Tag: defense spending

Wednesday Links

Martin Feldstein on the Defense Budget

Martin Feldstein, a distinguished economist and a former colleague, made a surprising case for maintaining a large U.S. defense budget, despite a huge federal budget deficit, in the annual Irving Kristol lecture Tuesday night at the American Enterprise Institute.

On one point, he was clearly right: we can afford it. “There is no danger of bankrupting ourselves by so-called ‘imperial overreach’ when we spend less than 5 percent of GDP on defense” (in fact, 5.6 percent of GDP in 2010).

But he failed to make a convincing case that we should spend this much for defense, especially given the dire outlook for federal deficits and the debt. In 2010, U.S. real (inflation-corrected) spending for national security was over twice the annual spending during the Ford and Carter administrations and over 40 percent of total current world defense spending. What conditions, what national objectives, might justify continued U.S. defense spending of this or a higher magnitude?

Feldstein first plays the China card, arguing that “The United States should maintain a military capability such that no future generation of Chinese leaders will consider a military challenge to the United States or consider using military force to intimidate the United States or our allies,” maybe forgetting that a much weaker China successfully challenged us in Korea in the early 1950s. He next makes the case for the importance of a global military presence, arguing that “We have to make it clear by our budgets and by our actions that we are the global force now and will continue to be that in the future.” And finally, “we have to ask ourselves whether we have a moral obligation to defend our allies. …. There are those who say the United States should not be the global policeman. But if not us, who? As the only democratic superpower with the ability to defend and punish, do we not have a moral obligation to be willing to use that power?” All of this assumes without argument or evidence that it is important for the world to have a global policeman, that we can play this role effectively, and that it is a moral obligation for the United States to serve in this role.

The U.S. military had a central role in the most important strategic development since World War II — prevailing in the Cold War against the (former) Soviet Union. But it is critical to recognize that our military has not been very effective as a global policeman or nation builder. The Korean War ended in a draw, leaving a despotic communist government, now with nuclear weapons, in control of North Korea. After 20 years of a U.S. military presence, we abandoned Vietnam to a communist government that now controls most of southeast Asia. The U.S.-sponsored invasion of the Bay of Pigs was defeated, leaving a communist government in control of a large island 90 miles from Florida. U. S. forces have now been in Afghanistan for nearly 10 years without securing it from lightly armed local forces without significant external support. And U.S. forces have now been in Iraq for over eight years without securing it from frequent terrorist attacks.

I wonder what evidence Feldstein or anyone else would offer to support a view that the United States has a comparative advantage as the global policeman. Most of our allies can afford higher defense spending if our support is reduced. The total GDP of the European Union is higher than the U.S. GDP. The GDP of South Korea is many times that of North Korea. There is no obvious calamity that would result if the U.S. contribution to the collective defense with our allies were reduced.

Yes, we can afford a large defense budget, and national security is one of the few federal programs for which there is clear constitutional authority. But like the budgets for most other federal programs, the defense budget is too large. So a substantial reduction of the defense budget should be on the table in any serious effort to avoid a fiscal collapse, a threat that is more serious and more urgent than any that might be effectively countered by trying to maintain the role of a global policeman.

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No, Paul Ryan Really Doesn’t Cut Pentagon Spending

Last week I expressed my disappointment with Paul Ryan’s budget plan, specifically about his unwillingness to cut military spending. Some people think that he does cut spending through his acceptance of Secretary Gates’s $78 in “cuts.” (see, for example, Sen. John Sununu; Sen. Joseph Lieberman, AEI’s Gary Schmitt and Tom Donnelly; and the Heritage Foundation’s Baker Spring).

So either I am wrong, or they are. Let me try to set the record straight.

First, all of Ryan’s other savings – savings which I support – were projected either against the Obama administration’s FY 2012 budget or against the current budget baseline. For example, according to Ryan’s own “Key Facts” his plan “Cuts $6.2 trillion in government spending over the next decade compared to the President’s budget, and $5.8 trillion relative to the current-policy baseline.” With respect to military spending, however, Ryan’s plan basically follows the Obama/Gates budget, proposing to spend a staggering $670.9 billion in FY 2012. The Obama administration’s DoD budget request for FY 2012 – including the Pentagon’s base budget plus overseas contingency operations (OCO) – totals $670.9 billion as well.  Of course, that total leaves out national defense spending tucked away in other departments (including nuclear weapons spending in the Department of Energy). Total national defense spending in FY 2012 will top $700 billion. I stand by my earlier assertion that the Pentagon’s budget escapes from Ryan’s budget axe “essentially unscathed.”

Ryan and others claim that military spending has already been cut, hence the decision to embrace this portion of the president’s budget. Sen. Lieberman explained to Bloomberg news, “To a certain extent, Secretary Gates has enabled us at least temporarily to take defense off the table because he has initiated his own round of defense cuts.”

“To a certain extent” is doing a lot of work in that statement. In fact, Gates and Obama do not cut military spending.

First, they don’t claim to do so. These supposed cuts are only “cuts” in Washington-speak. The Pentagon’s base budget under both the Ryan and Obama plans will increase 1 percent in real, inflation-adjusted terms. See the table below, recreated by my colleague Charles Zakaib from the official DoD budget request.

Second, Ryan claims that Gates’s “exhaustive review of the Pentagon’s budget” identified $178 billion in savings. It does nothing of the sort. By Ryan’s own admission, taxpayers will see only $78 billion of these; the other $100 billion are to be “reinvested” elsewhere in the Pentagon. (They’re always “investments” when you’re spending the taxpayers’ money, even when Republicans do it.)

So we’re really talking about $78 billion toward deficit reduction over the next five years, or approximately 2.6 percent of the Pentagon’s base budget (excluding the wars) over that same period. With all due respect, that isn’t a bold plan for reducing the crushing burden of spending and debt; that’s a rounding error.

What’s more, it is highly unlikely that these savings will materialize. Many of these efficiencies involve consolidation of commands – something that Congress has already balked at – and unspecified savings that are relatively easy to identify, but extremely difficult to implement.

But if, by some miracle, Robert Gates’s successor(s) manage to get them passed by Congress, those savings won’t actually be dedicated to deficit reduction: they will be completely devoured by spending on the wars. This is the greatest sham of all. Charles Knight at the Project on Defense Alternatives (and a key contributor to the Sustainable Defense Task Force, of which I was also a member) explains:

For several years now White House budget projections have included a “placeholder for outyear overseas contingency operations” most of which are accounted for by the wars in Iraq and Afghanistan. This placeholder number has been and remains $50 billion. Every year actual OCO (overseas contingency operations) spending turns out to be several times that number. FY11′s OCO is $159 billion and FY12′s is $118 billion.

Adjusting for the effect of the new OCO for FY12, the $68 billion budgeted above the placeholder of $50 billion eats up most of the $78 billion in Pentagon cuts that Secretary Gates offered up in January to fiscal responsibility….The remaining $8 billion (and much more) will go to the war budgets when reality collides with placeholder projections.

On 14 February Pentagon Comptroller Hale confirmed that the $50 billion placeholders for FY13 and beyond was the “best we can do.” Others make an attempt to be more realistic. The high tech industry association called Tech America annually projects DoD budgets for ten years out. In their 2010 projection they estimate that OCO spending will be $102 billion in FY13, $69 billion in FY14 and $57 billion in FY15. When we subtract the $50 billion placeholder for each of those years and total the remainder we find that the Pentagon is likely to spend $78 billion more in the years FY13 through FY15 than in the White House budget projections.

I hope that I’m proved wrong. I hope that the wars in Iraq and Afghanistan are brought to a close. I hope that the Congress gets serious about tackling Pentagon waste, and stops treating the military budget as an elaborate jobs program. I hope that our brave men and women in uniform get the hardware, equipment, and training that they need, and that Americans get the “defense budget” that they deserve. But if past history is any guide, the Pentagon’s budget will continue to climb, other countries around the world will continue to free ride on Uncle Sam’s largesse, and U.S. taxpayers will be left to foot the bill.

Tuesday Links

  • Republicans have a big opportunity to undo Obamacare and reform Medicaid and Medicare all at once.
  • It’s a good thing, too, because we’re facing a big debt crisis and if we don’t change course, federal spending will crest 42% of GDP by 2050.
  • There’s also a big elephant in the room in an excessively complicated tax code.
  • One has to wonder if the Republicans intend to put the big sacred cow of defense spending on the table.
  • Unrelated to the budget, education choice proponents scored a big victory in the U.S. Supreme Court yesterday in ACSTO v. Winn, a decision that upheld education tax credits: