The Magic of the Budget

Back in April, Dave Lin­dorff had a post up at Truthout con­cern­ing the por­tion of the fed­er­al bud­get that went to defense. It turns out it is 53%. For that 53% we get the largest mil­i­tary in the his­to­ry of the world. In 2009 US mil­i­tary spend­ing account­ed for 47 per­cent of all mon­ey spent glob­al­ly on war, weapons and mil­i­tary preparedness.

Today, on NPR’s Talk of the Nation, (I think at about the four­teen minute mark) Robert Samuel­son explained that half of the fed­er­al bud­get con­sist­ed of tak­ing mon­ey from the work­ers and pay­ing it to the retirees. He was on NPR because he had just writ­ten a col­umn on the sub­ject. From his column:

Social Secu­ri­ty, Medicare, Med­ic­aid and oth­er retiree pro­grams con­sti­tute rough­ly half of non-inter­est fed­er­al spending.

So it would seem that the entire bud­get is noth­ing more than defense and mov­ing mon­ey from work­ers to retirees.

But wait. Samuel­son also says:

In 1960, nation­al defense was the government’s main job; it con­sti­tut­ed 52 per­cent of fed­er­al out­lays. In 2011 — even with two wars — it is 20 per­cent and falling.

So is Defense half the bud­get or twen­ty per­cent of the budget?

Well, the bud­get Lin­dorff con­sid­ers does

not count… funds col­lect­ed for Social Security

but does include

$94 bil­lion in non-DoD mil­i­tary spend­ing, $100 bil­lion in vet­er­ans ben­e­fits and health care spend­ing, and $400 bil­lion in inter­est on debt raised to pay for pri­or wars and the stand­ing military.

These two fac­tors would obvi­ous­ly increase the per­cent­age, but from 20% to 50%?

Although he does not say so in his col­umn, I believe Samuel­son did men­tion on NPR that some vet­er­ans ben­e­fits are includ­ed in his “work­ers to retirees” col­umn and so, pre­sum­ably, not in his defense numbers.

If you won­dered why the bud­get is not well under­stood by the elec­torate, the above num­bers explain some of that.

Also, note that Samuel­son says Defense is 20% of the bud­get and falling. Lin­dorff says that defense is increas­ing at 9% which would require the over­all bud­get to increase at a greater than 9% pace for its share to be falling.

I have no idea who is right here. But I would point out that the Social Secu­ri­ty Trust Fund is not in any real trou­ble, a lit­tle tweak­ing and it is fine. Medicare is a seri­ous long term bud­get issue. If defense infla­tion is 9%, then it is also a seri­ous long term bud­get issue (espe­cial­ly if it is 53% of the budget!) .

Final­ly, Samuel­son makes the point that

In 2011 — even with two wars — it [defense] is 20 per­cent and falling.

I would argue that if we have man­aged over fifty years to take defense from 50% of the bud­get to 20% of the bud­get (with the bud­get increas­ing from about 30% to 40% of GDP over that span), that that is some­thing to be very proud of!

With so many ways of mak­ing the bud­get appear the way one wants it to, you would think we could use that mag­ic to solve our bud­get problems!

What Were They Thinking?!?

My nor­mal response to the ques­tion “What was he think­ing?” (or a vari­a­tion there­of) is that there was no think­ing involved. But is it pos­si­ble there was no think­ing involved on the part of the Repub­li­can House mem­bers when they passed the Ryan bud­get? If there was think­ing, what could it be?

All but four of them vot­ed to destroy Medicare, slash lots of spend­ing that peo­ple like, and low­er tax­es on the wealthy! They did this even though there was not a chance in hell of the bud­get becom­ing law. Next year they have to run for reelec­tion while defend­ing this vote. I assume the pri­ma­ry defense will be “There was no way it would become law, so it was safe to vote for it” which, I am sure, will make every­one feel bet­ter about it.

The inter­est­ing thing about the Ryan bud­get is that if it actu­al­ly passed the Sen­ate and the Pres­i­dent signed it, it would make the deficit worse. Why? Because there is no way the “end medicare as we know it” por­tion would remain intact. The spend­ing cuts the bud­get lays out would not remain intact. But you can bet your boots the tax cut for the wealthy would stay.

And the deficit would explode.

The deficit is a seri­ous issue, but it can not be solved by pre­tend­ing that polit­i­cal real­i­ties no longer exist.

Government Shutdown Avoided and Guaranteed

As I write, the news is that an agree­ment has been reached for the bud­get for the fis­cal year (or what’s left of it). This is good news, though it was pur­chased by the Democ­rats giv­ing up far more than they should have.

Appar­ent­ly, the House will not be able to pass the com­pro­mise with­out Demo­c­ra­t­ic votes as the Tea Par­ty mem­bers feel House Speak­er John Boehn­er gave up too much (he got more than his open­ing bid!). Which brings up the ques­tion, is Boehn­er an his­tor­i­cal­ly weak Speak­er, or an excep­tion­al­ly clever one?

I can not decide if the Democ­rats should give just enough votes for it to pass or if they should vote for it unan­i­mous­ly (or as unan­i­mous­ly as they can).

Now comes the hard part: next year’s bud­get. I see just two pos­si­bil­i­ties. One, no agree­ment is reach­able and the gov­ern­ment shuts down. I think this out­come is guar­an­teed. There is one alter­na­tive. Boehn­er could pass a bud­get with the 192 Demo­c­ra­t­ic votes and 25 Repub­li­can votes (includ­ing his own). This requires Boehn­er to be will­ing to lose his job as Speak­er. It also requires that he and the oth­er 24 Repub­li­cans face a Tea Par­ty oppo­nent in his pri­ma­ry. I see this as the only hope of avoid­ing a shutdown.

If we get through this fall, with or with­out a shut­down, then we have just one bud­get left for this con­gress, and that would be on the table dur­ing the elec­tion! That will be interesting!!

The Pentagon Budget and the Cold War

Recent­ly, though I can­not remem­ber where, I came across an argu­ment for cut­ting the pen­ta­gon bud­get. The speak­er was aghast that, adjust­ed for infla­tion, the pen­ta­gon was spend­ing more mon­ey now than it did at the height of the cold war.

There actu­al­ly is a good rea­son for this.

If you think about it, the whole Mutu­al­ly Assured Destruc­tion con­cept is a bit on the nut­ty side, although it did get us through the cold war. Why would coun­tries “at war” invest in such a con­cept? Because it saved money!!

Main­tain­ing a nuclear deter­rent was sig­nif­i­cant­ly cheap­er than what it would have cost to main­tain enough non-nuclear mil­i­tary to deter the USSR. Now we are faced with secu­ri­ty chal­lenges that are spread out over many coun­tries instead of con­cen­trat­ed in one. It is going to cost more.

Add in the fact that for most of the cold war, we draft­ed most of our sol­diers. Now it is an all vol­un­teer army. I coiuld be wrong, but I’d wager that the pay for sol­dier is high­er today. It is true that there are few­er sol­diers, but that just means that many of the tasks that used to be done by sol­diers are now done by con­trac­tors at what I believe, I could be wrong here too, is a high­er cost.

Is there mon­ey to be saved in the Pen­ta­gon? I have to believe that there is. But giv­en the world we still live in, there is prob­a­bly not as much to save as one might think. Even with the mon­ey we have been spend­ing on defense, we were not able to wage two wars at the same time. We fought in Afghanistan, then we let up in Afghanistan so we could fight in Iraq, and we did not again get seri­ous in Afghanistan until we had let up in Iraq.

I wish I could say that the days of wag­ing two wars at once are past (or the days of wag­ing one war!!!), but I am not that naive.