CalPers dipped their return assumptions from something like 8% to 7.5%. Wow, big whoopie!
The public sector and Congress live in fantasy land. A great example shown here.
US military chief warns on spending
By Edward Luce and Daniel Dombey in Washington
Published: September 15 2010 02:12 | Last updated: September 15 2010 02:12
The Pentagon needs to take prompt action to bring its spending under control to stave off the kind of “drastic” defence cuts afflicting Britain and Germany, according to Mike Mullen, the most senior US military official.
Referring to the 20 per cent or more cuts recently announced by America’s key European allies, Admiral Mullen said the Pentagon only had a limited time in which to act before similar changes would be imposed upon the country, given the sharply rising level of US national debt.
“If we do not figure out how to manage ourselves inside this growing challenge [of fiscal austerity] then I do worry that it won’t be too long before those kinds of cuts will be part of our future as well, and that would be very dangerous,” Admiral Mullen said in a View from DC video interview with the Financial Times.
Admiral Mullen, who is also the senior military adviser to President Barack Obama, declined to estimate how long the Pentagon would have before such cuts would hit.
He also reiterated his view that America’s biggest national security challenge was posed by the rising level of public debt, which is projected to reach 90 per cent of gross domestic product by 2018.
“What I am really speaking about is the need for those of us in the Pentagon to be very smart about how we approach this and recognise that we [account for] about 50 per cent of the discretionary spending that’s available in this government,” he said. “I am trying to send a message of getting this right now.”
The US defence budget in the next fiscal year is $567bn, excluding operations in Iraq and Afghanistan.
Admiral Mullen also raised concerns about the culture of spending in Congress, which often authorises higher budgets than the Pentagon has requested. Last year, Bob Gates, the US secretary of defence, asked Congress to eliminate a $2.4bn second engine for the F35 joint strike fighter. Analysts say there is every chance Congress will retain the second engine, which will generate jobs across many states.
Referring to what he called “brass creep”, Admiral Mullen conceded the Pentagon had become too top-heavy. He also cited this year’s Pentagon pay request, in which it has asked for a 1.4 per cent increase. However, Congress looks likely to award military personnel a 1.9 per cent rise.
“I think that is a wonderful example – that additional half a per cent comes to over $5bn over the next four or five years,” he said.
“We have to make the case to Congress [to change the way it authorises defence budgets]. I understand that.”
Admiral Mullen refused to be drawn on how many US troops would remain in Afghanistan after the withdrawal begins next July. But he hinted that it would be significant. He said his counterparts in Pakistan wanted “reassurance that we are going to be there” for far longer yet.
“I think the only way they are really going believe we are going to be there after July next year is to be there after July next year and I believe we will,” he said. “We are not turning the lights out. We are not running for the exits.” |
