Obama and the Bayonets: Who's Right on the Defense Debate?

NEW YORK - MAY 22:  U.S. Navy sailors walk past the USS Iwo Jima docked on the Hudson River during Fleet Week May 22, 2009 in New York City. Fleet Week, which annually brings an array of warships to New York City's harbors on Memorial Day weekend, is being celebrated this year with the smallest flotilla of ships since the event began 22 years ago, as budgets have been hampered by the current economic crisis.  (Photo by Mario Tama/Getty Images)Monday's debate between President Barack Obama and former Gov. Mitt Romney was a bit of a yawn-fest, but it did feature one memorable exchange:

Romney: Our navy is smaller now than at any time since 1917.

Obama: [Romney mentions] the Navy, for example, and how we have fewer ships than we had in 1916. Well, governor, we also have fewer horses and bayonets, because the nature of our military has changed. We have these things called aircraft carriers, where planes land on them. We have ships that go under water, nuclear submarines.

Give the president credit for a quick counterpunch, but do his arguments hold water? Is the U.S. government under President Obama being a good steward of your tax dollars, as it spends them on aircraft carriers, nuclear subs, and other gear for a smaller, high-tech Navy?

Yes and no. The president's right that today's 285-ship Navy bears little resemblance to the 245-ship fleet of nearly a century ago. John Pike, Director of GlobalSecurity.org, points out that "today's aircraft carrier has about 10 times the lethality of an aircraft carrier of [even] 20 years ago." The modern U.S. Navy bears little resemblance to the circa-1916 fleet of wooden and steel dreadnoughts. (Although Argentina's might.)

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But Romney's broader point -- that today's Navy has fewer than half the 592 ships it had at its peak in 1989 -- is correct. And as Gary Roughead, former chief of naval operations -- and a big fan of high-tech military machinery -- recently pointed out, "today's ships are more capable than their 1916 predecessors, but the reality that you can only have one ship in one place at any one time hasn't changed."

The bigger issue, though, is what a small, high-tech -- and expensive! -- military does to America's budget deficit.

The fewer ships (and aircraft and tanks) we build, the fewer companies we need to build them. This has led to consolidation among big defense contractors like Boeing (BA), Lockheed Martin (LMT), and General Dynamics (GD). It's also led to less price competition among these contractors.

The Obama administration has also missed chances to cut costs, for example, by succumbing to lobbying efforts from Goldman Sachs (GS) and its Hawker Beechcraft subsidiary. Earlier this year, Hawker lost a contract to Brazil's Embraer (ERJ) to build us a low-cost, prop-driven warplane for use in Afghanistan. The administration voided that contract, and has yet to choose a new winner -- to the detriment of our troops in the field.

Moral of the story: Even 20th-century technology is better than nothing.

Motley Fool contributor Rich Smith holds no position in any company mentioned. The Motley Fool owns shares of Lockheed Martin and General Dynamics. Motley Fool newsletter services have recommended buying shares of Goldman Sachs and Embraer.

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