By Suzanne Kubota
Senior Internet Editor
FederalNewsRadio.com

Defense contractors, investors and senior DOD leaders gathered last week for the annual Credit Suisse/Aviation Week conference in a harsh economic climate.

But Jim McAleese of McAleese and Associates told Federal News Radio participants found some comfort despite new questions about DOD priorities and how much defense the nation can afford.

Speakers like Under Secretary Dr. Ashton Carter, Joint Chiefs Vice-Chairman Gen. James Cartwright, and Defense Comptroller Robert Hale, said McAleese, brought different perspectives to the conference, but all stressed the importance of working together and sharing the work that comes from doing more with less.

The biggest takeaway from the conference, said McAleese was an acknowledgement that Defense funding, for the first time in a very long time, is no longer driven by the threat.

We are at the end of a cycle. We saw the cycles in Korea, Vietnam, Reagan, and we’re now at the top of the cycle. The grim reality is that we are indeed likely to begin moving down the trough in terms of receding from $700 – $800 Billion requested from the American taxpayer in 2011. And there was a general trend that historically we usually recede about 15 to 20% after a major crisis. The distinction was that the past major crises, whether the Reagan build up, the fall of the (Berlin) Wall, the Vietnam war or Korea, the peace dividend there was driven by the fact that the threat went away. Here it’s obvious we’re engaged in a shooting war. We’ve got issues like North Korea, Iran, places like that..China, and there was a general theme at the conference this year. We are expecting over the next several budget cycles a contraction in overall Defense funding and that instead of being driven by the threat, which is not going away, unfortunately it would be driven by the massive deficit and the need to share the pain of the American people. And I think that was a very responsible approach that was taken by the DoD leadership.

McAleese said that at least from a Defense Department resourcing perspective, there will be some stability as long as we’re in a shooting war. He said he expects that will most likely last through 2012, maybe into 2013.

That was balanced at the conference against reaction to the recommendations from the Fiscal Responsibility and Reform Commission. There is, said McAleese, a “clear understanding that we need to share in the contribution to repair the deficit along with entitlement reform” with a general understanding that world politics are unstable, especially he noted in North Korea.

DoD funding is seen as an insurance policy “and the question that the President will have to decide with Congress and the American people is what’s it worth and how much to put down on the policy today.”

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