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.