President-Elect Barack Obama's Plans for Defense
Monday, December 01, 2008PAUL KANGAS: President-Elect Barack Obama announced his national security team today. He tapped former rival Senator Hillary Clinton for secretary of State and General James Jones to be national security adviser. Obama also wants current Defense Secretary Robert Gates to stay on with the new administration. As Stephanie Dhue reports, the announcements send a clear message about Obama's defense spending priorities.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: President-Elect Barack Obama sent a message of continuity by keeping Defense Secretary Robert Gates on his national security team. But he also sent a message that the game plan will be changing.
PRESIDENT-ELECT BARACK OBAMA: To succeed, we must pursue a new strategy that skillfully uses, balances and integrates all elements of American power: our military and diplomacy.
DHUE: Analysts say a shift toward diplomacy foreshadows a shift in spending priorities. Defense analyst Brett Lambert says that won't happen right away.
BRETT LAMBERT, MANAGING DIRECTOR, CIVITAS GROUP: I think over the next 12 months, you'll see defense spending approached with a scalpel. He'll be very careful in the first 12 months not to upset the apple cart and not to have the moniker being weak on defense.
DHUE: Still, analysts expect significant cuts to come in the 2010 budget. With wars in Iraq and Afghanistan, the U.S. is spending about $700 billion on defense annually. Lambert expects $200 billion in cuts, about half from a troop drawdown in Iraq. The rest would come from cuts in weapons systems programs, most of which are over budget and behind schedule.
LAMBERT: This industry has grown fat and happy, quite frankly, over the last eight years of a very permissive environment and contractor-driven procurements, so it is going to be a battle, can the Pentagon take back the procurement of major programs or are they going to continue to allow the contractors to run them?
DHUE: Lockheed Martin's F-22 fighter jet, Northrop Grumman's next generation destroyer, and Boeing and SAIC's future combat system for the army are some of the programs at risk. That has the defense industry gearing up for a budget battle. The Aerospace Industry Association is launching a $1.5 million advertising campaign emphasizing the two million manufacturing jobs and $97 billion in exports the industry provides. The trade group's Marion Blakey says the ad is aimed at policy makers.
MARION BLAKEY, PRES. & CEO, AEROSPACE INDUSTRIES ASSOCIATION OF AMERICA: We simply want to be clear that aerospace and defense can't be a bill payer, that we in fact are providing the engine behind our economy in a huge way, in exports and our ability to have jobs all over the country that are really vital to this economy and that needs to be a message that's heard loud and clear.
DHUE: Obama seems to have heard that message. Today he promised to continue to make the investments necessary to strengthen the military and increase our ground troops. But analysts say he can do that and still cut defense spending. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
