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Charting 60 Years Of Defense Spending, And Why The Mean Reversion Will Cost Millions Of Jobs

Tyler Durden's picture




 

Moody's is out with a comprehensive chart of defense spending since 1946 which shows that while over the years the average yearly amount spent on defense by the US government has been around $400 billion, in the past decade this amount has surged to an all time high of just under $750 billion. And while one can debate the reasons for why America spends 20% of annual revenues on military (and debate even more why this number has continued to surge under a Nobel Peace Prize winning president), one thing is rather certain: this number will decline in the coming months and years as Washington has no choice but to cut the defense budget. And while this will likely be a multi-year process, it will have substantial implications for not only the defense companies identified, but for their respectively supply-chains, resulting in hundreds of thousands and possibly millions of layoffs over the next decade as government-sourced revenue plummets and yet another layer of overhead will have to be trimmed.

Per Moodys'

Last week’s escalating political rhetoric and ongoing debate about the US statutory debt ceiling and deficit spending lead us to expect deeper-than-anticipated budget cuts that will negatively affect defense contractors doing business with the US government.

At almost $700 billion and about 20% of total annual domestic outlays (and more than half of discretionary expenditures), the world’s largest defense budget by a factor of 6x (China ranks second) remains politically vulnerable to becoming at least a partial solution to the longstanding deficit problem. Whether or not a satisfactory solution to the growing deficit problem is reached near term and the debt ceiling is raised, there is little doubt that pressure to trim excessive spending will persist.

Affected companies include prime defense contractors Lockheed Martin (Baa1 stable), Northrop Grumman (Baa1 stable), Boeing (A2 negative), Raytheon (Baa1 stable) and General Dynamics (A2 stable); other big US government defense suppliers such as Science Applications International (A3 stable), ITT (Baa1 review for downgrade), L-3 Communications (Baa3 stable), BAE Systems (Baa2 stable) and United Technologies (A2 stable); and ultimately the full contingent of companies in the supply chain to these large defense contractors.

For the past 10 years since the events of 9/11, the rapid build-up of arms and services, as seen in the exhibit below, made the defense business a good place to be, almost irrespective of specific program focus.

Now, with government budgetary pressures constituting a global phenomenon, defense spending is universally getting a broad reassessment after this period of very high growth, and defense contractors are consequently chasing fewer opportunities in a heightened competitive environment.

Before leaving office, former Secretary of Defense Robert Gates had already identified and/or effected $400 billion of cost cutting from canceling certain weapons programs and identifying overhead and efficiency savings. However, more than $300 billion of that savings is slated to be reinvested in similar programs and/or higher military priorities, leaving only $78 billion available for deficit reduction. In his April budget proposal, President Obama asked for $400 billion of incremental defense spending cuts, roughly equal to 7% of the Department of Defense’s projected base budget (excluding supplemental wartime spending) over the coming 10 years. Still a somewhat modest figure in real dollar terms, we now expect agreement on a much larger deficit reduction plan, partially prompted by the desire and need to avert an outright payment default and downgrade of the country’s Aaa government bond rating, which we placed on review on 13 July.

For the defense industry, that may mean a call to reduce spending at a multiple of the original $400 billion target, particularly if held to its proportionate share of the total budget. As the just-approved Fiscal Year 2012 Department of Defense Appropriations bill from the House works its way through the Democratic-controlled Senate, particularly against the backdrop of broader deficit-reduction talks providing added political fodder, this historically largely untouched defense category may get hit with a double-digit percentage reduction in base funding levels over the next few years.

An accelerated withdrawal from Iraq and Afghanistan will jump-start the reduction in total defense outlays (including such wartime supplemental spending), and this alone will have a meaningful impact on many companies. Going forward, it will be increasingly important for defense contractors to be on the “right” programs. Exactly which programs those are remains to be seen, though, given the increasingly broad and growing list of potential and actual threats to US national security.

The offset to all of this is the sector’s overall current health and participants’ strong financial profiles. As well, such prospective spending cuts at any meaningful level will also likely take many years to play out, particularly given the long-dated nature of most defense contracts. Moreover, the daily news feed invariably serves as a constant reminder that the world is still a very dangerous place. The real issue is one of affordability. Demand (and need) for the sophisticated weaponry, programs and services on offer by defense contractors will largely mirror the threat level and therefore remain high, particularly for the US government. In this regard, the industry enjoys a somewhat unique but mutually beneficial relationship with its most important customer.

Think today's layoff announcements by Cisco and Borders will be bad for the NFP? Just wait until the spending cuts start being priced in by various corporate treasury and CFO offices across the defense curve.

 

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Mon, 07/18/2011 - 18:52 | 1468266 Audacity17
Audacity17's picture

Where is the per-capita chart??

Mon, 07/18/2011 - 18:54 | 1468273 mynhair
mynhair's picture

Don't say 'cap' when talking defense.  The Libs like it.

Mon, 07/18/2011 - 18:55 | 1468276 Audacity17
Audacity17's picture

heh

Mon, 07/18/2011 - 19:09 | 1468324 knukles
knukles's picture

Oh, pshaw.... say cap as many times and as fast around the libs as you can.  Once they fixate on the "cap" portion of the discussions (and they will, just like girls and shiny stuff) do a Bugs Bunny and slip in education, agriculture, green energy, taxes, whatever your little heart desires.....
It works absolute wonders.  Agree with 'em, get 'em going full tilt, light speed and then invoke principle.  They go apoplectic, like an epileptic having a seizure on a deck chair tryin' to imitate the Transformers.
To wit: One of my Uber-Liberal governmental employee golf buds (and I do mean that even by California standards...Jeeesssshhh) thinks that having business's boards of directors setting their own company bosses salaries is a conflict of interest which is why the biggliewiggliepigglies is paid so much.
I told him I agreed.
I thought he and I were gonna windup mating right there in the bunker just to the right of the first green. 
Until I pointed out that the same conflict of course applies to governmental employees and.... holy Jesus H Christ on a Crutch.  Principles don't matter with a lotta folks (of either political persuasion) so say cap a whole bunch.  Or immigration. Or penalty. Or equality.  Or justice... now there's one bein' worn to death. 

And what's great's as soon as the rest of the world figures out what the shorthand is for, then the PC doctrine has to find yet another term to abuse.

English for Dummies.

Cap.
Cap.
Cap.

Mon, 07/18/2011 - 20:08 | 1468488 Cheesy Bastard
Mon, 07/18/2011 - 20:18 | 1468515 sun tzu
sun tzu's picture

We need a 10% across the board cut in all departments. There are too many paper shufflers and lawyers working for the goobermint.

Mon, 07/18/2011 - 22:01 | 1468827 chemystical
chemystical's picture

Acording to a Congressman who appeared on C-SPAN a few months ago, the DOD's Acquisitions department has 6000 attorneys.

 

A search ofthe Net could not confirm that, but considering that lawyers comprised 10% of their last several hiring sprees since 2008, I don't doubt the Congressman.

DOD has 700,000 civilian employees now.  Acquisitions alone has around 150,000.

If we still routinely pay for every cost overrun despite that the overruns violate the contracts, and if we still pay for several new incarnations of the $2500 toilet seat, then why do we need 6000 lawyers to write and read and interpret contracts?  For that matter, why do we need what have to be 15,000 assistant managers to the undersecretary assistant directors whose sole job is to enforce the contracts?

 

Reminds me of the joke about "What do you call a bus with 50 lawyers heading over a cliff?"  A good start. 

Mon, 07/18/2011 - 22:35 | 1468919 Ying-Yang
Ying-Yang's picture

Should the defence budget be steeply cut the unemployed soldiers and private contractors can be hired guns for the elite. Oh wait they are now nevermind.

Mon, 07/18/2011 - 23:35 | 1469059 TaxSlave
TaxSlave's picture

We need a 10% across the board cut in all departments.

Cut?  That means less increase, right?

10% raise instead of 20% raise = 10% cut.

I guess this is what 'pays for' the Tax Breaks For The Rich.

 

Tue, 07/19/2011 - 07:59 | 1469519 boooyaaaah
boooyaaaah's picture

Dwight on the military industrial complex

 

A vital element in keeping the peace is our military establishment. Our arms must be mighty, ready for instant action, so that no potential aggressor may be tempted to risk his own destruction.

Our military organization today bears little relation to that known by any of my predecessors in peacetime, or indeed by the fighting men of World War II or Korea.

Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But now we can no longer risk emergency improvisation of national defense; we have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations.

This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.

Akin to, and largely responsible for the sweeping changes in our industrial-military posture, has been the technological revolution during recent decades.

In this revolution, research has become central; it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government.

Today, the solitary inventor, tinkering in his shop, has been overshadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers.

The prospect of domination of the nation's scholars by Federal employment, project allocations, and the power of money is ever present

  • and is gravely to be regarded.

Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientifictechnological elite.

It is the task of statesmanship to mold, to balance, and to integrate these and other forces, new and old, within the principles of our democratic system -- ever aiming toward the supreme goals of our free society.

V.

Another factor in maintaining balance involves the element of time. As we peer into society's future, we -- you and I, and our government -- must avoid the impulse to live only for today, plundering, for our own ease and convenience, the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.

Mon, 07/18/2011 - 18:52 | 1468268 mynhair
mynhair's picture

Is Zandi's fingerprints on it?

Mon, 07/18/2011 - 18:53 | 1468271 Cleanclog
Cleanclog's picture

Look at the years of the ramp up.  Will the mean reversion be called the "W" in honor of George W who authorized all that spending, mostly on war in Iraq that had nothing to do with 9-11?  

Or shall we just call it a "Raw" Deal.  Raw being war spelled backwards as we means revert.

Mon, 07/18/2011 - 18:57 | 1468285 mynhair
mynhair's picture

It means be prepared to live Red Dawn.

Mon, 07/18/2011 - 22:06 | 1468846 theopco
theopco's picture

That would fit about right in with your level of rationality, wouldn't it.

Mon, 07/18/2011 - 20:23 | 1468526 sun tzu
sun tzu's picture

Pelosi and Reid were in charge of Congress beginning Jan 2007 and the spending continued straight up and didn't even slow after 0bama was elected. Now we're involved in a third war. I have to blame both sides for the insanity. The Iraq War by itself didn't cause the ramp in war spending. 

Mon, 07/18/2011 - 21:06 | 1468671 papaswamp
papaswamp's picture

5...operations in Yemen, Pakistan, Afghanistan, Libya and Iraq.

Mon, 07/18/2011 - 18:56 | 1468278 boricuadigm-shift
boricuadigm-shift's picture

These companies will just have to move their business overseas! :-)  Bull defense Russia & China!

Mon, 07/18/2011 - 22:16 | 1468871 max2205
max2205's picture

Say goodbye to the DC housing market

Mon, 07/18/2011 - 18:56 | 1468279 High Plains Drifter
High Plains Drifter's picture

you watch what happens. they will go across the pond and start doing business with the chinks........

Mon, 07/18/2011 - 19:23 | 1468358 Cleanclog
Cleanclog's picture

We call the Pacific the pond now too?  Figured it should have a different name, being much bigger than the Atlantic and all.  Lake? Loch? Sea?

Mon, 07/18/2011 - 20:35 | 1468530 Ropingdown
Ropingdown's picture

Defense elements sold to the Chinese has already begun.  When Michael Schwarz, as CEO of Raytheon, couldn't get permission to sell missile guidance technology to the Chinese due to its obvious military uses, he gave the National Democratic Committee 1 million.  And Clinton gave him the export permit.  Simple.  Makes you glad you fought a supposedly-American war.  The game has been too clear for 20 years:  "All this patriotic stuff is great guys, but we in corporate America need growth and better margins.  So we're going start investing in China, and we're going to sell the stuff in America, and you guys are going to defend us to make sure the Chinese don't just take our stuff, right?  You're patriotic young men and women, aren't you?"  Pre-chinese Wilson ProStaff tennis racquet? $189.  Made in China Wilson ProStaff tennis racquet?  $189.  Get the picture, consumers?  Soldiers?

Mon, 07/18/2011 - 22:20 | 1468882 chemystical
chemystical's picture

Let's not forget Bernard Schwartz at Loral Air and Space.  The export application to use a chinese rocket to launch highly sensitive tech into satellite was denied by DOD and DOS and NSA, so Willie shopped it to Ron Brown over at the DOC.  Brown rubber-stamped the fraud.  The technology magically disappeared when the satellite's rocket magically failed to lift off and magically exploded.  Then the People's Army cordoned off the area and refused to allow anyone to examine it, saying, "Take our word for it.  The tech was destroyed and there's not a shred of it remaining.  (wink wink)."

 

Brown later got a bullet to his skull while flying in the middle of the night in a severe thunderstorm and aboard the only plane in the fleet that lacked proper nav equipment and a black box.  The 1st responders (Red Cross?) stated on CNN that they found were survivors, and then a few minutes later said, "Oops.  We meant there were no survivors."  Then the air traffic controller decided to commit suicide.

 

Schwarz & Schwartz.  Go figure.  Same tribe who stole and sold other tech to China.  Anyone remember the real Wedtech story?  The murder of the invistigative journalist?  (Danny Callasaro or something like that).  Magic Lantern?  Echelon?   With allies like that...who needs enemies?  Good thing the new US Amb to ISR has stated on the record that ISR is his highest priority and that his boss Obama told him so.  Nevermind making the USA your - putative employer - your highest priority.  Soulless pieces of shit spawned from and for that "shitty little country".

Mon, 07/18/2011 - 23:35 | 1469057 bakken
bakken's picture

You are forgeting the sale of nuclear sub technology, silent propellor manufacture, that the Israelis stole from us and sold to Japan(Toshiba) which company accidently sold machine tools to the USSR.  We should have nuked Israel back then.

Mon, 07/18/2011 - 18:57 | 1468280 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

All that defensive spending didn't amount to a hill of beans on 9/11... oh wait, yes it did, it was executed to 'perfection' (well good enough for the average U.S. joe to fall for that evil piece of theater hook, line and sinker, and without question)... go team!

Mon, 07/18/2011 - 18:59 | 1468289 mynhair
mynhair's picture

We are talking about the wars against poverty, drugs, obesity, right?

If only that much had been spent on a war against Liberal stupidity.

Mon, 07/18/2011 - 19:12 | 1468326 Bob
Bob's picture

Hey, cunthair, they got you driving the clown bus on afternoon shift again this week?

Ya really need to lay off the drugs--when you're at work, at least. 

Mon, 07/18/2011 - 19:30 | 1468378 mynhair
mynhair's picture

We won the war against poverty to the tune of $10 trillion?  Damn MSLSD, they never mentioned it.

Mon, 07/18/2011 - 22:15 | 1468866 karzai_luver
karzai_luver's picture

hair you idiot

we are fighting a Defense of Poverty,drugs,obesity,right?

 

You fuckwads are all alike.

Mon, 07/18/2011 - 22:56 | 1468971 theopco
theopco's picture

shut up cunthair.

Mon, 07/18/2011 - 18:57 | 1468287 Audacity17
Audacity17's picture

But didn't Obama say spending was stimulus?

Mon, 07/18/2011 - 18:59 | 1468291 mynhair
mynhair's picture

Only when it goes to ACORN.

Mon, 07/18/2011 - 19:15 | 1468335 knukles
knukles's picture

I do so love it When the libs start a junkin'.  Just think, maybe even gettin..... mad. 
Angry. 
Upset. 
Agitated. 
Annoyed. 
Plain downright pissed off.

Keep up the good work.

Mon, 07/18/2011 - 19:21 | 1468350 Bob
Bob's picture

Sometimes you can get a real hearty divide-and-conquer riot goin' on in the boyzroom!  Impressive, albeit ignant. 

Most of the time you get put into place, however.  Let's see all the little pee-pees out!  Ready . . . set . . . piss away!

Mon, 07/18/2011 - 19:31 | 1468382 mynhair
mynhair's picture

Heh.

Got a timeline on when you move out of your parent's basement?

Or when you can apply for a GED?

Mon, 07/18/2011 - 19:54 | 1468445 knukles
knukles's picture

See they've started, junkin' up a storm.

Tue, 07/19/2011 - 08:25 | 1469551 snowball777
snowball777's picture

His Herr (Hitler) can't play...Granny got him "fixed" where he wasn't broke (now if only they could do something about the brain-damage from when he was playing in the street for too long).

Mon, 07/18/2011 - 22:35 | 1468902 chemystical
chemystical's picture

...and Pelosi said that unemployment checks are the fastest way to stimulate the economy. 

 

 

Mon, 07/18/2011 - 22:34 | 1468905 chemystical
chemystical's picture

...and Pelosi said that unemployment checks are the fastest way to stimulate the economy. 

 

Paraphrased: unemployment creates job.  Right Nancy, and war is peace. 

 

Didn't she also say that every dollar in unemployment checks adds two dollars to the GDP?

 

If we all quit our jobs, the country will be in the black in no time.  Wish she and the other 535 would go first.  Then tack on another 9 from SCOTUS, and then Biden and then the Soulless Dicksucker-in-Chief.

 

 

Mon, 07/18/2011 - 19:00 | 1468292 Manzilla
Manzilla's picture

Let's name it BO. If we are gonna whine about Bush than we should whine about Obama as well. Gotta love a guy that gets voted into office promising not to be like Bush but than ends up continuing everything he started. Ahhhh the hypocracy.

Mon, 07/18/2011 - 22:19 | 1468879 karzai_luver
karzai_luver's picture

Nobody could possibly believe he would be different.

 

This obama - bush you all speak of could just as well be muppets.

They only get "options" provided by your rulers.

party on buttcracks

 

 

Mon, 07/18/2011 - 22:38 | 1468926 chemystical
chemystical's picture

In 2012, of the voters who voted for Barry to prove that they weren't racists....how many will vote against him to prove they aren't idiots?

 

Neverending War For Everlasting Peace. 

Mon, 07/18/2011 - 19:01 | 1468294 Rainman
Rainman's picture

Defense contractors have been planning on a 30% cut in USA defense biz since ODrama won the election. They'll cultivate more overseas biz. The merchants of destruction don't much care about the humans on the receiving end of their products so long as it ain't them.....and oil profits have gotta' go somewhere.

Maniacs especially love expensive boom-boom toys.

Mon, 07/18/2011 - 21:10 | 1468681 papaswamp
papaswamp's picture

Hey O closed the biggest overseas defense contract in US history...give him credit where credit is due. That peace prize was good fro something..peace through superior firepower.

Mon, 07/18/2011 - 19:01 | 1468295 ZackAttack
ZackAttack's picture

Ridiculous to have a gold-plated $400b fighter program when the Banker Party and the Other Banker Party are pompously debating whether grandma gets private label cat food or not.

Has anyone asked the military if they could manage to make do with, you know, 800 of them instead of 2500? And of course all those F-16s, FA-18s we already have.

What exactly are we defending Japan against, again?

After NATO finishes demonstrating its military mastery in the killing dunes of Libya, maybe they can take over holding back the red menace at the Fulda gap.

 

Mon, 07/18/2011 - 19:07 | 1468318 Bobbyrib
Bobbyrib's picture

Maybe Grandma should get rid of her cat(s).

Mon, 07/18/2011 - 19:27 | 1468370 mynhair
mynhair's picture

Byte me, ya hater.

Tue, 07/19/2011 - 08:27 | 1469555 snowball777
snowball777's picture

And get rabies? Or do you just froth at the mouth naturally?

Mon, 07/18/2011 - 19:53 | 1468442 spdrdr
spdrdr's picture

Absolutely.  Science is yet to breed out the proclivity of cats eating their owners following their demise.  They start with the eyes, and work outwards.

Evil bastards.

Mon, 07/18/2011 - 19:21 | 1468348 knukles
knukles's picture

We're supposed to be defending against climate change... you know and it's direct results like tsunamis, earthquakes, volcanoes, hurricane, typhoons, rain, heat, drought, cold, and the like
And just like the dumocraps stimuli, ain't worked yet worth a fuck cause we didn't enuf, yet.

Mon, 07/18/2011 - 19:25 | 1468365 TaxSlave
TaxSlave's picture

We're fulfilling our Manifest Destiny, and that takes a lot of blowin' stuff up.

Think of all the poor window businesses that will suffer when we stop breaking all those windows.

And the undertakers!  What will they do?  Their children will go hungry!

Mon, 07/18/2011 - 19:01 | 1468297 ex VRWC
ex VRWC's picture

What he says about the supply chain is very true.  Before even LM, GD, etc start cutting their direct employees, they will spread the pain to their suppliers.  Already in this world, stretching to 90-120 days, price pressure on suppliers, etc is common.  When the contract cancellations come, lots of medium and small company suppliers with no margin will be gone, like that.  With them goes a good percentage of tech and other 'real' jobs the US has left.  The twin industry to mil/defense is aviation, also in a similar boat.

Mon, 07/18/2011 - 19:02 | 1468302 dick cheneys ghost
dick cheneys ghost's picture

It doesnt matter wwhere they cut.........the job losses with be massive.........millions of jobs will be lost when medicaid cuts happen..........it is the box we cant get out of......but bring it on,.............lets get this over with...........

Mon, 07/18/2011 - 19:33 | 1468386 mynhair
mynhair's picture

So true.  It needs to happen.  Starting in the Squirrel's house.

Mon, 07/18/2011 - 19:02 | 1468303 Catullus
Catullus's picture

Add in the Department of Fatherland Security and this number becomes even more ridiculous. Its really that we're not rewarding enough failure in this country. Not won a war in 70 years? Increase war spending. Couldnt stop a bunch of assholes from hijacking a plane by adding a lock to the cockpit? Create a national security state hiring retards to feel up 9 year old girls. Can't catch a $50billion ponzi scheme with industry insiders giving you all the leads you need? Double the budget for the SEC. Massive hurricane exposing your disaster preparedness as a complete joke? Dump billions into FEMA.

Whenever someone's ready to call the bluff on the "raise the debt ceiling or we'll all die!" bullshit coming out of DC, the entire planet will be better off.

Mon, 07/18/2011 - 19:04 | 1468304 buzzsaw99
buzzsaw99's picture

You're dreaming. they will spend progressively more and start more and more wars until everyone is dead.

we have always been at war with eastasia. [/orwell]

Mon, 07/18/2011 - 19:04 | 1468308 Paul Bogdanich
Paul Bogdanich's picture

This chart, like almost all the others that purport to tally defense spending, is pure propaganda.  It does not include Veternas Administration expenses and leaves those under HHS, it does not include nuclear weapons design, testing and maintenance expenses which are booked under DOE, and it does not include social security survivors payments to deceased soldiers next of kin and SSAN disability to injured but surviving service members.  If one adds in those little tid bits we currently spend about 1.1 Trillion a year on "defense."  if we add in Homeland Security (when we got attacked on 9-11 it became clear the the "Department of Defense" doesn't defend anything [the old name "War Department" was more accurate] so we had to create a whole new bureaucracy for "defense") then it's about $1.25 trillion a year.     

Mon, 07/18/2011 - 19:04 | 1468309 mynhair
mynhair's picture

HEY!  I propose a simple solution to the defense budget farce!

LET'S JUST OPEN THE BORDERS!

Oh, we already did.

Mon, 07/18/2011 - 22:23 | 1468892 karzai_luver
karzai_luver's picture

senseless - you been in the catnip again ??

Yeah, just wait until we close that AF/Pak border.whohoooo!!!

Treats all around.

 

Mon, 07/18/2011 - 19:04 | 1468310 Gamblor
Gamblor's picture

I work in this industry and to say that DoD needs to be cut is an understatement.  So much waste with the OCO funding.  AmCon had a great piece on how the $750Bn number was low - and that defense related expenditures were really around $1Tn/year.  That is insane and unsustainable.

The budget should be between 15-18% of taxable take from the government, or around $350-400Bn/year.  Our DoD overlords are smart, though - they won't cut overseas basing and ridiculous weapons programs, instead they'll say any cuts should come from troop levels.  DO NOT LET THEM GET AWAY WITH THIS.  Like most things, Ron Paul is spot on with the need to rein in this monster.  Thomas Woods' Rollback has a great section on how defense spending makes us less efficient overall as a country. There will be pain upfront from these cuts as we move people around, but the bottom line is this bememoth has to be chopped down to size.

Mon, 07/18/2011 - 19:06 | 1468314 sellstop
sellstop's picture

You could do the same thing with the medical establishment. All of the government programs, employer insurance, and the like that occured over the last 50 years caused an industry to flourish.

It is also called "inflation".

That is why the events of recent are deflationary and a part of deleveraging....

Defense...

Medical...

Transportation....

Housing.....

Service and hospitality.....

Who takes the paycut first? That is the crux of the argument.

The machine has to slow down....(LOL)

 

gh

Mon, 07/18/2011 - 19:09 | 1468322 Shameful
Shameful's picture

Yeah, no reversion willingly.  Both parties would see every American starving or dead before the warfare state loses any of it's funding.  Can't terrorize the planet without grotesque military spending, and as a bonus get to pillage bunch of that money and those happy defense companies kick up bribes...er campaign contributions.  They would start WW3 before scaling back mil spending to something less than totally insane.

Mon, 07/18/2011 - 19:26 | 1468368 buzzsaw99
buzzsaw99's picture

+1

Mon, 07/18/2011 - 19:13 | 1468332 JW n FL
JW n FL's picture

Uncle Sam is Broke.. because..

Uncle Sam Taxed the shit out of the middle..

Uncle Sam gave Tax Breaks and Subsidies to his Corporate Lobby Dollar Wielding Friends..

Those Corporations moved 6 Million Manufacturing Jobs to China over the last 10 years.. (really 11 now)

and those Corporations were paid by the "We the People's" Tax dollars to undermine / gut America's Manufacturing and Tax Base.

 

We gave away our tax base.. One better! We PAID Corporations to Undermine Our Tax Base and Our Manufacturing Base!

 

The Lobby Whores!

Were paid Lobby Dollars!

To Provide Tax Breaks and Subsidies! That DESTROYED! America's Manufacturing Base.. Which as well undermined America's Tax Base!

 

50,000 Manufacturing Jobs a MONTH!

Were shipped Off Shore!

For Tax Breaks and Subsidies that "We the People" paid for! (plus cheap Chinese Labor)

 

Government Paid Corporations "We the People's" Tax Dollars.. to DESTROY America's Manufacturing Sector and Tax Base that those jobs equated too.

 

what is 6 million people paying taxes worth.. not the top 1% who pay NOTHING! but the middle manufacturing jobs.. $50k to $100k average for the last decade?

 

25%? on $100k ='s $25k X's 6m ='s $1,500,000,000,000 (Social Security is passed straight thru, IOU my ass)

 

That is nothing to sneeze at.

 

Now multiple that $1.5 Trillion times 10 years.. we are down $1.5 Trillion in Tax Revenue per year! for those Manufacturing Jobs.. and over ten years (it’s really 11 years now, so even more) it would be $15 Trillion..

 

**************$15 Trillion Fucking Dollars!***************

 

In Tax revenue GONE to China! And “We the People” paid for it! Who Voted for that shit? Who among you voted to Gut America’s manufacturing sector?

 

Who among you voted to undermine America’s Tax Base? WHO?????

So the same amount of money we paid to move off shore is what we as a Country owe..

 

FUCK ALL OF YOU THAT DO NOT SPREAD THIS INFORMATION TO EVERYONE YOU KNOW!!!

 

***** “Over the last ten years, China has mounted the biggest challenge to the U.S. manufacturing sector ever seen, threatening producers of steel, chemicals, glass, paper, drugs and any number of other items with prices they cannot match. Not coincidentally, the United States has lost an average of 50,000 manufacturing jobs every month during the same period.” *****

http://blogs.forbes.com/beltway/2011/02/14/intelligence-community-fears-u-s-manufacturing-decline/

 

That is the 50,000 jobs a month.. equaling 6m jobs +++ becuae it has been 11 years now!!

 

http://www.banktech.com/articles/229700093?cid=nl_bnk_daily

Top U.S. Lobbying Banks Got Biggest Bailouts

 

1.    [PDF]

A Fistful of Dollars:Lobbying and the Financial Crisis; Financial ...

File Format: PDF/Adobe Acrobat - View as HTML
A Fistful of Dollars: Lobbying and the Financial Crisis by. Deniz Igan ...
www.imf.org/external/np/res/seminars/2009/arc/pdf/Mishra1.pdf

 

that is the lobby dollars! what else do you need to see? to wake the fuck up? let me know! and I will make it dumb enough for you to understand!

 

http://www.treasurydirect.gov/NP/BPDLogin?application=np

 

and that is what we owe as a Country.

 

Bush signing the World Trade Organization Docs to Ship Jobs Off Shore!!

[PDF]

WORLD TRADE ORGANIZATION & REGIONAL TRADE AGREEMENTS

www.jetro.go.jp/theme/wto-fta/news/pdf/W_CMonthlyReport-July.pdf

You +1'd this publicly. Undo

File Format: PDF/Adobe Acrobat - Quick View
Mexico Threatens First Complaint Against China at the WTO on Investment ... President Bush signed into law the Farm Security and Rural Investment Act of ...

Mon, 07/18/2011 - 19:35 | 1468392 mynhair
mynhair's picture

Broke is your brain.  Will you please change your name to dickheadinMA?

You are an embarrassment.

Mon, 07/18/2011 - 23:05 | 1468989 theopco
theopco's picture

you're one to talk, cunthair

Mon, 07/18/2011 - 20:06 | 1468480 jemlyn
jemlyn's picture

Too bad you all didn't elect Ross Perot.  He saw all of this coming and tried to warn people.  Bill Clinton set up the giant transfer of jobs and signed NAFTA sandf GATT

Mon, 07/18/2011 - 20:15 | 1468508 ex VRWC
ex VRWC's picture

You could say it a lot shorter and more memorably too:

http://www.youtube.com/watch?v=y3SRWmV2WIE

 

Mon, 07/18/2011 - 20:45 | 1468601 blindman
blindman's picture


that was great ! nice work e.

Mon, 07/18/2011 - 20:55 | 1468631 fuu
fuu's picture

but then he can't attention whore at the same time

Mon, 07/18/2011 - 20:51 | 1468616 blindman
blindman's picture


you swingin' the hammer and the nails are
goin down. nice collection of informative
documents. arbitraged labor through temporal
variations and evolution in inflation through private fiat
fractional reserve manipulation in socio-political
space time. like that.

Mon, 07/18/2011 - 21:57 | 1468812 plata pura
plata pura's picture

well post'd; furthermore end corporate personhood

Tue, 07/19/2011 - 10:03 | 1469877 smiler03
smiler03's picture

"FUCK ALL OF YOU THAT DO NOT SPREAD THIS INFORMATION TO EVERYONE YOU KNOW!!!"

Did you forget that you weren't on facebook ?

Mon, 07/18/2011 - 19:20 | 1468343 Mr Lennon Hendrix
Mr Lennon Hendrix's picture
Swan Lake: Military Industrial Complex

Sucking America dry of its wealth, the Military Industrial Complex has laid waste to the Nations of the globe.  Its inception was created by the financiers of the Federal Reserve Bank, but it has become its own monster.  It has held America hostage with false flag after false flag, and has been the final blow to the American culture.  Men that go to war for the US have the highest homeless rate out of all demographics.  There is also a very high tolerance for the sexual abuse of women.  American society has been financially and morally fleeced by the Military Industrial Complex since the start of the First Great War....

And a few more paragraphs at the link below.

Swan Lake- Military Industrial Complex:

http://lhmarketwatch.blogspot.com/2011/05/swan-lake-military-industrial-...

Mon, 07/18/2011 - 19:19 | 1468345 perelmanfan
perelmanfan's picture

Fascinating to consider what would happen if the trillions spent on guns to secure oil had instead gone to solar panels on rooftops. Just as many jobs, energy independence and a dent in global warming. And a few million fewer dead and displaced, if anyone cares about off-ledger considerations...

Mon, 07/18/2011 - 19:20 | 1468351 Bobbyrib
Bobbyrib's picture

At this point in time solar couldn't replace oil.

Mon, 07/18/2011 - 19:37 | 1468398 mynhair
mynhair's picture

Uh, people would slaughter animals for fat to make candles?

Try solar, you will never do it again.  Moron.

Mon, 07/18/2011 - 19:58 | 1468461 perelmanfan
perelmanfan's picture

You are right, what the fuck was I thinking. Technologies never improve. Efficiencies never increase. Investment never works. Please respond via your laptop abacus. 

Mon, 07/18/2011 - 22:26 | 1468898 karzai_luver
karzai_luver's picture

cats are worthless anyway. I like it.

Lite that fire .

 

Mon, 07/18/2011 - 19:20 | 1468347 Auricle of Omaha
Auricle of Omaha's picture

An 11% "decrease" in defense spending in the first quarter supposedly played a major role in trimming 1.7 points off the GDP number. Since there's never any spending cuts in Washington, I'm sure it was just an 11% decrease in defense spending GROWTH. But that was all fixed with the bombing in Lybia.

There's no point in talking Republicans or Democrats on this matter. The money will be spent in order to keep the numbers looking positive. And as of right now, it's more politically viable to make the case that we "need" this spending for defense, after all we "can't cut and run," than to spend it on domestic programs. A currency and economy based on debt creation will never see any real cuts in spending - domestic and military.

Mon, 07/18/2011 - 19:22 | 1468356 InconvenientCou...
InconvenientCounterParty's picture

as long as crude settles in dollars, the game can continue. I wouldn't bet the farm on a drop in military spending just yet.

There's just too much at stake to allow these cavalier political noobs to crater the empire. I think they are going to learn the nature of the U.S. government very soon.

Mitt Romney is going to be the coporate darling. He plays ball.

 

Mon, 07/18/2011 - 19:43 | 1468420 Gamblor
Gamblor's picture

Nobody embodies servitude to the elite quite as much as Mitt Romney.  Huntsman a very close second.

Mon, 07/18/2011 - 19:24 | 1468363 SwingForce
SwingForce's picture

Don't alot of servicemen spend money overseas? Take it away, its a global loss.

Mon, 07/18/2011 - 19:40 | 1468399 knukles
knukles's picture

Ain't counted in our GDP numbers, so it can't be for real.  Nope, don't  believe it.  Bring 'em all home and just bomb 'em from the air.

Curt LeMay had it right.  Bomb 'em back into the stone age.  Except everybody we're fightin' these days already is back in the stone age....   maybe time for a defense review?

Mon, 07/18/2011 - 19:29 | 1468375 buzzsaw99
buzzsaw99's picture

They would gladly kill us all rather than cut one single dollar.

Mon, 07/18/2011 - 19:40 | 1468403 mynhair
mynhair's picture

Who is 'us'?  You generalist.  To me it means Libs.

Libs are the true evil in this world.  Tied with Muslims.

Mon, 07/18/2011 - 19:49 | 1468434 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Hegel loves you.

Mon, 07/18/2011 - 19:51 | 1468440 knukles
knukles's picture

Now that sir, is good.
I gotta get a bumber sticker says that.  Nobody'll have a clue.

Mon, 07/18/2011 - 21:36 | 1468750 Charles Wilson
Charles Wilson's picture

"There is only one man who understands me and even he does not!"

-  Hegel

 

CW

Mon, 07/18/2011 - 19:49 | 1468436 knukles
knukles's picture

Ya know, best as I can try, the libs still get on my ass, even when I'm being politically correct.

Sure, we all know that it's just a few crazy ass Muslim terrorists that give the rest of 'em a bad name.  So, I treat them all the same, as crazy ass Muslim terrorists.  

See, just doin' my part for God, country, America, freedom, liberty, equality... Unless you're not white , a single mom, unemployed, handicapped, diseased, disabled, other than Southern Baptist Fundamentalist Christian, gun loving, bigoted, hate everybody else but yourself.  Er, myself, Goddamnit.  Oh, gays, I forgot gays.  And liberals, liberals, too.  And rich people, foreigners, illegal aliens, people takin' any job from an American.

God bless me.

Mon, 07/18/2011 - 23:09 | 1468994 theopco
theopco's picture

You're funny knukles. Funny is good.

Mon, 07/18/2011 - 19:56 | 1468454 Alcoholic Nativ...
Alcoholic Native American's picture

Jesus you are full of derp.

Mon, 07/18/2011 - 20:31 | 1468553 buzzsaw99
buzzsaw99's picture

that's a naughty pussy.

Tue, 07/19/2011 - 10:55 | 1470153 DR
DR's picture

Only when you turn 65 and became a net revenue loss...meanwhile pay them taxes!

Mon, 07/18/2011 - 19:36 | 1468394 e1618978
Tue, 07/19/2011 - 06:35 | 1469435 docj
docj's picture

I was wondering about that. Good point.

But it also fails to account for DHS, the DOD labs like LANL and the VA, all of which is "defense" spending of a sort.

Would be very interesting to see all that rolled-in and adjusted for inflation vs. budget and GDP.

Mon, 07/18/2011 - 19:38 | 1468400 Arch Duke Ferdinand
Mon, 07/18/2011 - 19:41 | 1468411 Hacksaw
Hacksaw's picture

Aw, all those Boeing, GE, and McDonald Douglas leeches who have been sucking off the government teat their whole life. They make huge wages, have great health care, and huge unreasonable retirement plans, all paid for on the tax payers back. Cut the heck out of them, heck they can't even bring in a plane on time or on budget. Don't steal from the producers of this country just to support these sucks, cut them all loose.

Mon, 07/18/2011 - 19:50 | 1468428 PulauHantu29
PulauHantu29's picture

Aw, come on....there are dozens of little countries out there just waiting to be invaded so we can "stimulate" the economy.

Mon, 07/18/2011 - 19:55 | 1468450 mynhair
mynhair's picture

Countries can't defend themselves.

People can't defend themselves.

People can't drive themselves.

So now cars are made to handle the third point.  So why is drunk/drugged driving bad?

Mon, 07/18/2011 - 19:57 | 1468451 medicalstudent
medicalstudent's picture

ending wars means unemployed, gun toting soldiers accomodated to murder death kill back at home as well as an end to the militaristic backing of the dollar.

Mon, 07/18/2011 - 22:17 | 1468875 GeorgeHayduke
GeorgeHayduke's picture

No problem these days. They hire those folks to be cops, Homeland Security workers and TSA pat-down artists. Hey, someone or something has to keep the sheep in fear.

Mon, 07/18/2011 - 19:56 | 1468457 hedgeless_horseman
hedgeless_horseman's picture

What is our record?  10-1-2 or close to that?  With that payroll we should be undefeated.  It's that collective bargaining that is to blame.

Mon, 07/18/2011 - 19:59 | 1468463 tony bonn
tony bonn's picture

oh my god - can the usa survive with only 1998 bases world wide instead of 2000? and what will happen to donald rumsfeld's pension? i am sure that dick cheney is turning blue and it can't happen quickly enough.

Mon, 07/18/2011 - 20:07 | 1468465 THE DORK OF CORK
THE DORK OF CORK's picture

Much of the defence spending during the 1953 - 65 period was orientated towards high technological nuclear deterrence operations - this like it or not had vast spin offs into the private sector.

Once more & more spending went into tactical operations the technological returns became less & less.

In real terms the defence expenditure during the 50s & 60s were truely massive with such things as the RC - 135 strategic tanker becoming the 707 commercial airliner.

Once technological development was cut during the 70s the long term benefits of R&D into higher faster better became less & less - with funds directed towards forward base operations rather then technology.

 When the Cold war ended the American economy reorientated even more towards the service sector with obvious long term consequences.

Maybe its best to serve the man breakfast.........

www.youtube.com/watch?v=-eREiQhBDIk

 

Mon, 07/18/2011 - 20:26 | 1468537 rapier
rapier's picture

It's important to remember that these dollar totals for defense spending are inflated by at least 100% by waste and overcharging.  Then to there is no way to quatintify defense output.  Some would say the defense output of the wars in sandy hot places is zero.   Others may disagree.  At any rate in terms of defense capeabilities it is probable that China, on 600% less outlays, is producing more defense capeabilities.

Surely the offshore spending will decline but the numbers won't as we turn inward. The National Security state which is only quasi military will grow and grow and grow some more.

Mon, 07/18/2011 - 21:05 | 1468624 blindman
blindman's picture


"cost millions of jobs" but save millions
of lives. there will be better jobs.
it is time we made the transition to quality
v.s. quantity, the qualitative revolution.

Mon, 07/18/2011 - 20:54 | 1468629 wombats
wombats's picture

"Defense" spending may decrease by necessity over time, but will probably always remain huge as a percentage of spending.  The Military Industrial Complex and the oligarchs that run the country will make sure of that.  When Obama (and the rest of the gov't) runs out of foreign enemies to fight he will turn on the US population.  This will still require vast sums.

Tue, 07/19/2011 - 05:36 | 1469407 uniman
uniman's picture

This sounds plausible but what actual domestic enemy could the military invent? There's nothing big and fierce enough to warrant the use of their fancy weapons, so much of their power would be irrelevant and thus blunted.

The Enemy's Achillie's heel is their money and logistics.  Their system depends upon an endlessly gluttonous consumer culture that borrows and spends and thus yields enough economic activity to yield a fat piece of pie in harvest.  To the extent that the Enemy proceeds against the American people, the Enemy will cut its own throat.  It has already begun the assult against we-the-people under the pretense of "security" via Homeland Security, TSA, et. al. and look at how the economic bubble has popped.  Correlation? Sure. Causation? I don't know. But there is clearly a sense of hunkering down in order to survive the storm, as well as a desire to clean up private balance sheets via deleveraging, which I believe is killing economic activity.

The Enemy can continue to tighten the noose and the crisis will only get worse.  When the free money spigot gets jammed and the docility bribes are thus impeded, there's going to be wide spread domestic unrest.  Which of course will spawn more tightening of the noose.  The problem for the Enemy is that their ability to make high tech is going to disintegrate in a vast wave of business and personal bankruptcy, passive resistance and aggression, and civil disobedience.  There's not much you can shoot at in this.

 

Mon, 07/18/2011 - 21:40 | 1468760 Charles Wilson
Charles Wilson's picture

Does this mean that we can finally finish building the Super Conducting Supercollider?

 

CW

Mon, 07/18/2011 - 22:00 | 1468822 glenlloyd
glenlloyd's picture

In this regard, the industry enjoys a somewhat unique but mutually beneficial relationship with its most important customer.

i.e. parasite and host.

Mon, 07/18/2011 - 22:07 | 1468848 HowardBeale
HowardBeale's picture

Think today's layoff announcements by Cisco and Borders will be bad for the NFP? Just wait until the spending cuts start being priced in by various corporate treasury and CFO offices across the defense curve.

That will be incremental and over a long period of time, and it pales in comparison to the reality off the ONE to TWO MILLION! educators and support staff that were PERMANENTLY laid off across the country this summer. So far, they have managed to "seasonally adjust" those layoffs out of the realm of perception, but they are there; they are not going away; they are people that are suddenly going to be spending some small fraction of what they were before. It's fucking criminal that this has not made it into the news somewhere. Get ready for a BIG fucking NFP surprise sometime soon.

Mon, 07/18/2011 - 22:10 | 1468857 dogismyth
dogismyth's picture

a million jobs lost....lmfao!!!  I'm sure the killing of millions of overseas brown people for that money will enhance our competition with the world.

The point is not how much is spent on defense, but what was spent and how it was financed.

The banksters love war whether its two formidable opponents, or a bully picking on the little guy.

We'll be paying the trillions for war efforts since Bushi's Iraq War up to the present annihilation of the Mideast...PLUS INTEREST.  The country is now further in debt and its likely the banksters have already secured hard assets to cover that bill (in the event we can't/don't pay).  So either way we're fucked.

Now the banksters will start lending to another country be it Pakistan, China or North Korea.

Ya know the Bank of England financed the Nazi Empire and Hitler....right?  Along with a few other financeers from Amerika.

The solution: remove Central Banks from all countries, clawback their wealth and distribute, and hang the stakeholders.

Problem solved.

Mon, 07/18/2011 - 22:14 | 1468861 GeorgeHayduke
GeorgeHayduke's picture

You can bet the numbers used for this chart are the "official" numbers and not the real true DOD costs, many of which are well hidden.

It's funny how showing the Dept. of Offense (to secure markets, resources and drug crops for private profit) expenses riles up some people so much. I've always been amazed at the bitching some people do about the federal government, but then they have an orgasm when the military is mentioned, as though they are not part of the federal government. What else should we expect as their owners have conditioned them well. It's all part of the waste we have seen over the years.

Mon, 07/18/2011 - 22:34 | 1468915 karzai_luver
karzai_luver's picture

Lots of those cats are sucking on that welfare tit of war........ spending.

It's such an easy con to run on the doped up sheep,priceless!

 

 

Mon, 07/18/2011 - 22:41 | 1468934 Bicycle Repairman
Bicycle Repairman's picture

The USA spends more on "defense" than the rest of the world combined.  Slash defense spending.  Yes, jobs will be lost.  Defense contractors may try to sell overseas, but no one is going to take up the slack.  Slash "defense" spending to the bone.

Mon, 07/18/2011 - 23:41 | 1469075 bakken
bakken's picture

Look,  if BO is going to whack Iran, we willl need to keep up our military spending, see?  Not that we really need to whack Iran, but did we really need to waste time bombing Libya?  Or, isn't Afganistan an awful expensive an endeavor just to kill Osama?[DC rumor mill has it that Obama was given his severed dessicated manly member as a  trophy!]

Mon, 07/18/2011 - 23:50 | 1469091 NonAggressionPr...
NonAggressionPrinciple's picture

im pretty sure that is not going to happen.  do you think paid killers will sit back and watch their empire dissapear?  Not a chance.

War, terrorism, anything they can use will be exploited to not only keep the power, perqs, and money they have, but expand it.

It will collapse eventually but not without these guys going out with a bang.

....

Also, why has no one mentioned that the US military budget is really well over a trillion as they hide stuff like nukes in the DEA etc.   google it and im sure you could find more.

Tue, 07/19/2011 - 00:05 | 1469113 Itsalie
Itsalie's picture

Well they can always create another Osama or 9/11, that would allow the republicans to stroke the back of the defence-halluburton-koch complex another 2 decades, I say $1tr defence spending before 2015!

Tue, 07/19/2011 - 00:05 | 1469122 the grateful un...
the grateful unemployed's picture

i expect to see the same cuts to the bone of DOD spending, while adding fat to high tech contractors, and special ops. there is no more military, there is only a band of highly efficient mercenaries. the new ME policy is to control the air and punish selective targets, reducing the ability of any one country, or group within a country, to mount terrorist activities. we can continue this policy indefinitely without boots on the ground. eventually the whole world will be a no fly zone.

Tue, 07/19/2011 - 02:17 | 1469318 headless blogger
headless blogger's picture

They will just create new markets for their weapons or customers in other nations. But they will probably move production too.

I would like to see the military welfare socialist system reduced or disbanded.

I am sick of paying for all these men (and women) that do basically nothing.

 

 

Tue, 07/19/2011 - 10:31 | 1470007 infocyde
infocyde's picture

This article misses a few things.  The defense sector was already been decimated in the 90ies. Since then there has been massive industry consolidation, which is actually part of the problem with why some of the later stuff is costing so much (less competition). US military spending as a percentage of the GDP has actually been declining since Vietnam, and although spiked since 911 it is still on a downward slide. Also the % of the population that is militarized is the least it has been since WWII, even though the US is fighting multiple "McWars" or half wars. We have gone from a 1200 ship Navy down to a 285 ship Navy that will continue to decline. We have gone from 18 active army divisions to around 10+ (organized differently). Our nuclear arsenal has been reduced from 30k+ nukes to about 7k with less than half that number deployed and ready for use at any given time. The amount of combat air wings we have has declined dramatically.  

 

I say all this just to balance some of the info about military spending. The liberal meme of America as being an military state is in some ways true, but at between 3.5 - 5% of GDP, depending on how you calculate things, we are not sparta.  Also their is the miscalculation that by the US reducing military spending somehow global expenditures will be reduced as well, not so, others will spend more to fill the gaps, we already see that with BRIC nations spending more and more on their militaries as US power waines. 

Should the US military budget be cut? Absolutely, but a better way to look at things would be to decide as a people, rather than have the decision hode podged together by a bunch of academic or economic elites, about what the power foot print of the US military should be in the world, and then fund accordingly. 

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