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A Further Perspective
Mistaking Target for Culprit
Military spending, which has been in relative decline, will be punished further as ever rising mandatory spending goes untouched.
Claiming to tackle spending, Washington will mistake target for culprit next year. By disproportionately focusing on defense for next year’s spending cuts, federal policymakers are ignoring the real reason for uncontrolled spending: mandatory programs. The result: the budget area that has shrunk relative to the U.S. economy gets whacked, while the area that has exploded goes largely unscathed.
There are two major categories of federal outlays: discretionary spending, which is determined annually, and mandatory spending, which once enacted, goes on indefinitely. Forty years ago, discretionary spending was the slightly larger category — equaling 10.9% of GDP versus mandatory’s 7.4%. Today, the situation is reversed: in 2011, discretionary spending was 9% of GDP, while mandatory spending was 13.5%.
Within the discretionary spending category, defense spending has undergone an even greater relative shrinkage. In 1972, defense spending was 6.7% of U.S. GDP, while nondefense spending was 4.2%. In 2011, defense comprised 4.7% of GDP, while nondefense was 4.3%.
Today, defense spending is roughly just half of the far smaller of the two federal spending categories. The culprit in Washington’s decades-long spending binge is obvious, so guess what is targeted for next year’s automatic spending cuts? That’s right: defense spending.
Last year’s Budget Control Act required $2.1 trillion in deficit reduction over a decade. First, there was an immediate $900 billion in cuts — over 80% of which was from discretionary spending. Second, once Congress failed to achieve the remaining savings, further cuts will happen next year.
According to the Congressional Budget Office, 84% of these 2013 cuts will come from discretionary spending — and 61% of those will come from defense spending. Thus not only will Washington’s spending cuts come from the smaller and relatively shrinking category of federal spending, those cuts will come disproportionately from defense — the major area of spending most rapidly shrinking relative to the economy.
To comprehend what is going on, imagine what the federal budget would look like today, if mandatory spending had performed like discretionary or defense spending over the last 40 years.
Since 1972, discretionary spending has fallen 17.4% relative to the economy, while defense spending has fallen 29.9%. Over that time, mandatory spending has almost doubled relative to the economy — increasing 82.4%.
If mandatory spending’s growth had just kept pace with the economy, last year’s federal deficit would have been just 2.6% of GDP, instead of the 8.7% it was.
If mandatory spending had matched just discretionary spending’s fall over the last 40 years, last year’s budget deficit would have been just 1.3% of GDP — just slightly larger than it was in pre-recession 2007.
If mandatory spending had matched defense spending’s 40-year fall, last year’s deficit would have amounted to just 0.4% of GDP.
All these huge deficit improvements would have come even with revenues at today’s recession-reduced levels. If current receipts were equal to their 40-year average (roughly 18% of GDP) — instead of last year’s 15.4% — the federal budget would have had a surplus equal to 2.2%.
Such a surplus would have actually allowed mandatory spending to grow by 30% relative to the economy — the same percentage by which defense fell — and still leave the federal budget balanced.
If all these rosy projections for federal spending seem unbelievable, remember: they are based on what has actually happened to discretionary and defense spending — and which helped absorb some of mandatory spending’s fiscal assault — over the last 40 years.
What is really incredible is that discretionary and defense, which are relatively shrinking, are the spending areas Washington has targeted for more cuts. What goes comparatively unscathed is the culprit of the government’s spending problem: mandatory spending, which is only projected to get bigger as Baby Boomers move into Medicare and Social Security.
By mistakenly targeting defense as the spending culprit, Washington is proving the modern axiom that no good deed goes unpunished.
About the Author
J.T. Young served in the Department of Treasury and the Office of Management and Budget from 2001 to 2004 and as a Congressional staff member from 1987 to 2000.
Letter to the Editor View all comments (20) | Leave a comment
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Jack in Wi| 8.14.12 @ 7:08AM
The country has wasted trillions in the last 20 years on a failed foreign policy. This country could be defended for half the money we are spending and defended well. Think Switzerland, a strong defense for the country and let everyone else pay for themselves. This being the world policeman, for the last 100 years has been disasterous for our country. Bring the troops home now and let the world pay for it's own defenses. We are broke and our troops are broken.
Boar Hunter| 8.14.12 @ 7:26AM
Jack you are pathetic. How's the wife?
Oh that's right! She left you!
She realized you are like Solendra.
You waste a lot of our resources and serve no useful purpose.
Occam's Tool| 8.14.12 @ 5:47PM
Switzerland has contributed the cuckoo clock, and has basically been silent in any war against evil. They have NO monument to their Greatest Son, Albert Einstein. Cowardly scum, like you, Jack.
nathan| 8.14.12 @ 7:54AM
Here are are the numbers dispute them if you will but IF YOU DO, come back with BETTER NUMBERS, NOT NAME CALLING.
We spend MORE than the next 10 countries combined. More than Russia, China, all of Europe, and a bunch of other countries, COMBINED. That yes, some of our costs, like personnel can be considered greater than some of theirs but still when you add it up, our defense expenditures and not all of those are in the DOD budget, amount to over 40 percent probably around to 45 percent of the total world's expenditure's on military spending. To be sure match the expenditure to the threat but those of you following China and it's economic problems and potential social unrest and Russia with its population implosion make a case for them being a HUGE threat to us. GO AHEAD.
Combine that with yesterday's front page Washington Time's story on the IG report regarding procurement. The F-35 was called a "white whale" and procurement in general is called out of control. Now before we "increase" defense, don't you all think MAYBE we ought to get that under control and quit wasting the taxpayers money? Or do you all favor just throwing it away?
Now I've cited numbers AND sources. You've got better ones, have at it. Otherwise, don't waste my time.
JD| 8.14.12 @ 12:14PM
You're right, we do claim to spend more than all of them. However, do you truly believe that China, with its 5 million man army and all its research, spends so little as it claims? North Korea, as well?
The difference between us and them is that we're honest about what we spend, that's all.
Moreover, there's a liberal element to our spending. As with social welfare, the rich spend more to subsidize the poor. America does this in defense. We are the rich; the rest of the world is the poor. We are covering them. We have seen that lacking defense is bad for everyone. It would be better if we could get them to provide for themselves; however, our politicians lack the will.
I agree that we spend wastefully on defense. However, the article is also correct - there are far bigger areas of concern in our budget than defense. Liberals focus unduly on defense in order to protect their sacred cows - entitlements. This is flawed thinking.
Occam's Tool| 8.14.12 @ 5:48PM
Yup, and our casualty rates in actual armed high intensity conflict bear out our spending.
If you want China calling all the shots, Nathan, you are welcome to move there. Not missed.
markenoff| 8.14.12 @ 8:52PM
The absolute amount the federal government spends on defense is irrelevant to the argument. What is relevant is the Constitution, a document I suggest you read sometime. Unlike all the "mandatory" spending, spending to provide for the common defense is actually REQUIRED by the Constitution. Funny how the mandatory responsibilities of the federal government are considered discretionary when it comes to funding them. All the "mandatory" programs are not required by the Constitution and are arguably not allowed by the Constitution. Yet it is defense, the primary responsibility of the federal governmen, that will take the biggest and most disproportionate amount of cuts from the sequestration (50% of the cuts from 20% of the budget).
markenoff| 8.14.12 @ 8:53PM
If federal government spending is such a stimulus to the economy as BO likes to say, why not spend more on defense? A supercarier with air wing costs about 13 billion. We could have built ten of them and only used 16% (before interest) of BO's stimulus and provided 1000s of good paying jobs here in the US instead of sending jobs to Finland (Fiskar) or Mexico (Sunpower) paid for with stimulus dollars. Or how about the C-17 cargo plane? The government shut down the production line just about the time the stimulus was being passed by Congress. At 202 million a piece we could have built another 100 for only 2.5% of the amount spent by the stimulus bill. Again, thousands of well paying jobs right her in the US. In 2011 Boeing won a contract to build 179 new refueling tankers for the USAF at a cost of 35 billion. You could have double the number and only used 4% of the stimulus and, again, provide thousands of well paying jobs for America. And the federal government would have actually been spending money in an area where they unarguablyhave not only the right but the obligation.
Derek Leaberry| 8.14.12 @ 9:17AM
With the country broke and the Cold War long won, defense should be cut along with the rest. Bringing home the troops from Japan, Germany, Korea, Iraq and Afghanistan is paramount.
Periwinkel| 8.14.12 @ 11:09AM
Interesting...I just read Bill Gertz's article about the Russian subs roaming the Gulf of Mexico this summer undetected by The Won and his Pentagon/CIA, etc.
Derek Leaberry| 8.14.12 @ 12:15PM
Admiral Mullen found it more important to homosexualize the military and increase affirmative action in the armed forces. Social engineering is more important than mission in the modern left-wing military.
Al Adab| 8.14.12 @ 11:51AM
Too many confuse the need for a atrong national defense capability with the over extended military presence world wide. Our nation building efforts are misguided and our presence in over 170 nations around the world unessesary. Nonetheless, when we need the military it must be able to respond to provocation with overwhelming power.
Where is the 400 ship Navy; where the million man Army; where the bomber fleet and fighter combat wings we need? That question and the logistical and supply system needed to keep capability second to none should get our first priority attention.
We have conducted operations in Iraq and Afghanistan with overuse of reserve forces. We could not today mount a Gulf war size operation should we need to. That need, not our continuing worldwide presence should guide our military strategy.
markenoff| 8.14.12 @ 8:56PM
The "military presence in 170 countires" is a BS factoid. US Marines protect our embassies so every country where we have an embassy has a US military presence. And every embassy has a miitary attache as well. So it is an irrelevant factoid.
Conservative Bob| 8.14.12 @ 12:28PM
I am not persuaded by these x% reduction is less than y% argument.
The federal gov does not spend wisely or efficiently. While we need a strong defence how efficiently they spend is as important as what share of the federal bloat the spending represents.
We need to review all spending manditory and discretionary. Instead of a balanced budget ammendment how about limiting spending to a fixed percentage of GDP say 14%. As an incentive congressional pay should be reduced at 10 times the percentage over the target amount. So that federal spending at 19% of GDP would reduce congretional pay by 50%.
Want to align their words and deeds... connect their wallet.
JD| 8.14.12 @ 1:23PM
Congressional pay is a red herring. Most of them make more money through other endeavors (often linked to their congressional power) than they get in their federal paychecks.
A spending cap is also a cheap substitute for intelligence.
mike 3/505| 8.14.12 @ 2:33PM
I find it bizarre that programs of questionable constitutionality such as Social Security are classified as "madatory," while constitutionally enumerated functions such as Defense, are classified as "discretionary."
JD| 8.14.12 @ 3:16PM
"Mandatory" means "things Democrats want." "Discretionary" means "things Democrats don't want".
Haven't you received your DoubleSpeak Dictionary?
Occam's Tool| 8.14.12 @ 5:51PM
Everytime we reduce our military and get more touchy feely someone decides to kick us in the nads, folks. It would help to have a basic knowledge of the nature of human aggression.
Me, I like spending my money on things that go boom. If it were up to me, ALL Federal spending would be confined to two areas: Military and Space (Israeli military aid as a subset of Military). Medicare could be handled privately with no pre-existing conditions and competition across state lines.
Occam's Tool| 8.14.12 @ 5:55PM
Medicaid should be replaced by charity hospitals and clinics, with consent to be treated by residents as part of the overall package of care. Worked in the past, and, with appropriate tort reform, could work in the future (no malpractice in charity hospitals except for intentional tort such as sleeping with a patient---care could be rationed there appropriately (no need for unnecessary tests for CYA), and outcomes could be measured as a test for nationwide tort reform.
Dimitry_Aleksandrovich| 8.16.12 @ 3:53AM
Defense spending should be cut and as Rep. Ron Paul has pointed out we don't need military bases in nearly every nook and crany across the globe. We are supposed to be a Republic not an Empire. How many billions upon billions of taxpayer money has been wasted in Iraq and Afghanistan while defense contractors had a feast. Bring them home. Bring our soldiers home. Let Europe, Japan and South Korea defend themselves.