Archive for the U.S. defense budget Category

Congress and the Cutter’s Blade

Posted in 2012 Presidential Election, U.S. defense budget, US Domestic Politics, US Values and Freign Policy with tags , , , on August 28, 2011 by whatafteriraq

After a month’s respite, in which the major political events have been the emergence of Cowboy Rick Perry in the GOP race and some sniping at President Obama for spending a week at Martha’s Vineyard, Congress will return to Washington in a week or so. Like everyone else, I can hardly wait. Neither can your friends and neighbors at the Pentagon, where the power point presentations must be gathering furiously.

The “highlight” (lowlight?) of the resumed session will be the fight over the budget. Most of the activity will concentrate on 2012 election year posturing, of course, but the Congress has set itself up by including the provision for draconian cuts to be triggered automatically after Thanksgiving unless the Supercommitte does the unexpected and comes up with a viable compromise solution to bringing the deficit under control. Given the constituency of the committee, one should not hold one’s breath on that one, especially given that all six GOP members have signed Grover Norquist’s “no new taxes” pledge and that virtually every responsible adult in the United States understands that the process cannot possibly achieve anything like balance without additional revenues. The only chance is that the committee can come up with some convincing euphemism by which new taxes and are called something else, but even the ideological fanatics of the right will probably see through that. The prospects for the system working this out are, in other words, not very good.

Enter the Pentagon. If the automatic trigger goes into effect, the Department of Defense takes it in the knickers, as, of course, does everyone else. Defense planners have already stated that the additional cuts the automatic reductions would impose, about $.5 trillion over a decade or roughly $50 billion a year, will seriously compromise the national defense and thus must be avoided. The power point writers have undoubtedly been fervently at work building the case for the Apocalypse should this occur, and they can be counted upon to share their concerns with anyone who will listen.

In the past, DOD has been very successful in dodging budget bullets. Their key weapon, however, has been the existence of a reasonably clear and present threat that needed blunting. The Russian bear (or the Chinese dragon, or both) could always be dragged out of the closet to frighten the public and assure that Congress would not apply the blade to the DOD budget during the Cold War, and Osama bin Laden has provided the same kind of valuable service for the past decade. But the Russian bear is mostly a Mafiosi now, the dragon stocks our local Wal Mart, and bin Laden is dead. It is not clear who can play Freddie Kreuger and scare the bejusus out of us now to defend high levels of defense spending. The threats may be there, but they are more subtle, less convincing and, quite frankly, less compelling.

If one is defending the defense budget, this leaves one with four arguably Devil’s Choices. One can defend no taxes, high defense budgets, and thus really deep cuts in social services–a position that has traction with the GOP right that has been an historic ally of defense. The problem is that this solution attacks the large constituency who receives social benefits that get pared back radically under these solutions. This constituency is only beginning to become aware of the consequences of this strategy for them, and Democrats will help them fill in the details. When they figure out what Paul Rand-Ryan(Rand as in Ayn Rand) really has in mind for them, they are not going to be happy. And, by the way, they vote in higher proportions than just about any other voting group.

Second, they can play good soldiers, and accept the sacrifices of being full participants in deficit reduction without additional tax revenues. At the abstract level, this has some appeal. It seems patriotic, but it leaves the military with less than they truly believe they need, and playing their traditional guardian role requires resources: patriotism thus cuts both ways. Most military/defense intellectuals consider themselves conservative and thus lean Republican, but other than contractors, they are not among the uber wealthy who benefit the most from this solution.

Third, they can join the chorus that argues that some sacrifice is necessary, but deep cuts are unacceptable, and that the only solution is increasing taxes, some of the revenue from which will defray additional cuts in defense. From a strict calculation od self-interest, this is probably the optimal solution, but it is a tough one to swallow if one believes, as many defense types do, in very limited government that does  nothing opulently except for funding national defense. The problem is that no one is really pushing this position: it is essentially libertarian, but Ron Paul, the darling of the libertarians, is also an ardent isolationist (he of course does not call himself that) who essentially wants to withdraw to the shorelines, which can be defended at considerably smaller costs than now being incurred (which is one reason he favors that posture).

The fourth option, of course, is to continue things as they are: large budget deficits. While a short term case can be made for this solution, one thing the Tea Party right has successfully done is to take this option off the table. 

The net result of all this is to leave the defense establishment in a pickle of sorts. They believe in fiscal responsibility but generous resource allocation for defense. They generally oppose additional taxes, but they also oppose running what many of them join other conservatives in decrying as ruinous deficits. The problem is they cannot have it both ways. Anybody who believes that the outcome of this whole process is going to be the gutting of entitlement programs to defend an opulent defense budget must suffer from a dangerous belief in the Tooth Fairy: despite the wildest dreams of the Tea Party (which is almost certain to fade rapidly as the social consequences of  its advocacies are fully understood), this simply is not going to happen. Defense can only be resilient and funded at levels with which it is comfortable by raising taxes. It is really as simple as that, and anyone who tells you different is either a chronic liar or a delusional fool. While I understand this describes a large number of the current membership in Congress, it is nonetheless true.

Welcome back to Washington, Congress! Citizens, on the other hand, beware!

Advertisements

The Devil in the Budget Reduction Details

Posted in U.S. defense budget, US Domestic Politics, US Values and Freign Policy with tags , , on August 2, 2011 by whatafteriraq

As this is written, the grand budget reduction package has finally passed and is headed to the White House for the President’s signature. Tinged with more than a hint of digust and distaste for the unseemly process that got to the final agreement, most people are heaving a sigh of relief that the debt default bullet has been dodged at least until after next year’s election. The respite from the thoroughly unpleasant realities that got us here in the first place is, unfortunately, nothing more than a brief respite. The Congress and the President may have agreed in a general sense to overall cut levels and directions for reducing government spending, but the details afre yet to be worked out, and as usual, it is in those details that the devil lies.

The agreement, of course, purports to do three things. First, it sets an overall goal for deficit reduction (over 2 trillion), to be amended (upward, one assumes) by the report of the commission of Congressional members it also mandates and whose report on December 23 will be a Christmas present of dubious desirability for members and the president working toward reeelction. The provisions of the deal say that unless the commission’s work is completed and acted upon, the result will be to “trigger” much more draconian cuts elsewhere, but most prominently to defense and entitlement programs. Since these budgets have the largest and most vocalof all constituency votes, avoiding the trigger (which everybody is rhetorically committed to doing) is a real incentive. The two major potential sources of savings do not change by acting, however, setting up the basis for a firefight the parameters of which are already forming.

The second major provision is that the deal includes no additional governmental revenues in the form of new (or reinstated in the case of the 2001 Bush tax cuts) governmental revenues (taxes). The Republicans are heralding this as a major accomplishment, but it means that any movement toeward deficit or debt reduction has to come exclusively from spending cuts. This provision should be considered as etched in sand as the tide moves in, not in concrete.

Third, the deal requires a vote in both chambers on a proposal for a balanced budget amendment. This is pure political posturing to make the sullen children of the Tea Party caucus happy, and although it makes good apparent sense on the face of it, it will become a part of the U.S. Constitution approximately one week after the first full-scale flight of flying pigs passes over your home. It’s part of the deal, and both sides will use its failure to stoke its campaigns in emotional and misleading ways, but that’s about it.

The devil in the details is in how to turn the general numbers into real reductions in the ratio between what the government takes in and what it spends. The actual contribution of various sectors has effectively been kicked down the road, where it will form the core of the 2012 election campaign, particularly for the presidency. Defense, which is the general concern of this blog, stands at the center of this debate. Let me suggest that two questions will dominate that debate and dictate its outcome.

The first question is the ratio of budget cuts to “revenue enhancements.” Conservatives maintain they have taken this question off the table, but don’t believe it. Clearly, deficits can be reduced either with cuts in spending, increases in revenue,or some combination. The deal says reductions only, but that was a sop to the GOP. Since the exemption of tax increases (or reforms) is the current focus, balance can only be achieved by greater cuts. Conversely, enhanced revenues reduce the cuts that must be made. Anyone who thinks that question has been settled is in for a rude awakening that will play out in the 2012 election.

The most public arena will be over cuts to entitlements. Democrats are going to argue that cutting entitlements effectively taxes the poor and weak at the expense of providing additional benefits for the fat cats (rich people whose taxes would be raised under tax reform). It is a powerful emotional argument. Republicans will skirt the issue of further enhancing the already rich (because the wealthy are their most important constituency but do not have enough votes to win elections) and argue instead that additional taxation are “job breakers” (based on the unproven assertion that the wealthy will invest their untaxed income on job creation rather than in simply piling more dollars in their “counting rooms”). This will become particularly emotional when the actual detailed impacts on entitlements that actual people depend on are put on the record (which, of course, Democrats will do with some glee). The Republicans are counting on the dual notions that people want smaller government and that their cuts do not particularly affect current recipients, just future ones. The problems here are that people agree abstractly that they do not like big government except in areas where they benefit from it and that some current recipients actually do care about their descendents. A food fight of epic proportions (and unparalleled nastiness) looms.

The other question is how much defense will participate in these reductions. The first wave is not especially onerous, because much or it is premised on savings from drawdowns in Iraq and Afghanistan that have already been programmed and accepted (if not embraced) by the Pentagon. The argument for full participation by Defense in cuts arises from the size of the defense budget (second largest program) and the proportionof so-called discretionary money that is in that budget (about 65 percent of the total of funds that must be appropriated annually).

The wagons are already circling on this one. Deeper cuts, we are told, will cut into the “muscle” of the military and leave it incapable of protecting all of America’s overseas commitments. The deeper the cuts get, the worse the effect is. Since nobody wants to be accused of making the country more vulnerable to its enemies, there is a strong emotional conflict here that has to be resolved.

This debate has to be taken in the context of the overall reduction debate. The amount the Pentagon has to sacrifice is directly related to the debt left after other sources–notably entitlements and new revenues–are accounted for. Defense is thus pitted against programs from which large numbers of Americans who vote in large numbers benefit from and the tax breaks of the wealthist Americans. There are no simple answers to how that relative contribution should be assessed, although plenty of simple answers, all of which are flawed in some ways, will be floated during the campaign. In the most general terms, Republicans are likely to argue a minimum defense contribution and no new taxes, leaving virtually the entire reduction on the backs of entitlement programs. That is simply not going to happen electorally. The Democratic answer is new revenues (closing loopholes, doing away with the Bush cuts), fairly deep defense cuts, and lesser cuts to entitlements. The lines are thus drawn in the sand, ready to be washed away with the tide. It is not going to be pretty to watch, but it will be exciting once the current eye in the storm passeds over and thosepesky details have be attended to.

The Debt Ceiling Crisis and National Security

Posted in U.S. defense budget, US Domestic Politics, US Values and Freign Policy with tags , , on July 24, 2011 by whatafteriraq

It is a central tenet of the right-wing, generally Republican, overwhelmingly pro-TEA Party movement that wields a stranglehold on the U.S. House of Representatives that the central government is not good for much. It does not, of course, put its belief in quite those terms, but nonetheless, that is the libertarian spirit in terms certainly of the role of the central government.

This position is, of course, arguable in either direction,as are its implications. Some of these are no less then bizarre. If government should be minimized, for instance, it follows for those who believe in the minimalist philosophy that governance is best entrusted to “citizens” rather than “professional politicians,” as they argue the Founding Fathers believed. Once again, this position is arguable on historical grounds (a thorough reading of the Federalist Papers indicates the founders agreed on relatively little and changed their minds in many cases, for instance) as well perspectival grounds (the founders thought and wrote in a very different time and might or might not reach the same conclusions today they did in the 18th century). Since none of them are around, one can, however, interpret their ideas in a variety of ways without, for instance, Tom Jefferson standing up and saying, “I never said that.” The bizarre interpretation that arises from the anti-government position, however, is the notion that governance is best placed in the hands of amateurs–in this case individuals who, based on experience levels, do not understand government and, in most cases, dislike government. How people with such an attitudinal and knowledge base can be expected to produce better government than those with the experience and positive attitude (the hated professionals) has never been entirely clear to me. The sophomorism of the TEA Party caucus in the House is evidence of this anomaly.

There is, however, one area where even the most Ayn Rand-besotted libertarians agree that government plays a role, and that is in the provision of national security. Arising from this belief, the GOP right wing (currently wagging the party dog) insists that the massive cuts in government spending they insist upon must exempt defense spending to be acceptable. Their formula for reaching a satisfactory outcome is to insist that massive government expenditure cuts not include cuts to the defense budget which is, of course, the primary source of discretionary spending in the federal budget. Since they also insist that their be no revenue enhancements (particularly directed at the uber wealthy, who finance the TEA partiers and hold the rank and file in their irrational thrall), the only way this can be accomplished is by gutting non-discretionary budgets, meaning entitlement programs. One sees Ayn Rand’s curiously named “objectivist” philosophy swirling in the rhetorical fog here. If they do not get what they want, they will not play in the Congressional sandbox, and the country defaults on its debt.

The picture here is of some truculent, pouting teenagers saying that ifthey don’t get their way, they will take their ball and go home. Were it all that innocent and inconsequential, but most observers (including virtually everyone who knows anything about economics) agree that there are very real consequences for the country and its ability to operate effectively in the world. Some TEA Party leaders and supporters say they do not believe anything bad will happen, and even if it does, it is a small enough price to pay for their real objective, which effectively is dismantling FDR’s New Deal legislation of the 1930s (which, of course, is really the objective of the uber rich, for whom the TEA Partiers are the willing–and mostly ignorant–shock troops).

Since no country of the consequence of the United States has ever had the chutzpah to declare effective bankruptcy (or even to flirt as close to the precipice as the United States has already ventured), it is impossible to predict exactly how bad this will all become, but the burden of proof that nothing particularly bad will occur seems to me to fall on those who buck all the experts and say nothing bad will happen.

This is really a question that is familar in national security circles. The rationale for stout defenses in peacetime is that strength discourages adventurism by one’s opponents: that we keep military force to deter its use against us. Generally, it is impossible to demonstrate completely that things would have been dire in the absence of that preparedness, but given the dire consequences had we failed, the effort is justified.

Doesn’t this same logic extend to the current economic crisis? What happens if, on August 3, there is no extension of the debt ceiling, and the U.S. cannot pay all its bills? At a minimum, many who rely on federal checks will not get them (which in turn means they cannot buy things that help stimulate the economy), but where is America’s place in the world? Will it be harder, even impossible, to sell American bonds internationally? Will we trigger worldwide inflation that hurts everyone and for which we are clearly to blame? Will our global position of leadership not be injured? If so, isn’t that a national security setback? Maybe we need to keep up the defense budget to protect ourselves from the understandable ire of the world community toward us. Or maybe we will simply be held in global ridicule as the superpower that refused to act responsibly according to its world position and perceptions about how we are expected to act.

Does the current crisis have national security implications? You bet, and they are all negative. Can we deter the negative reactions like we did Soviet missiles? Sure we can, but that means getting off the schneid and passing a meaningful debt ceiling extension bill. All sides in this sordid experience have some blame in all this, but it seems to me (maybe not to the reader) that particular responsibility falls on the TEA Party caucus who effectively are dragging us toward the cliff. John Boehner, if he has a pair, needs to put on his big boy pants, get out his bag of switches, and inform the TEA Party “patriots,” as they love to portray themselves, to grow up and quit playing Russian roulette with American politics, including national security.

The Tea Party: Deficits and Defense

Posted in U.S. defense budget, US Domestic Politics with tags , , on January 23, 2011 by whatafteriraq

New Congressional members of the Tea Party think they have have the answer to the country’s ills: less overall federal spending and a strong commitment to defense.These are, of course, among the core values of the conservative and libertarian wings of the Republican Party and have been for a long time. That wing, dating in the modern (i.e. post-World War II) environment to and originally associated with Senator Robert Taft (R-Ohio) was dominant immediately after the war but was eclipsed when Dwight D. (“Ike”) Eisenhower won the GOP nomination from Taft in 1948, sending this wing into minority status with the GOP until the Reagan years.

The refrain of those whom the Tea Party seek to represent is straightforward: their mantra is minimal government, which translates into a minimum involvement of the government (especially the federal governmen) in the lives of citizens, which in turn means a government that is comparatively cheap to operate and thus does not require large taxes. So far so good, and while one can agree of disagree with this philosophical position and its operational consequences (e.g. minimal government services for various, mostly disadvantaged, citizens), it is at least internally coherent.

The philosophical problem is the other part of the rightist agenda, a commitment to a robust defense. Admittedly, what is robust to one person may seem either paltry or bellicose to another, but a strong defense means, operationally, a commitment to a large federal monetary commitment to national defense in its various aspects and guises. Once again, one can argue with the wisdom of this formulation, but it is at least coherent. Essentially, the Tea Party and its friends are arguing that defense spending is one of the relatively few worthwhile things the government does for the citizenry.

In the current atmosphere, the two operational consequences of this position fly in one another’s face. The generally dim libertarian view of government generally leads Tea Party activists in the 112th Congress to argue for cuts in the federal budget; their pro-defense position equally argues that defense cuts should be spared from the budgeter’s axe. In specific terms, they call for a $100 billion reduction in overall government spending this year, from which they would exempt the defense budget. Were Ike to return for a day, he would have a puzzled, possibly bemused look on his face. Most likely, he would agree that government does and spends too much; he would equally likely not let defense off the hook for bearing its part of whatever spending cuts are imposed.

The Tea Party’s position may be coherent, even philosophically attractive, in the abstract, but it does not hold up very well in the real world. It begins from at least an implicit premise that there is a lot of “waste, fraud, and abuse” (to borrow the 1980s phrase) in the non-defense budget but, implicitly once again, that there are not parallel examples of wasteful spending in the defense sector. That is probably a false premise. There may be (almost certainly is) some waste in non-defense spending like some of the more egregious earmarked projects, but previous assaults have removed most of this “fat,” leaving mostly muscle to trim; at the same time, there is without question wasteful spending in the defense area: the plush settings of many American military bases and the expense of a large number of marginally justifiable overseas basescomes to mind immediately. Spending hundreds of billions on two entirely stupid, unproductive, unwinnable, and unnecessary wars comes even more to mind.

The Tea Partiers are, of course, free to believe and advocate whatever they want–it is still a free country. Their contribution to a meaningful national dialogue, however, could stand a bit of a reality check. It is well and fine to advocate what I would argue is a hopelessly bloated defense budget on the ground that keeping us safe is the government’s primary obligation. It is naive, and probably hypocritical, to argue that filling the defense budget trough to the rim can be paid for by cutting “non-essential” spending elsewhere. To repeat an item in the last entry, over half the discretionary budget is in defense, and it follows that defense should belly up to the bar (it does have a considerable belly, after all) and do its part.

The Tea Party says its goal is to balance the federal budget, but that it wants to do so without raising taxes (thereby increasing government). Yeah, right! This is the Jack Spratt approach: Jack Spratt (the non-defense budget) will eat no fat, and his wife (the defense budget) will eat no lean. The result: skinny Jack, fat spouse. But it is still a lovely couple wallowing in debt, because, at the risk of seeming a nag on the subject: THE FEDERAL GOVERNMENT BUDGET CANNOT BE BALANCED WITHOUT LARGE CUTS IN DEFENSE SPENDING.

Well, that’s not entirely true. There is a way to balance the budget without cutting defense spending: HIGHER TAXES. To argue you can do one of these things (cut government and balance the budget) without the other (cutting the defense budget) or raising taxes is a chimera. No, make that a conscious lie that everyone who makes the argument realizes unless they are stupid or delusional. Ike knew this, and he said so. Tea Party activists who deny it are being inconsistent philosophically (they do not stand alone in this regard), and their continued advocacy of policies that do not address the very issues they publicly endorse should raise questions about the assertion on their bumper stickers: “Tea Party Patriot.”

Afghan Withdrawal by 2014

Posted in Afghanistan, Afghanistan and Election, Afghanistan War, U.S. defense budget, Uncategorized with tags , , , , on November 21, 2010 by whatafteriraq

The NATO summit occurred this past week in Lisbon, and the major news that came out of it was that NATO ministers agreed to continue the International Security Assistance Force (ISAF, the technical name of the mission there). According to the comminique at the end of the meeting, the focus of the agreement was to continue the commitment of declining numbers (unspecified) into 2014, when all combat tasks will have been turned over to the Afghan National Security Forces (ANSF), leaving only a residue of NATO noncombatants (including American troops) behind. In other words, an Iraq-style drawdown and post-combat situation whre the U.S. is out but not out simultaneously.

This settlement, as it is chewed upon, regurgitated, and swallowed, is likely to please nobody, most of all the Afghans themselves (the Taliban has already called the decision “irrational”). People (myself included) who believe the active involvement of the United States should end much faster, are going to maintain that leaving NATO forces on the front lines will accomplish little substantively and simply represent greater human and material sacrifice for the troops and the Afghans themselves while not materially improving the prospects for the post-war peace. If one believes the war is unwinnable, as I do, three or more years of combat is a tragic waste. The NATO conferees anticipated this reaction (which will be more pronounced in other NATO countries than in the U.S.) and offered the bone that “if circumstances agree, it (withdrawal of combat troops) could be sooner.” How about tomorrow?

Critics on the other end of the spectrum will also be unhappy because of the simple fact of establishing any kind of deadline. Their consistent refrain about such deadlines (in Iraq, for instance) is that they simply encourage the opponent to wait out whatever the deadline is, wait for us to leave, then seize the moment. In their minds, setting a deadline is little more than a deferred form of surrender. 2014 is sufficiently far enough away so this objection will not be loudly raised at this point, but as the date grows nearer, it will. This criticism, of course, is only valid if one accepts the proposition that the war is in fact winnable in some sense, if one is perseverant enough to pursue it long enough. We are, after all, still hearing this argument about Vietnam, which has been over for 35 years.

The designation of 2014 also must be viewed through the lens of 2012–the next presidential year. It is a curious choice that, like so many the Obama administration has made recently, appeals neither to his core constituency or probably to the independent middle. Obama supporters on the left are pretty uniformly disappointed in Obama’s Afghan policy and want out now. The “shallow” withdrawals that NATO describes for 2011 are going to make them unhappier than they already are. It will not drive them into the arms of the Tea/GOP candidate, who is likely to adopt a “stay the course” position on Afghanistan, but it could make them less enthusiastic supporters of the campaign or even, at worst, cause them to sit out the election. The date is also unlikely to win any support from the right, which opposes any specification of withdrawal dates and would not vote for Obama if he promised to stay in Afghanistan for another 50 years.

That leaves the swing vote in the middle. They voted for Obama in 2008 and against him in 2010. Nobody seems to want to court them very badly. They are almost certainly going to be repelled by the Libertarian nut jobs the Tea Party has foisted upon the Congress, and they are generally less than enthusiastic about the deficits the administration is running up–part of which, of course, are powered by the ongoing war in Afghanistan. Which way they go in 2012 will determine who enters or stays in the Oval Office in 2013. The shape of the economy (and especially the unemployment rate) will likely determine who they vote for, but Afghanistan will play a part as well, on two grounds. First, budget cutting/balancing is going to be a major part of the 2012 campaign, and by then, the public may well have figured out that anything like a balanced budget is impossible without a major defense contribution. But where does that contribution come from? Since Americans also overwhelmingly say they favor a robust defense, they will not support major cuts in ongoing defense expenditures. If that is true, where can one look for cuts? Afghanistan virtually jumps off the page of candidates. Second, if the war continues to go poorly (as it likely will), the middle may decide overwhelmingly that they want it to end. Would Obama buck such sentiment?

The most hopeful interpretation of the 2014 deadline is that those who chose it did so because they know they are going to exceed it. The Afghans fairly clearly do not want us around for three more years, and most of the NATO allies join American public opinion in that assessment. A 2014 withdrawal date is dismal news–the worst case–and if we can exceed that expectation and bring the troops home sooner, wouldn’t that be grand? And wouldn’t we be grateful when we enter the voting place (assuming much of this happens before November 2012)? Does this all sound kind of cynical? Yes it does, but given the mess we are in right now, any shard of hope is to be grasped.

A New Peace Dividend?

Posted in Global War on Terror, Iraq War, U.S. defense budget, U.S. military manpower, US Domestic Politics, US Values and Freign Policy, War on Terror with tags , , , , on May 1, 2010 by whatafteriraq

One of the clear lessons political lessons (if there are any) of the “great recession” from which the country is slowly emerging is that the United States cannot afford everything, since unbridled spending in the absence of additional public revenues (taxes) means a burgeoning deficit that will be handed down to future generations. No one seems to find this prospect of kicking the fiscal can rhetorically acceptable, yet nobody seems to offer any serious plans for changing the ways and objects on which public money is spent.

Most of the proposals are laughably irresponsible and insincere. The Republicans want to lower taxes (at least they want to restore the Bush tax cuts for the very wealthy), on the empirically shaky ground that doing so will stimulate private investment, which will produce jobs, which will produce more income because the incomes from these jobs can be taxed. The underlying premise is John Kennedy’s multiplier effect, which any honest economist will tell you only works in very special circumstances, such as pent-up needs to buy and consume, which clearly is not the case today. Trickle-down economics is a fiscally responsible approach to deficit spending only for the extremely cynical or intellectually impaired. When asked where spending can be cut, Republicans rally behind John McCain and eliminating earmarks. Never mind that these account for about $10 billion annually or that a great deal of these are sponsored by fellow Republicans (my former senator, Richard Shelby of Alabama, is probably King Pork).

Democrats don’t do much better. They correctly identified health care as the future’s budget buster, but ladeled enough extraneous spending into the health care bill to dilute its salutary effects. Thet also correctly identify current budget trends as ruinous, yet they have little to say about what to do about them. Entitlements are the burgeoning villain, but who is seriously willing to propose building Al Gore’s “lock box”around the social security fund or moving back the eligibility time frame for seniors? Not anyone standing for reelection.

This space is normally devoted to foreign and security topics, so what is a discussion of the current economic woes doing here? The answer is that national security spending run amok has been and continues to be one of the prime drivers of the deficits that are accumulating. Politicians on both sides have ruled subjecting defense spending to scrutiny to help reduce deficits is off-limits. My point here is that defense spending cuts must be part of any serious effort to return to something like national solvency. It may not endear me to many colleagues to say this, but anyone who tells you different is either lying or delusional. Or both. To set the ship of state right, we simply must have a new peace dividend.

Three examples of uncritical defense spending (“spend whatever is necessary regardless of the consequences”) stand out. The most obvious are the wars in Iraq and Afghanistan. No one truly knows–of if they do, will not admit–what these adventures have cost us to date, but it is certainly at least $2 trillion (a VERY conservative estimate), and it is almost certainly costing in the range of$500 billion a year to continue these efforts. Regardless of what one thinks of the geopolitical merits of either adventure, can anyone argue that even the most extravagantly positive outcome will come close to justifying this level of expenditure? Withdraw from both places and see how much you save.

There are two other smaller but not insignificant examples. One is the global war on terror (GWOT). No one, to my knowledge, has systematically cost accounted how much U.S. treasure has gone into this effort, but it is a lot (close to a trillion?). Usama bin Laden must be laughing up his sleeve at how he is undermining the American economy on the cheap in this “war.” Would it not be feasible instead to try something else to defuse the threat, liking leaving Afghanistan and Iraq (thereby undermining the argument we are there as imperialists) and retreat from our blanket endorsement of Israel (particularly in their relations with the Palestinians)? I’m not sure how much this these acts would reduce the threat and thus our expenses, but I am sure it would have a measurable impact.

The third example is the All-Volunteer Force (AVF), America’s professional armed force. The AVF has been in existence now for nearly four decades, and it has virtues. The military likes it, because it produces a highly motivated force (everybody who is there wants to be), and the pay is better. The politicians like it, because it removes the possibility that any of their constituents might be forced into involuntary service (drafted) and sent into combat in places they would almost certainly not tolerate their own sons and daughters being sent (Iraq and Afghanistan).

The AVF is also pernicious. For one thing, it is very expensive, since it must compete economically for the services of its members, and it is small, since only a limited number of people will volunteer under any circumstances. This latter dynamic means it must be augmented by using very expensive civilian contractors or by using socially expensive reserves. Moreover, the AVF may be too easy to use, since those contemplating employing American forces do not have to ask themselves the question, “will the American public buy into the prospect of their children being sent off to fight and die in (fill in the blank)?”

The defense budget cannot take all the hits necessary to recreate fiscal responsibility, but looking at the three areas raised could at least contribute. There is, for instance, no question that a substantial tax increase is necessary to right the ship of state, but proposing that requires a level of political courage not abundantly evident today. A new peace dividend is not the panacea, but it is a beginning. Let’s put defense spending  back on the chopping block!

A Defenseless Budget Freeze

Posted in Afghanistan, U.S. defense budget, Uncategorized, US Domestic Politics, US Values and Freign Policy with tags , , , on January 31, 2010 by whatafteriraq

As part of its election-year attempt to appear fiscally responsible, the Obama administration announced recently a proposal to freeze discretionary spending in part of the federal budget. The term “discretionary” spending refers to those parts of the budget that must be appropriated annually for the government to spend them, hence the Congress has discretion about whether to spend them or not. These items are also known as “controllable” budget items, since they are controlled by annual budgetary decisions. The other part of the budget is non-discretionary (or uncontrollable), and encompasses those budget items that are automatically spent unless the Congress take specific action in a given session to alter or cancel them. Entitlement programs like Social Security and Medicare are uncontrollable or non-dicretionary, although some increases in entitlements occasionally fall into the discretionary category.

Most of the federal budget is non-discretionary. The largest uncontrollable item categories are in entitlements and service (paying the interest) on the national debt, a rapidly growing item. Collectively, these two items (especially if one includes payments to veterans) makes up about two-thirds of the federal budget, and uncontrollable items in other budgets push the non-discretionary part of the budget up to around three-fourths of federal spending. That leaves a very small percentage of federal spending that is actually subject to meaningful Congressional or executive branch control. When annual budget battles rage rhetorically about control of federal spending, it is well to keep in mind that these fights are over a fairly small slice of the federal pie.

The largest single location of discretionary spending in the federal budget is in the defense budget. Historically, about two-thirds of defense spending used to be discretionary, although that figure is probably down some after eight years of two wars. The government is reluctant to tote up and publicize exactly how much money the U.S. spends annually on defense.  The official basis of equivocation depends on exactly how one defines defines defense spending–a distinction reminiscent of Bill Clinton’s questioninig what the meaning of “is” is. Is, for instance, spending on veteran’s medical care and pensions a defense or a social services entitlement expenditure? Officially it is the latter, meaning that spending does not show up in defense outlays.

The defense outlay of the United States is now push one trillion dollars a year. Official estimates are somewhat smaller–for the next fiscal year, for instance about $650 billion for the Department of Defense (DOD) budget, and an additional two hundred billion or so Iraq and Afghanistan. If one dug under enough budgetary rocks, one could probably unearth another $150 billion or so to reach the round $1 trillion mark.

This brings us to the budget freeze. The problem, of course, is that the government is spending increasingly more than it is taking in, a situation everyone agrees is not good and about which something should be done. Freezing the growth in discretionary spending speaks somewhat to that problem, especially if ALL federal discretionary spending is included. At that, it would not solve the problem and bring outlays in line with receipts, but the proposal is indeed “defenseless”–defense spending (the largest discretionary category, remember!) is exempted. The result is a spending freeze on a relatively small portion of a  very small portion of federal spending. Now that is bold thinking!

Why is defense spending exempt? The answer, of course, is wrapped tightly in the U.S. flag: We are at war (two wars), and protecting the United States is our highest priority, beside which all other concerns pale. Thus an exemption for defense spending, and a conundrum for the country: do we want to keep spending at current levels and run up additional debt? or do we want to cut spending enough to bring government receipts back in line with expenditures? If one believes, as Dwight Esienhower famously did, that national security depends on a strong economy and that the deficits undermine that economy, it is a serious question.

There are, of course, two ways to right the fiscal ship of state: spending less, or gathering in more. One can politically dismiss the likelihood of the latter, which would involve substantial increases in taxes, possibly even doing something as radical as reintroducing a meaningfully progressive tax structure on income (perish forbid!). The other is drastically to reduce spending.

But where can large spending cuts come? The answer is defense spending. Two areas stand out. One is the cost of maintaining the current military structure the United States has. The all-volunteer force (AVF) has been in place since 1972, and it has produced a fine, very capable force. It has also, however, produced a relatively small force, and one that is very expensive, particularly because it requires paying military members competitively and having to contract many formerly military tasks to private contractors–at very high costs. There are cheaper alternatives like a return to a force that contains conscripts, although such a force is politically unacceptable. The other source of spending would be to shut down the wars the United States is waging. Both Afghanistan and Iraq are arguably strategically marginal operations, but they are expensive. Does anyone seriously believe that the return the United States will reap from these wars will even approximate the costs? Shut them both down and then look at the deficits (they don’t disappear, but they certainly shrink).

The Obama proposed spending freeze is not an inherently bad idea, and it will save more money than its absence would have yielded. At the same time, it represents little more than a symbolic gesture if the serious intent is to reduce or eliminate federal deficits and thus additions to the federal debt. Doing so requires far deeper cuts in federal spending (and inevitably “revenue emhancement” for those who cannot say taxes) that cover a much wider range of the discretionary budget–in other words, freezes and reductions that are not defenseless.