Panetta calls for tax increases, not Defense cuts

Manuel Balce Ceneta/AP

Defense Secretary Leon Panetta on Tuesday stepped back into the bitter debate over the nation’s debt, arguing that lawmakers should close the budget deficit through tax increases and changes to popular programs like Social Security rather than through additional cuts in Pentagon spending.

“No budget can be balanced on the back of discretionary spending alone,” he told the Senate Budget Committee. “I strongly believe that all areas of the federal budget must be put on the table – not just discretionary, but mandatory spending and revenues.”

“Revenue” in that context is code for tax increases, while “mandatory spending” is code for programs like Medicare. 

Panetta has made that argument before. Last August, during his first press conference, the Defense chief said trimming the debt would mean also taking a “look at revenues as part of that answer.” Last fall, he explicitly told a House panel to consider “increases in revenue” and entitlement cuts before taking another whack at the Pentagon budget.

But the new comments come in the midst of the heated Republican presidential campaign, where front-runners like Mitt Romney and Rick Santorum have emphatically ruled out any tax increases – even on the very wealthy – while also promising to somehow shield the defense budget from further reductions. 

The candidates have promised to save billions of dollars through far-reaching Medicare and Social Security cuts, but many independent budget analysts have said the candidates’ plans for additional tax cuts would wipe away any such savings and instead add to the national debt.

Panetta’s comments about the need for tax increases came as he reiterated his long-standing warnings that so-called sequestration – the roughly $600 billion in automatic defense cuts which would take effect if no debt-cutting deal is reached by the end of the year – would hollow out the nation’s armed forces and directly threaten U.S. national defense. 

In his typically colorful language, Panetta derided the sequester mechanism as a “meat axe” which would impose dangerous across-the-board cuts rather than the targeted plans the administration has also unveiled for shaving $487 billion out of the Pentagon’s budget over the next 10 years.

Shielding the Pentagon from those mandatory cuts, he argued, would require lawmakers and the White House to gore cows sacred to both parties. Panetta said Congress and the Obama administration would need to look at tax increases and cuts to popular entitlement programs like Social Security. 

The panel expressed near-uniform opposition to sequestration, but Panetta’s calls for tax increases were largely ignored by lawmakers from both parties. Instead, the lawmakers expressed shock at several specific components of the Pentagon’s gargantuan budget. When Pentagon comptroller Robert Hale said it costs $850,000 to keep an individual service member in Afghanistan for a year, committee chairman Kent Conrad of North Dakota said the figure “takes my breath away.”  

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