Democrats won't cave on Obamacare -- but on everything else...?

I am getting weary of progressives' reflexive head-shaking over Republican "craziness" and mainstream reporters' warnings that the GOP may commit electoral suicide by ceding policy to their most extreme members.

Perhaps they will.  A party does not have a single will. There are doubtless Tea Party diehards that would shut down the government, push the nation into default, and never vote for any funding bill that includes the discretionary funding for Obamacare.

But they will not ultimately dictate the party's actions. What I strongly suspect will happen is that the Senate GOP will run down the clock, filibustering the so-called "clean" continuing resolution (with the Obamacare defund stripped out) until the last minute, then win a series of concessions making the horrendous House spending provisions worse -- shifting more funding under overall sequester caps from domestic to defense -- in exchange for allowing a vote [correction 9/24: Democrats need only a simple majority to amend the unchanged House CR -- thus, it's unlikely to get worse. But current reporting is confident that Senate Democrats will not amend the CR's spending provisions.] Then Senate Democrats will pat themselves on the back for "standing firm" against defunding Obamacare -- while locking in the sequester as a new funding baseline and shielding defense spending from much of its bite. Comforting reports that Red State Senate Democrats won't vote to defund Obamacare serve only to convince me that they'll give away everything else in the store.

Krugman, The Wire beat you to it....

Paul Krugman, desperate for a form of stimulus that Republicans can get behind, starts thinking like a disaffected detective in that epic of police and general government dysfunction, The Wire:

John Maynard Keynes...noted a curious “preference for wholly ‘wasteful’ forms of loan expenditure rather than for partly wasteful forms, which, because they are not wholly wasteful, tend to be judged on strict ‘business’ principles.” Indeed. Spend money on some useful goal, like the promotion of new energy sources, and people start screaming, “Solyndra! Waste!” Spend money on a weapons system we don’t need, and those voices are silent, because nobody expects F-22s to be a good business proposition.

To deal with this preference, Keynes whimsically suggested burying bottles full of cash in disused mines and letting the private sector dig them back up. In the same vein, I recently suggested that a fake threat of alien invasion, requiring vast anti-alien spending, might be just the thing to get the economy moving again.

The empire pares back

In occasional posts about Robert Gates' speeches, I've noted that he takes a risk management approach to military spending.  In Pentagon debates regarding how to much focus on building conventional military capabilities to counter strong rival nation-states (i.e., China in 10-20 years) versus asymmetric conflict in failed and failing states, he has worked to weight the scales in favor of the latter, arguing that "the most likely catastrophic threats to the U.S. homeland -- for example, that of a U.S. city being poisoned or reduced to rubble by a terrorist attack -- are more likely to emanate from failing states than from aggressor states." He has served as a kind of antidote to Rumsfeld's "you go to war with the army you have"; his mantra might be have the army you're going to war with. And war, for the foreseeable future, is asymmetric conflict in failed/failing states.

Last week, in his final testimony before Congress, Gates adjusted this approach to deal with the new reality of long-term deficit reduction pressure -- in particular, Obama's proposal to save $400 billion from currently projected military spending over twelve years.  Since personnel costs account for the bulk of military spending, cuts of that magnitude mean reductions in troop levels, which in turn means reduced ability to fight Iraq/Afghanistan-type wars -- which from a certain (probably wrong) perspective means reduced focus on the risks Gates has defined as primary.

The new budgetary pressure requires a different kind of triage from the counterinsurgency-versus-big-ticket-weapons emphasis Gates has pushed for in recent years. The budget-cutting imperative means doing less (military) counterinsurgency -- which means, according to Gates, accepting additional risk. That means that the U.S. must be prepared to do less militarily -- and focus on doing it well:

Gates the knife?

In today's Financial Times, Clive Crook argues bluntly that Obama's call for "shared sacrifice" means -- must mean -- new taxes. He proposes a 4-point fiscal reform program for the U.S:

Here is what needs to be done, starting in 2011, but to be announced and enacted as soon as possible. First, raise the retirement age. Second, phase out income tax relief on new mortgage loans. Third, introduce a carbon tax. Fourth, introduce a national value added tax, tied to healthcare reform.

Raising the retirement age and and taxing energy consumption are no-brainers. Reducing state support of homeownership violates U.S. taboos but makes sense at least on the margins, e.g. for second homes or for mortgages over a certain amount. A VAT to fund healthcare reform would be, to borrow a pet Obama phrase, a steep hill to climb in political terms, but makes sound fiscal sense.

Crook did not, however, address a spending target that looms as large as social security: defense. Obama stressed throughout the campaign that drawing down the U.S. occupation of Iraq would save an unspecified portion of a $120 billion yearly tab. Even if the withdrawal goes more or less as planned, some of that money will support tens of thousands of remaining troops and some will go to the Afghanistan/Pakistan morass -- where Obama doubtless aims to spend some of his international political capital on obtaining more help from allies.

Most fundamentally, however, Obama will likely take aim at the Pentagon's long-term procurement programs. And in this struggle he will have a no less formidable and savvy ally than Defense Secretary Robert Gates, who has already been working to reign in the Pentagon's deep-rooted penchant to overinvest in a vast array of high-tech hardware designed to win a prospective World War III.

In a series of speeches and writings this year, Gates has outlined the need to shift spending toward counterinsurgency capability -- pilotless drones, well-armored vehicles, more soldiers. These things are not cheap, but they're a lot cheaper than massive procurements of next-gen hardware designed to fight a militarily competitive nation-state. Here's Gates speaking to the Heritage Foundation, on May 13, 2008:

In a world of finite knowledge and limited resources, where we have to make choices and set priorities, it makes sense to lean toward the most likely and lethal scenarios for our military. And it is hard to conceive of any country confronting the United States directly in conventional terms – ship to ship, fighter to fighter, tank to tank – for some time to come.

Two days later, speaking to military contractors, Gates highlighted the Herculean task of turning Pentagon priorities:

A common mantra at Defense is that the rest of the government isn't at war. Well, a lesson I learned fairly early on was that important elements of the Defense Department weren't at war. Preoccupied with future capabilities and procurement programs, wedded to lumbering peacetime process and procedures, stuck in bureaucratic low-gear. The needs of those in combat too often were not addressed urgently or creatively.

More recently, outlining the National Defense Strategy in the current Foreign Affairs, he cast Pentagon budgeting as a problem of risk management:

The most likely catastrophic threats to the U.S. homeland -- for example, that of a U.S. city being poisoned or reduced to rubble by a terrorist attack -- are more likely to emanate from failing states than from aggressor states...It is true that the United States would be hard-pressed to fight a major conventional ground war elsewhere on short notice, but as I have asked before, where on earth would we do that? U.S. air and sea forces have ample untapped striking power should the need arise to deter or punish aggression -- whether on the Korean Peninsula, in the Persian Gulf, or across the Taiwan Strait. So although current strategy knowingly assumes some additional risk in this area, that risk is a prudent and manageable one.

For forty years, it's been politically toxic for a Democrat to make cuts in military spending. Obama doubtless recognizes the need. And Gates gives him essential cover as well as unmatched know-how.

I should add that I don't know whether Gates sees his calls for "balance," risk management and triage as a means to cut defense spending or simply to control its growth. Note, however, that while lamenting 1990s reductions in "national security" capabilities in the Foreign Affairs article, Gates focused not on military spending per se but on the instruments of soft power:

In many ways, the country's national security capabilities are still coping with the consequences of the 1990s, when, with the complicity of both ends of Pennsylvania Avenue, key instruments of U.S. power abroad were reduced or allowed to wither on the bureaucratic vine. The State Department froze the hiring of new Foreign Service officers. The U.S. Agency for International Development dropped from a high of having 15,000 permanent staff members during the Vietnam War to having less than 3,000 today. And then there was the U.S. Information Agency, whose directors once included the likes of Edward R. Murrow. It was split into pieces and folded into a corner of the State Department. Since 9/11, and through the efforts first of Secretary of State Colin Powell and now of Secretary of State Condoleezza Rice, the State Department has made a comeback. Foreign Service officers are being hired again, his and foreign affairs spending has about doubled since President Bush took office.

And while Gates' list of spending priorities is not short, his sense of finite resources is acute:

When it comes to procurement, for the better part of five decades, the trend has gone toward lower numbers as technology gains have made each system more capable. In recent years, these platforms have grown ever more baroque, have become ever more costly, are taking longer to build, and are being fielded in ever-dwindling quantities. Given that resources are not unlimited, the dynamic of exchanging numbers for capability is perhaps reaching a point of diminishing returns. A given ship or aircraft, no matter how capable or well equipped, can be in only one place at one time.

In any case, on the broadest strategic question - whether and how much to cut the Pentagon budget -- Gates is not "the decider." Obama is.

Related posts:
Back from the shadows: Can Gates steer the surge?
Goo-goo under Gates
Gates repudiates Rumsfeld's "army you have" doctrine
Gates: Have the army you'll go to war with