The recently passed financial bailout package
has drawn the ire of citizens throughout the United States. Both conservatives
and liberals have condemned Congress and the White House for rescuing Wall Street
titans, who caused the economic death spiral in the first place, by transferring
an enormous fiscal burden to middle- and working-class taxpayers. At a time
when people are losing their homes and struggling to make ends meet, many Americans
find the bailout's $700 billion price tag to be simply outrageous.
What many Americans may not realize is that the United States is likely to
spend $711 billion on national defense in the fiscal year that began on October
1 (assuming fiscal year 2009 war costs are $170 billion, an estimate
provided by Secretary of Defense Robert Gates). You read that correctly: the
United States will spend more on defense over the next 365 days than on the
$700 bailout package.
The graph below compares estimated US defense spending in fiscal year (FY)
2009 to the bailout, previous US conflicts, and other federal spending priorities.
Experts have claimed for the past few years that US defense spending, now
at its highest inflation-adjusted level since World War II, will start to decline
soon. This anticipated downturn has yet to materialize. Presented with war funding
requests still labeled "emergency" even after seven years
of war and motivated by a desire to be seen as pro-defense, lawmakers
have been ready and willing to give the Department of Defense (DOD) everything
it asks for and more.
With the United States suffering through economic conditions not seen since
the Great Depression, however, the era of $700 billion annual defense budgets
may soon be coming to an end. "Any crisis of this nature is going to affect
must affect other federal spending," former chief Pentagon
budget official Tina Jonas said about the struggling economy in September. "You
cannot look at defense by itself. It is a subset of our macro financial picture."
Secretary Gates added that "I certainly would expect [defense budget] growth
to level off, and my guess would be we'll be fortunate in the years immediately
if we were able to stay flat with inflation."
Now, this is not the first time the Bush administration has claimed that defense
spending is going down. Lowballing future costs is the oldest trick in the Pentagon's
book. But when high-level officials in an administration as defense-happy (and
deficit-careless) as George W. Bush's speak so openly about potential defense
budget cuts, it suggests that spending contractions may indeed loom, particularly
with military operations in Iraq ostensibly planned to start winding down in
the next 6-12 months.
A troubled economy is not the only threat to $700 billion per year defense
budgets. Declining tax revenues and growing mandatory spending are also clouding
the fiscal skies. The Bush administration's tax cuts helped increase the gross
national debt over 70 percent (approximately $4 trillion) since FY2001, forcing
the government to spend more on debt-interest payments despite generating less
tax revenue. Federal spending on both mandatory programs (like Social Security)
and debt interest payments, if current trends hold, will consume two-thirds
of government revenues by 2015, crowding out other spending priorities like
education and housing assistance.
With a new administration and Congress set to assume power in January 2009,
today's economic storm provides an opportunity to make the hard choices that
have been put off for too many years. The key question for policymakers today
is whether current levels of defense spending reflect the appropriate federal
budgetary priorities. Money spent on defense is money not spent on deficit reduction,
infrastructure, or developing alternative sources of energy. If certain parts
of the defense budget were pruned, such as funding for unnecessary Cold War
weapons systems, the savings could be redirected toward other critical needs.
Opportunity cost and budgetary tradeoffs are real. A lot could be done with
the $700 billion appropriated for the financial bailout. Even more could be
accomplished by trimming the $711 billion flowing into the Pentagon over the
next 365 days.
Reprinted with permission from Foreign Policy