with conventional capabilities in Europe porous and relatively weak and theater nuclear forces now overshadowed by those of the Soviet Union, with deterrence flimsy (at best) in the region of the Persian Gulf despite the West's enhanced interests and responsibilities, with the naval balance deteriorating in the Far East, and with trouble even in the Caribbean (and an evanescent threat "to go to the source")--not to mention concern about the strategic balance, Minuteman vulnerability and aging B52s--that should have been an issue in principle easy to resolve. Yet, all along the real question should have been--given the administration's fiscal proposals--how to maintain adequate deterrence with growing responsibilities in the Indian Ocean and with resources dramatically less than those invested by the Soviet Union.
Seven months have been wasted on an irrelevant debate. We shall now have to make do with a smaller growth in defense resources than that projected by the Carter administration-- previously denounced as hopelessly inadequate. So much for "making America strong again," "closing the window of vulnerability" and the vaunted "superiority" so casually endorsed in the Republican platform.
The unavoidable outcome, given its fiscal goals, seems genuinely to have suprised the Reagan administration. Disregarding the normal laws of arithmetic, and bemused by its own distortions of supply-side economics (alternatively known as "voodoo economics," snake oil or the Tooth Fairy), it lulled its pro-defense supporters (and itself) with farfetched projections supposedly demonstrating that the proposed rearmament effort could be achieved in the face of a massive shrinkage of the tax base.
According to the initial mythology, dramatically lower interest rates and cutting the "balance of government" almost in half (everything beyond interest payments, defense and the "social safety net") would permit the achievement of a balanced budget by 1984. But interest rates have risen rather than fallen, and only so much blood can be squeezed from the "balance of government" turnip, so the cuts unavoidably must now come from the fenced "social safety net" or from defense. More significantly, the recent tax legislation--which seems likely to go down in history as the single most irresponsible fiscal action of modern times--reduced the tax base to 19 percent of the GNP by 1984 (with expenditures running some 22 percent of the GNP), a revenue reduction of $150 billion or roughly 17 percent. As an offset, some $35 billion in non-defense expenditure reductions have now been achieved--less than one-third of those projected for 1984, less than one-fourth of the revenue loss.
The budget director, occupationally debarred from an abiding faith in the Tooth Fairy, has now read the grim arithmetic--the equivalent of a Budgetary Dunkirk. The fiscal consequences may be briefly, if sadly, stated. Unless the tax reductions are reversed--which seems unlikely--on the basis of present legislation and projected defense spending, the nation faces growing budget deficits of $65 billion in 1982, $90 billion in 1983 and $120 billion in 1984. Non-defense reductions will be increasingly hard to achieve. Thus, only the total jettisoning of the administration's goal of a balanced budget will permit even a modified defense buildup to survive.
Nor should one believe that with the half-announced cuts for defense of $20-$30 billion we have reached the end of likely defense reductions. The best current estimate for FY 82 outlays is $715-$720 billion ($20-$25 billion over ceiling). The ceiling for FY 83 in the revised Reagan budget is $732 billion--a total increase over 1982 of $12-$17 billion. Limiting spending to this ostensible ceiling, given probable inflation rates, would imply a reduction of real federal expenditures by 6-7 percent. Not very likely. Far more probably 1983 expenditures will run roughly to $775 billion--a sum $45 billion over the presumptive ceiling. Substantially to reduce the out- year deficits, given the growing difficulty in achieving non-defense cuts, would probably require that some three out of four dollars in reductions come from defense.
One can always spend less--by doing less. Gone now are the fancies of nine additional tactical air wings, of three additional Army divisions. Gone, too, in all probability, is the 600-ship Navy--unless, like Jefferson, we provide mostly frigates or gunboats. Embarking on major new systems like MX or B1 or new acquisitions like carrier task forces will ultimately lead to an ill-balanced force by leaving insufficient funds for operations, readiness and sustainability.
The planned buildup for NATO will have to be reduced--especially so in light of Indian Ocean requirements. What an ideal moment, given the anti-nuclear tide running in Europe, to increase the degree of dependence on nuclear weapons and diminish conventional capabilities.
The international ramifications are disquieting--to say the least. The already apprehensive Europeans will conclude that, while the United States is prepared to disturb the international scene by threatening to launch an arms race, it is now seen to be unwilling to provide the resources either to run the race or to provide additional military muscle. The Soviets will not be loathe to exploit those European apprehensions. Moreover, the Soviets will conclude that, despite American bluster, they have little to fear in terms of additional forces to narrow the growing disparity in military capabilities. As for the Japanese (and others), this notable example implies that we might as well abandon the effort to persuade them significantly to increase defense spending.
In creating and maintaining forces, wishful thinking is no substitute for an adequate tax base. In this ill-fated venture the cycle from bold words to budget cuts has been the shortest on record--a kind of instantaneous New Look. The historic failure lies in so casually dissipating the carefully forged national consensus supporting higher defense spending--while leaving in the public mind the illusion that a sizable new defense effort has actually been launched.