I predict it will go up. The reason why I think it will go up is a controversial one. I think that without the right leadership in the White House, the Chinese will think they have an opportunity to apply a knockout blow to the United States. Look not for direct combat, but Chinese-inspired insurgencies and local wars initiated with the desire to draw in the United States to as many regional conflicts as possible. North Korea/South Korea, perhaps Pakistan/India, another conflict in Vietnam, perhaps insurgencies in the Phillipines and Indonesia.

The hope is to get the elephant to fall into the trap, get caught on the punji sticks, and slowly bleed out (mainly financially, though in a literal way as much as reasonably possible without prompting a full-scale direct Sino-American conflict) while that elephant thrashes around, fruitlessly trying to free himself from defeat and national bankruptcy.

And falling into that trap, my friends, would require expenditure of American blood and treasure that these small little adventures have just whetted the Chinese appetite.

Administration already blew it in DEC 10. They should have let the tax cuts expire, or maybe extended cuts for rich for one year, and middle class for two years (because of hangover from the great recession).

I don't think TR has a good appreciation for how things look out here in the heartland, people are not willing to pay for their own schools, roads, universities anymore. The majority of people are not willing to pay taxes for ANYTHING. They are definitely not willing to pay for Imperial America anymore.
"Plus, the rich are gonna have to start paying their fair share -- by which I mean at least 75 percent of what they paid during most of the 20th century, not just on income but, more importantly, on capital gains. " TR

The deficit is so big (and baby boomers retirement looms so large) that just freezing cost growth won't do it anymore. We're going to have to figure out how to get Feds more revenue (easy in Dec 10, improbable now) and we're going to have to take an ax to everything defense included.

Most serving today don’t know what austerity is. . .and I’m happy for them, because during time of war, they should get what is needed.

However, it is sure bet that although money will be available for big ticket items such as tonnage for the Navy (as opposed to specific needed hull designs), and of course aircraft to keep congressional districts humming, etc. The real hurt will be felt, just as happened in the 1970's after our departure from Viet-Nam, at the small and mid unit level where equipment, training allocation dollars, and supplies in general will become scarce. . .I guarantold you so.

Which isn't the end of the world. I expect the Marine Corps to return to the days of buying your own office supplies and getting your ass chewed for wasting paper by 2016, in addition to the planned force reductions that correspond to the withdrawal from Afghanistan.

There's a lot of fat to be cut from the other services without negatively impacting their capabilities. Gradual reductions to the Army's personnel appropriation, for example, will make retention more competitive, force them to reevaluate their tables of organization, etc. There's a substantial overlap in the sort of operations done by USMC and the Army, but the USMC consistently staffs leadership positions with lower-ranking personnel and overall has a much younger force, which translates into substantial savings over time. This tendency has forced the Marines to adopt a more effective PME/leadership training policy, which has been discussed at length in previous comments, and which seems to have been generally agreed upon as producing a higher quality leadership product than Army institutions.

Similarly, significant reductions in the Operations and Maintenance appropriation should not limit the effectiveness of the Army as an organization. As one example, my peers in the military police community attend a joint Army/USMC MOS-producing school. Their capstone exercise was apparently a platoon/platoon reinforced convoy that got ambushed, dismounted, and then performed a platoon assault with a support by fire element. The platoon commander was the top graduate of the school, and "led" the exercise from a Blackhawk. This is both a waste of money and tactically unsound (coincidentally, the exercise was a debacle and ended in significant blue on blue fire).

It seems that there's a tendency in the Army to overvalue technology as a force on the battlefield. If there's any major lesson that should have been learned from the major conflicts from Vietnam on, it's that technological superiority can be overcome by willpower and excellence at the tactical, operational, and strategic levels. Reductions to funding in O&M will necessarily correspond to decrease reliance on technology and force additional emphasis on fundamental warfighting skills, if only because the Army will no longer be able to afford to bridge fundamental shortcomings with technology.

I would argue that a 25% reduction to the Army's personnel and O&M appropriations, if implemented incrementally to allow the organization time to react, will actually lead to a more effective fighting force. Obviously there's not the same level of equivalency between infantry-centric organizations and the Navy or Airforce, but it's safe to say that because a culture of thrift hasn't been institutionalized through perpetual underfunding, there is doubtless a fair amount of waste built into their current organization. Incremental reductions in funding will excise this waste even if larger cuts aren't made based on a reassessment of the opportunity costs of our current global force posture.

Regardless, the political will to cut defense spending exists. The 99% of the American public who is not currently serving in the armed forces only have a cursory interest in the goings on of the military and almost no functional understanding of the armed forces, and I'd argue that even the majority of foreign policy talking heads and politicians aren't much better in terms of understanding the nuts and bolts of military operations. The population as a whole has no vested interest in defense spending, but they do have a vested interest in the domestic economy and job market. Ultimately defense spending will be sacrificed, as well as a low tax rate for wealthy individuals and corporate interests, simply because no matter how effective their lobbyists may be, corporate interests conflict with popular interests.

As far as China bleeding us through a series of small wars, I very much doubt it, given the fact that their export driven economic success is entirely dependent on the US' role as the largest consumer in the global economy, the fact that there is no other major economy capable of taking up the consumptive slack, and the fact that it will take the Chinese several years to retool their economy so that it better represents a sustainable balance between domestic consumption and export. The current economic policy, in conjunction with the policies of other East Asian economies, are sufficient wihtout further action to facilitate a long-term decline in American military and economic hegemony. It's a waste of China's time and effort to engage us in small conflicts when that time and effort could be better used in the improvement of the Chinese state as a whole.

Lester

The Marines really are a bargain, but they save money by pushing off costs on Navy, Army etc.... in ways the other services can't emulate. If the Expeditionary Marines start a war, the Army has to show up on day 15 of the contingency and start flipping burgers and pumping gas. Do Marines get any savings from having Navy Corpsmen? Do Marines want to start paying for Gator Navy? Are you splitting out costs of USMC aircraft or are they in Navy budget? (I really don't know used to be in Navy budget) Do you know where USMC got their M1 Tanks? SECDEF told Army to give them free tanks. That stuff is OK, but it does not save any $$ just pushes costs off on another service.

I am no whiz on this stuff, most of it is logistics. Here are some executive agent missions.
Veterinary Service Support
Single Integrated Medical Logistics Management (SIMLM)
Controlled Disposal of Waste, Explosives, and Munitions
Mortuary Affairs
Military Troop Construction Support to OCONUS USAF
Executive Agency for DoD Enemy Prisoner of War Detainee Program
Common-User Land Transportation in Overseas Areas
Intermodal Container Management
Overseas Ocean Terminal Operations
Management of Military Postal Services
Executive Agency for Land-Based Water Resources
Executive Agency for the DoD Customs Inspection Program
Management of Conventional Ammunition
Executive Agency for Processing Claims (in Selected Countries)
Executive Agency for Settlement of Tort Claims by DoD Employees
Locomotive Management
Single Manager for Military Traffic Management
Food Safety Service
Overland Petroleum Support Management
Inland Logistics Support to US Marine Corps
Executive Agency for Automatic Information Technology (AIT)

My prediction, the amount of $s that we spend will continue to rise, however the percentage of the overall budget will go down.

I don't see the looming debt crisis, fear over lost American prestige, Baby boomer retirement concerns, and a rising China= prudent, rational decisions. If anything, the desire to keep the system going as long as possible and deny reality may make our leaders continue on with their flawed policies. Domestically you can see this with the notion of artificially inflating the price of houses, the various bailouts, etc.

The more astute politicians and economic leaders may be convinced that a continued denial of current American realities, coupled with a series of distractions is less dangerous than admitting how bad things really are. The problem is they can keep the game going only so long.

Don't be fooled by current popular gloom over Afghanistan or dissatisfaction with Libya, Americans and, more importantly our leaders, need the US to be world's hegemon no matter what the cost. If only this were about economics and greed. It's worse, it's psychological and cultural and pays ever decreasing dividends to the majority of citizens.

Gates, in his recent comments, couldn't even countenance serving in a government when the US is no longer willing to spend whatever it takes to maintain its hegemony.

If someone makes $1 million dollars and the are taxed 10%, they are paying substantially more in taxes than someone that makes $1 thousand dollars and is taxed 10% (granted, I know people in that bracket wouldn't pay taxes).

So if 'rich' people already higher tax percentages, then what is fair? Fair is not a good way to approach this problem.

Libertarians will inherit the Earth! :-)