The Unites States economy has been a subject of debate for as long as American politics have existed, however it has never been as closely scrutinized as it is in these times. As the global economy becomes more boundless, actions taken to adjust our economy are felt as ripple effects world-wide, or even as a tidal wave. With a current and future prediction of austere budget environments in the U.S. for the foreseeable future, we must examine the global impact of our internal budget decisions. Undeniably, even with the most careful considerations given, there will be unintended consequences that were not thoughtfully considered.
The Defense Budget
The military budget of the United States is always a topic of discussion when a significant economy debate is evolving. This is because of the substantial portion of our national budget that is devoted to sustaining and building our present and future national defense structure. The military budget structure is extremely complex. It is not only broken down by service branches, it has hundreds of organizational subcategories within the service branch divisions. Funding is allocated by functional areas such as personnel pay and benefits, operation and force sustainment costs, research and development, weapons system procurements, shipbuilding, developmental and operational testing, ordinance, and military equipment disposal. The debate of increasing or decreasing our military budget must be eventually carried down to this functional areas to decide what programs will see either an increase or decrease (Axe, 2011). Inevitably, those charged with the management of the myriad of subprograms associated with the functional areas in questions, will have specific arguments to defend the need for maintaining funding at current levels, or more often, increasing the funding allocated.
Congress and the Budget
Consider for example that Congressional leaders decide that a major aircraft procurement
that is planned to purchase 800 discrete units over a four year period will sustain a 20% reduction. That is, 160 units that were planned and contracted for with the aircraft manufacturer will no longer receive the contraction option exercised that the government originally intended when the original procurement terms were negotiated. Now assume that each aircraft is produced at a cost to the government of $25 million. Congressional intention with this reduction is procurement is to reduce the treasury outlay by 20%, in this case $4 billion. What is the impact of this decision to the nation and does that also result in a global impact? I argue that the impacts are significant, not always initially apparent, and certainly result in a significant global impact.
The aircraft manufacturer in question has built a future business plan based on designing, assembly and testing 800 units over 48 months. The company has hired the necessary personnel to ramp up production to the required level and has...