The US annual budget deficit now approaches $1.5 trillion which nearly matches both the entirety of US discretionary spending each year and the amount of interest we will soon pay each year on the overall government debt of $32 trillion. The newly elected House is now controlled by the Republican party with some of its key members proposing that as a country we must move toward a more prudent economic and budget policy that gets the US to a balanced annual budget and in a position to begin to pay down our overall national debt.
Most economists now concur that the massive increase in spending since the pandemic began but especially in the past two years has driven up inflation to the 8-10% average, the highest in four decades. To simply adjust all government spending to keep pace, the Congress would have to add $600 billion to government expenditures every year, an amount equivalent to the entire Federal budget of 1980.
To get spending under any semblance of control will be a daunting task. But there is a right way and a wrong way to go about it.
Historically, whenever government spending becomes an issue in Congress, the narrative generally approved for debate is that spending for more guns or butter is at issue and only the roughly $1.6 trillion now spent for domestic discretionary spending, such as for EPA, the Department of the Interior, the State Department and Department of Defense can be candidates for cuts.
Today, of that amount, $814 billion is scheduled to be spent in the US Department of Defense and an additional $30 billion for the defense programs at the Department of Energy and the National Nuclear Security Administration and as such defense spending is often the top candidate for spending cuts.
In 2010-11 the last time Congress held the spending line (modestly) was under the Budget Control Act, which capped domestic discretionary spending over a decade at roughly $1.3 trillion adjusted for inflation, with defense spending at $670 billion rising modestly to $705 billion, but providing a reduction in overall spending that would have occurred without the caps.
But once the Budget Control Act expired, and as poverty programs and social entitlements increased markedly, especially as the baby boom began to draw Medicare and Social Security benefits, and the work requirement for public assistance was abandoned, plus pandemic related spending kicked in, the annual US Federal budget climbed to $6 trillion annually, and with annual debt exceeding $1 trillion.
Some historical perspective is useful to get an idea of how daunting these numbers are. For example, when John F. Kennedy was elected, the entire Federal budget was around $100 billion. And that includes everything—Social Security, poverty programs, foreign aid, the State department, Treasury and Defense.
And the defense department alone was $49 billion annually, or half the entire Federal budget, for a population of 179 million or $558 per person. Of this amount, $273 per capita was for defense and $285 per capita was for all other social spending.
Twenty years later, in 1981, with a population of 226 million, the US government annually spent $745 billion or $3300 for every American. At the time of 9-11, the US government was spending $2 trillion a year for 285 million people, or $7000 per capita.
But the split was widely different for defense and non-defense.
For example, somewhere between 2016-17 the annual Federal spending hit $4 trillion for 327 million people, or $12,200 per person and now with the $6 trillion milestone being surpassed in 2021 for 336 million Americans, the US government is spending $18,400 per person, or 3300% growth from 1960, of which $16,000 per capita is for social non-defense (up 5600%) and $2400 per capita for defense, (up 880%).
Let’s look at those numbers again. For every dollar per capita that defense increased from 1960 to 2021, the rest of the US government increased seven dollars. So, when the US Congress increases defense to consider both inflation and new requirements, why should non-defense go up even by greater numbers when historically there has been little equity between defense and non-defense?
Now it is certainly understandable that the question many Americans will ask is what the right amount of spending for US national security and the defense department is. In 2020, the US spent $2100 per person on defense. If we kept that same level of defense spending as a percent of our overall Federal budget (12%), the proper level of defense spending would be $840 billion, near the $847.3 billion in the FY2023 NDAA especially when one considers the additional funds for Taiwan and Ukraine. Added to that has been another $10.6 billion in defense projects that are outside the NDAA for a grand total of $857.9 billion or some $2550 per capita.
Another way of measuring things would be to spend in FY23 the same as we did in FY2020 as a percentage of GDP---and that would yield an NDAA defense budget of $814 billion, exactly what Congress has just approved in the NDAA.
Historically, a defense budget of $49 billion in 1960 is now $858 billion, or a 17.5-fold increase or 1750%. For nondefense, $51 billion in 1960 has now reached $5.4 trillion, or 110-fold or an increase over 11,000%.
But what about the argument that even if the overall defense number is not excessive, what about elements within the budget?
A common proposal of those seeking to cut defense spending is often that we eliminate nuclear weapons programs, which make up 5.6% of the defense budget and only 0.0062% of the Federal budget. The DOD nuclear expenditures, not including the Department of Energy related warhead work, is $27 billion annually and that is what the US government spends every 40 hours. So, for an average work week for most Americans, the US government could fund the entire US nuclear modernization and sustainment effort for an entire year.
Now what if we decide not to spend the money? The Triad of nuclear platforms we rely on for deterrence, including submarines, land-based missiles, and bombers, are 42, 60 and 62 years old, respectively, and will rust to obsolescence if not soon replaced. And once current plans are finished, it will be nearly half a century since the last time the US government modernized the US nuclear deterrent.
Is the spending worth it?
Well, for 70 years, since the end of WW II, the US nuclear deterrent has worked to prevent a single nuclear weapon from being used by anyone against anybody. There is thus a high bar in making the case whether such a successful deterrent force, even if costly, should be significantly changed or abandoned.
The USAF budget contains two of the three legs of the US nuclear TRIAD, and it is often looked to for spending cuts. But over $40 billion of the USAF budget is set aside for non-USAF requirements. And of the remaining $173 billion, $107 billion is for annual operations, maintenance, miliary pay and military construction, and $40 billion for research and development, with only $26 billion for missile and aircraft acquisition, conventional and nuclear.
The Air Force is working to modernize its force, as it is the oldest and smallest Air Force in US history. The cost of maintaining legacy forces is high, and the USAF is trying to reduce the old technology systems, take the savings, and put it into enhanced modern technology, so that by the end of the decade, new systems will come into the force, including the new B21 strategic bomber and the new Sentinel ICBM.
Well doesn’t a stronger defense mean a US leader would be more inclined to go to war?
A stronger USAF will not tempt American leaders to seek dragons to slay overseas as one of our first President’s worried. As President Reagan and other US Presidents have proven, carrying a big stick, and talking softly, and without recklessly using US armed forces, wins out in the end.
Witness the collapse of the Soviet Empire
At the height of détente and peaceful coexistence in the 1970’s, as the US grappled with a hollow military, Moscow and its allies in Cuba, Libya, North Korea, and Iraq initiated the use of military force some 40 times annually by 1980 compared to 12-15 such excursions in 1969-72 when the policy of détente was initiated. Some 1.5 million enemy soldiers were deployed overseas compared to 100,000 at the beginning of the decade. With the collapse of the Soviet Union, enemy military interventions went to very low levels, and enemy military forces deployed out of country dropped to under 10,000.
The US can assume that restraint and peaceful intentions will dissuade bad guys from aggression. But historically as Margaret Thatcher once explained, the European continent is home to many dozens of military cemeteries that testify to the folly of appeasement.
While NATO and our Western Pacific allies have added considerably to their defense budgets especially since 2017, significantly more needs to be done cooperatively with the United States for the free world to succeed in pushing back on the remaining totalitarian tide from China and Russia, North Korea, and Iran.
It is important to remember, when Japan recently called on China to exercise restraint with respect to threats to Taiwan, the CCP official response was if Japan came to the defense of Taiwan, China would bomb Japan with nuclear weapons until Japan “for the second time” unconditionally surrendered.
Obviously, America’s deterrent and extended deterrent capability remains critical to our security and that of our allies, especially our nuclear forces. Spending roughly $2500 per person annually on all defense is not however too big of an expense for the US to, as former defense secretary General Mattis put it, ensure “survival.”
Our ally Germany is buying the F-35s and Australia is purchasing advanced submarines, while Japan is scheduled to double its defense spending, and thus our allies are beginning to shoulder some of the burden of security.
Collectively, the US is thus moving in the right direction, and it’s a huge blight on Congress that to pass a required defense bill, hundreds of billions in unnecessary spending must be the price because there is no check, at least not until next year’s budget process.
Unfortunately, the world is a dangerous place, and simply wishing it weren’t so doesn’t magically bring about peace.
The defense budget is sized to meet our security requirements. If folks want to take some of those security requirements off the table, argue why the ROK and Japanese alliance is no longer necessary, or conventional forces in Europe are not needed, or space will remain peaceful thus not requiring a US military presence.
It is often argued the US Navy has militarized the seas, but then how is it that 103,000 commercial ships now carry $22 trillion in world trade, compared to $6.45 trillion in 2000 and $2 trillion in 1980?