Team Infidel
Forum Spin Doctor
Inside The Pentagon
September 25, 2008
Pg. 1
The $700 billion taxpayer-financed bailout package the Bush administration has proposed for Wall Street will compound pressures on the federal budget and force reductions to military spending, Rep. John Murtha (D-PA), the chairman of the House Appropriations defense subcommittee, predicted in an exclusive interview with Inside the Pentagon.
Murtha, who wields enormous influence over Pentagon spending, said the Bush administration’s plan to try to steady global capital markets -- being rocked by a severe credit crunch -- with a series of taxpayer-financed interventions could squeeze the largest single pot of discretionary spending in the federal budget: the national security budget.
“You can’t spend that kind of money and lower taxes, reduce taxes and still have any money left for defense,” Murtha said yesterday after a press conference on Capitol Hill to discuss the status of the fiscal year 2009 defense appropriations bill.
The $700 billion bailout package the Treasury Department is seeking is roughly equal to the total annual Pentagon budget -- base spending as well as war costs for Iraq and Afghanistan.
The wars in Iraq and Afghanistan are already paid for with borrowed money, Murtha said, leaving the military short of training and equipment money to prepare for contingencies that may arise outside of Iraq and Afghanistan.
Pentagon spokesman Geoff Morrell yesterday offered a different assessment, however, arguing that spending to assist the financial markets will not adversely impact the Defense Department’s budget.
“I mean, this department operates off of five-year budgets,” he told reporters. “I mean, the day-to-day fluctuations in the markets, up and down, are not how we base our spending or how we allocate funds.
“So the current financial conditions are not, as far as I can tell, impacting how business is being conducted within this building,” Morrell said.
“I would note, however, that in good times and in bad, when the market is up and when it is down, the Congress has been consistent in its support throughout history of our nation’s defense. And I don’t see any reason why that would change now,” the Pentagon spokesman said.
Heidi Wood, a research analyst who follows the defense industry at Morgan Stanley, sent a note to investors yesterday with a similar prediction.
“We do not think the Fed’s proposed $700 billion (or more) bailout on Financials is going to result in meaningful reductions in U.S. defense spending, even when considering the chance of a recession and increase in the U.S. federal deficit,” Wood wrote.
-- John Reed and Jason Sherman
September 25, 2008
Pg. 1
The $700 billion taxpayer-financed bailout package the Bush administration has proposed for Wall Street will compound pressures on the federal budget and force reductions to military spending, Rep. John Murtha (D-PA), the chairman of the House Appropriations defense subcommittee, predicted in an exclusive interview with Inside the Pentagon.
Murtha, who wields enormous influence over Pentagon spending, said the Bush administration’s plan to try to steady global capital markets -- being rocked by a severe credit crunch -- with a series of taxpayer-financed interventions could squeeze the largest single pot of discretionary spending in the federal budget: the national security budget.
“You can’t spend that kind of money and lower taxes, reduce taxes and still have any money left for defense,” Murtha said yesterday after a press conference on Capitol Hill to discuss the status of the fiscal year 2009 defense appropriations bill.
The $700 billion bailout package the Treasury Department is seeking is roughly equal to the total annual Pentagon budget -- base spending as well as war costs for Iraq and Afghanistan.
The wars in Iraq and Afghanistan are already paid for with borrowed money, Murtha said, leaving the military short of training and equipment money to prepare for contingencies that may arise outside of Iraq and Afghanistan.
Pentagon spokesman Geoff Morrell yesterday offered a different assessment, however, arguing that spending to assist the financial markets will not adversely impact the Defense Department’s budget.
“I mean, this department operates off of five-year budgets,” he told reporters. “I mean, the day-to-day fluctuations in the markets, up and down, are not how we base our spending or how we allocate funds.
“So the current financial conditions are not, as far as I can tell, impacting how business is being conducted within this building,” Morrell said.
“I would note, however, that in good times and in bad, when the market is up and when it is down, the Congress has been consistent in its support throughout history of our nation’s defense. And I don’t see any reason why that would change now,” the Pentagon spokesman said.
Heidi Wood, a research analyst who follows the defense industry at Morgan Stanley, sent a note to investors yesterday with a similar prediction.
“We do not think the Fed’s proposed $700 billion (or more) bailout on Financials is going to result in meaningful reductions in U.S. defense spending, even when considering the chance of a recession and increase in the U.S. federal deficit,” Wood wrote.
-- John Reed and Jason Sherman