That's not how the legislative process works. Besides, if Obama is the "Dove" that you seem to suggest and he will use the DoD Budget as a place to help curtail the Federal Deficit, I would suggest that the cuts ( or the postponements ) that you see to advanced weapons systems ( such as the Future Combat System ) will barely make a "dent" in the Administration's $1.3 trillion deficit for FY-2010. At the end of the day, I think you underestimate how powerful Congress is in the legislative process.
I don't think it is so much a matter of having a dovish stance or wanting military cuts, as it will be necessity brought on by eventual pressure from outsized inflation (2011-2012) coupled with a desire to move money from defense to infrastructure. I don't expect defense contractors to be hurt that much, but they may end up making something other than weapons. There is a new wind blowing, and it is not in a direction favorable to the DOD.
I don't see that happening. The facts of the current environment at the Pentagon ( and future threats and the WoT ) just doesn't support what you are suggesting. The only new "wind" blowing is regarding the process in which DoD platforms are procured. The fact of the matter is that the difficulties with the budget become worse if one is concerned about planning for future threats, which could come from many directions. This situation has led to a capabilities-based, rather than threat-based defense posture, which Secretary Gates has supported. This is also why there is little appetite in Congress for cutting force structure. It is not just about jobs, but about risk. You do realize that the leadership in the Pentagon is the same leadership that developed a draft baseline budget of $581 billion last fall, which was increased over a prior budget estimate of $523 billion, right? If Obama was going to dramatically change the way that DoD does business, not too mention the growth of the DoD budget, then why does the last Administration's leadership pretty much remain intact today? As for the search to cut "waste" from the Defense Budget . . . . that has been going on for 20 years, with only modest success. Again, I don't believe that there will be any significant impact during the next 2-3 years in how weapons systems are procured and developed. Defense stocks are a buy.
Here are some bullet points to Gates' announcement yesterday: http://defensenewsstand.com/insider.asp?issue=04022009
LMT 73.90, +0.62, +0.9%) had the best outcome from [Defense Secretary Robert] Gates' budget decisions, there was also strong support for Northrop Grumman's and General Dynamics' shipbuilding businesses," said Douglas Harned, an analyst with Bernstein Research. "Notably, there were no indications of plans to bring budgets down significantly in 2011."
Gates Plan Raises Questions for Military and Contractors http://www.reuters.com/article/marketsNews/idINN0745259220090407?rpc=44 "JP Morgan analyst Joseph Nadol said Gates' recommendations were "far from a done deal," noting that several past defense secretaries, including Dick Cheney and Donald Rumsfeld, had seen their plans to cut weapons programs defeated by Congress." Interesting read.
As someone who obviously knows a bit about the industry, when do you think the market will start to discount any 2011 defense budget cuts?