Friday 1 October 2021

No, the Federal Budget Is Not Mostly Defense Spending

 Whenever the Left encounters resistance on a massive spending measure, it’s a matter of routine to make wild gestures at the Pentagon’s budget, which is large, and ask why some other large amount of money can’t also be spent.

The Pentagon’s budget request for this fiscal year was $715 billion, and the House gave it $778 billion. That’s a lot of money. Progressives are correct on that point (and if they’re upset about the House giving the Pentagon more than it asked for, they should take it up with the Democrats who control the chamber). If you multiply it by ten, that’s $7.78 trillion over the budget window we use when talking about fiscal policy. The reconciliation bill would cost $3.5 trillion over the budget window, and 3.5 trillion < 7.78 trillion, so the U.S. spends way more on defense than on helping with “human infrastructure,” the story goes.

There are a few problems with that story. First, defense is a fundamental obligation of government in general and a clear constitutional duty of the federal government in particular — unlike, say, giving tax breaks to union members or paying people’s Internet bills. Defense spending also isn’t rammed through by budget reconciliation in party-line votes. To be quite honest, defense spending should be a higher proportion of federal spending — not necessarily because we should spend more on defense, but because we should spend less on everything else.

Second, and less philosophically, federal outlays are split into three categories: mandatory outlays, discretionary outlays, and interest on the debt. Since interest rates are so low, interest on the debt is a relatively small proportion of outlays, so most of spending is in the mandatory and discretionary categories.

Most federal spending on social assistance is mandatory spending, not discretionary spending, which means Congress does not have to vote on it every year. Social Security, Medicare, Medicaid, and various income-security programs are all mandatory spending. According to the Congressional Budget Office, in 2020, the federal government spent about $1.1 trillion on Social Security, $900 billion on Medicare, and $450 billion on Medicaid. Projecting those out over the ten-year budget window is never as simple as multiplying by ten, because those programs become more expensive every year. The CBO projects that from 2022 to 2031, the federal government will spend about $16 trillion on Social Security, $13 trillion on Medicare, and $6 trillion on Medicaid.

Those totals don’t include the $3.5 trillion the federal government is already projected to spend on income-security programs (such as the Earned Income Tax Credit, the Child Tax Credit, and SNAP) over the next ten years.

So, over the next ten years, the federal government is already — without passing any further legislation — on the hook for about $38.5 trillion in mandatory spending on social programs. Again, Congress does not vote on any of that. It’s on autopilot, and those benefits must be paid.

In comparison, $7.78 trillion for the Pentagon doesn’t look so bad. (For what it’s worth, the CBO actually projects defense spending at about $8.5 trillion over the next ten years, but it doesn’t seem that progressives bothered to look at any data before spouting off.) The reason the Pentagon’s budget is constantly before our eyes is that defense spending is discretionary. The Pentagon must make a budget request to Congress every year, and Congress gets to vote on it every year.

Why is the Pentagon’s budget so high, though? The United States spends more on defense than the next eleven countries combined and did about 39 percent of the total defense spending for the entire world in 2020.

One reason is that the U.S. is treaty-bound to defend most of the free world. No other country is in that situation. American allies in many cases can and should do more to pay for their own defense, but obligations are obligations, and the U.S. must be prepared to uphold them.

Another reason is that the largest portion, roughly a third, of the defense budget is payroll and benefits for service members. Should military service members be paid less or receive fewer benefits? Certainly nobody in Congress would argue for that, so the largest portion of the military budget is off-limits right from the start, and we haven’t bought a single airplane, tank, or gun yet.

Then there are the maintenance costs of the stuff the military already owns — bases, equipment, etc. — so there’s not much you can do to cut that. Realistically, even the most brutal budget cutter couldn’t do much better than maybe 20 percent of the defense budget without severely harming U.S. readiness or throwing service members out on the street.

None of this is to say the Pentagon is frugal or there aren’t serious problems with the procurement process. The Defense Department is a government bureaucracy, and like all government bureaucracies, it wastes money. The point is just that in the grand scheme of federal spending, it pales in comparison with the spending on social programs.

Not only that — defense spending and social spending are moving in opposite directions as a share of the economy. When compared with GDP, defense spending has been on a downward trend since the ’50s. At the end of the Korean War, defense spending was about 11 percent of GDP. Last year, it was about 3 percent, and the Defense Department projects it will decline slightly over the next five years. In 2021, according to the CBO, Social Security, Medicare, and Medicaid combined for about 11 percent of GDP, and by 2031, they will average about 13 percent.

So please, let’s cut the nonsense about a large portion of federal spending going to defense and a small portion going to social programs. The exact opposite is true, and it’s not even close.

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