Rep. Paul Ryan’s addition to the Republican presidential ticket could sway Pentagon funding depending on the results of the November election, experts said.
Ryan, the Wisconsin Republican whom presidential candidate Mitt Romney tapped as his running mate over the weekend, has advocated for more-robust defense spending than Democratic President Barack Obama has proposed. Yet Ryan, as the Chairman of the House Budget Committee, also wants to cut entitlement programs popular with voters such as Medicare. Analysts already are mapping out scenarios for rises or drops in military funding depending on whether Romney and Ryan or Obama and Vice President Joe Biden win the presidential race in three months.
“Ryan says he favors robust defense spending, but he won’t get elected by supporting cutbacks to Social Security and Medicare,” defense consultant Loren Thompson said. “If he has to make a choice between bolstering defense and reducing the budget deficit, he will probably favor deficit reduction.”
“That means defense spending is likely to remain soft, at least until the next big threat comes along,” maintained Thompson, chief operating officer at the Lexington Institute in Virginia.
Ryan authored the fiscal year 2013 budget resolution the House passed in March, which calls for setting the FY ’13 defense budget at $554.2 billion, or $8.2 billion more than the $546 billion cap in the Budget Control Act of 2011 that Obama signed last year. The resolution calls for notably more funding in the Pentagon’s base and war budgets than the White House proposed in its budget released in February–with the resolution advocating 1.8 percent more in FY ’13, 1.4 percent more in FY ’14, 1.5 percent more in FY ’15, 2.1 percent more in FY ’16, and 2.7 percent more in FY ’17.
Observers said Ryan’s new position as GOP vice presidential candidate could elevate the status of the non-binding House budget resolution, which Democrats who control the Senate have ignored.
“If Gov. Romney was to win in November and the Republicans were to take a majority in the Senate, it was already a fair assumption that the House Budget Resolution would be the template for changes to spending plans. Now that seems certain,” Byron Callan, director of Capital Alpha Partners LLC in Washington, said in a note to investors. “That plan is bullish for defense sentiment.”
Callan notes that the outcome of the election, potentially, could be seen as a referendum on the House budget resolution and a broader verdict on whether to factor tax and entitlement changes into deficit-reduction deliberations.
“If Republicans are defeated by wider than expected margins in November, then there might be more volatility to defense stocks as the outcome could signal that defense spending might still be under pressure so long as deficit reduction is a national priority,” Callan wrote. He predicts that if the “verdict embodied in a Republican defeat is, ‘don’t touch our benefits,’ then the outcome of the election could be a negative for defense.”
It remains to be seen how Ryan’s stated plans for defense spending will jibe with Romney’s. The former governor of Massachusetts, Romney is slated to become the Republican party’s official nominee for president at the Republican National Convention in Tampa in two weeks.
Romney has optimistically called for boosting defense spending to 4 percent of gross domestic product (GDP), while Ryan’s House budget resolution proposes increasing Pentagon spending, including war costs, to a slightly smaller percentage of GDP. Callan, for one, estimates the resolution would boost such defense funding to 3.5 percent of GDP from FY ’17 to FY ’22.
Beyond budgetary proposals, observers said they don’t have strong military associations with 42-year-old Ryan. He has not served in the military and does not sit on defense-related committees in Congress. He also has not been a major recipient of the defense industry’s largesse.
During Ryan’s 2011-2012 reelection campaign for his House seat, “defense aerospace” is ranked No. 34 on the list of industries giving him campaign contributions, according to the latest Federal Election Commission data parsed by the non-partisan Center for Responsive Politics. Employees of defense-aerospace companies gave Ryan’s campaign committee $13,000, according to the center.