During the April 13 edition of Fox Business Network's Cavuto, guest host Charles Payne used a discussion of Capt. Richard Phillips' rescue from Somali pirates as an opportunity to falsely claim that President Obama has proposed cutting the defense budget. Payne asked the Heritage Foundation's James Carafano: "[W]ill this piracy situation make him rethink to propose cuts to our military budget?" Payne added: “You've got North Korea launching a missile, we've got increased violence in Iraq here recently, and now the Somali pirates situation. Good time to be cutting the budget?” During the segment, Fox Business ran on-screen text reading: “Pirate Problem: Will President Obama Rethink Military Cuts?” In fact, the Obama administration has proposed increasing defense spending by billions of dollars over the amount enacted in fiscal year 2009. As CNN.com noted on April 6: “The proposed overall fiscal year 2010 Defense Department budget is almost $534 billion, or nearly $664 billion when including the costs of the conflicts in Iraq and Afghanistan. The current Pentagon budget totals slightly over $513 billion, or almost $655 billion including the Iraq and Afghanistan conflicts.”

According to the White House, the administration's proposed budget for fiscal year 2010 requests $533.7 billion for the Department of Defense, “an increase of four percent from the 2009 enacted level of $513.3 billion,” plus $130 billion for military operations in Iraq and Afghanistan in 2010.

Payne further said of the purported defense budget cuts, "[T]his is sort of mind-boggling in a sense that we know how dangerous it is out there." He later asked Carafano: “James, do you also think the president is downplaying future threats to our country?” Carafano replied: “Absolutely.” During the segment, Carafano said of Obama: “He said, look, we're not cutting defense, we're just going to be more efficient and effective. And that just simply wasn't true. I mean, what they're basically doing is cutting defense. You know, they brought out the old canard, you know, well, we're going to get rid of all the fraud, waste, and abuse. Well, basically what they're doing is cutting money.”

From the April 13 edition of Fox Business Network's Cavuto:

PAYNE: President Obama hailing the successful rescue of Captain Richard Phillips from Somali pirates.

OBAMA [video clip]: And I am very proud of the efforts of the U.S. military, and many other departments and agencies that worked tirelessly to resolve this situation. I share our nation's admiration for Captain Phillips' courage and leadership and selfless concern for his crew. And I want to be very clear that we are resolved to halt the rise of privacy [sic] in that region.

PAYNE: Those pirates vowing today to take quick revenge on American ships off the coast of Somalia. This arguably the new commander in chief's first security test and an unexpected one -- so will this piracy situation make him rethink to propose cuts to our military budget?

James Carafano is with the Heritage Foundation; he says it doesn't make sense for the president to pause, or he shouldn't pause. James, welcome to the show.

What do you make of this? You've got North Korea launching a missile, we've got increased violence in Iraq here recently, and now the Somali pirates situation. Good time to be cutting the budget?

CARAFANO: No, it's not, and when you look at the logic behind the budget cuts, it makes even less sense because basically what the Bush administration did is they funded defense in two ways: They had a defense budget to pay for the Pentagon, buy new equipment, pay the troops, and then they had a supplemental funding to pay for the war.

Now what Obama wants to do is get rid of the supplemental funding because Iraq and Afghanistan are not popular with his party, so stick that all in the baseline budget. Plus, he wants to keep defense spending down because he's ballooning spending on everything else. And so, essentially everything else in the Pentagon becomes a bill payer for Iraq and Afghanistan.

PAYNE: So -- but this is sort of mind-boggling in a sense that we know how dangerous it is out there. The president just coming back from the G-20 and not getting really any help for Afghanistan. Everybody is bracing for the worst this summer in Afghanistan for our American troops. How does the president get around this?

In fact, I remember the day that some of the budget cuts were announced, some of the military stocks actually went higher. How does that work?

CARAFANO: Well, I mean, essentially what he did is he created a fiction. He said, look, we're not cutting defense, we're just going to be more efficient and effective. And that just simply wasn't true. I mean, what they're basically doing is cutting defense.

You know, they brought out the old canard, you know, well, we're going to get rid of all the fraud, waste, and abuse. Well, basically what they're doing is cutting money. Now, how that get rid of fraud, waste, and abuse, I don't understand. And how getting rid of fraud, waste, and abuse is different in defense and other agencies, I don't get either.

And then, essentially what they're doing is they're doing a “wish away” strategy. They're cutting money for all the things to deal with the threats in the future, whether it's protecting assets in space or dealing with increasing ballistic missile threats. So, they're paying -- you know, it's like paying your credit card. You know, all I care about is paying off the interest every month. I don't really care about the long-term problem that's behind that. That's what they're doing.

PAYNE: James, do you also think the president is downplaying future threats to our country?

CARAFANO: Absolutely. And you can see that most clearly in missile defense. You know, one of the -- the one complaint about missile defense is well, you don't test enough and you can't deal with emerging threats -- for example, if enemies put decoys on their missiles. You can't deal with larger missile forces like Russia and China.

But what are they cutting? They're cutting the research and the -- on all the future capabilities -- the abilities to deal with those things. They're cutting the money to do the more advanced testing. So it really is -- it really is kind of this big lie.

PAYNE: OK, out of this lie, what is your greatest fear of what could happen considering if we do go through with these budget cuts?

CARAFANO: Here's what's going to happen. President Obama is committed to Afghanistan and Iraq both. As those wars get worse -- he has no support in the Democratic Party for supporting that; he's not going to get more funding for the defense budget, yet he will personally be committed to those operations 'cause, essentially, they'll be his wars.

And he'll do what Johnson did, which is he'll increasingly have to send more forces and more capability. He'll raid the other parts of the defense budget to pay for that, because he won't be able to get the money from Congress.

And what you'll basically do is hollow out the military. You might have well-paid troops, you might have more troops, but they're not going to have the equipment they'll need, they're not going to have adequate readiness, and they're certainly not going to have new equipment.

And so, what's going to happen is four or five years from now, we'll come up against another unexpected threat, whether it's another Iraq or an Afghanistan or a confrontation with China over the Taiwan straits, and we will fall flat on our face, because what's underneath the military is nothing but a paper tiger, because we'll have eaten all that to pay to keep it up and going on in Iraq and Afghanistan.

PAYNE: All right, James, a frightening thought but very realistic. Please keep the message out there. Appreciate your time.