Military Budget Angst

The summary message here is that our bloated military budget is not the obstacle to non-defense spending growth that some people make it out to be.

I have been writing about this for a long time. A few numbers to start us off for Fiscal Year 2022, which ended in September. Receipts are $4.2 trillion. Expenditures are $6 trillion. By advanced math, as my econometrics professor used to say, that leaves a deficit of $1.8 trillion, or 7.8 percent of GDP. That’s high, compared to the pre-Covid years, but much reduced from the 15 percent left by the Trump Administration in FY2020.

On the outlay side, $1.7 trillion is classified as discretionary spending. The bigger half of $4.1 trillion is called mandatory spending and includes Social Security, Medicare, and Medicaid, among other programs. (I’m including net interest on Federal debt in the latter category.)

Within the discretionary category, the defense/non-defense split is $754/$913 billion. I won’t go on about the waste inside the defense amount. Groups on the left and right have been doing that for years. My pet peeves are in two items: funds to pursue a gigantic land war in Europe and nukes. The former seems unlikely and pointless, since the Russian military has been exposed as a giant pantload. The latter is reducible with negotiation. To deal with terrorism, we really need an army of assassins, which we have, and big cyber capabilities. Both are cheap in the grand scheme of $754 billion in annual spending.

Now consider the non-defense piece. A mere ten percent would be negligible in the context of the overall budget, and even compared to the deficit, but a revolution in domestic programs. It could, for instance, cover free college. Of course there would be a lot of competition for a piece of any such expansion.

I would agree that Congress has some internalized budget constraint, so there is a trade-off between defense and non-defense. But it is not zero-sum. My misgiving about the rhetoric is the implication of scarcity due to defense gobbling up all the potential revenue. In point of fact, a healthy increase in non-defense is feasible in economic terms with no diminution of defense, however misconceived the latter outlays might be.

The second canard circulating goes to the fact that Congress added onto the budget request from the president. This is routine. Defense contractors have very diabolically distributed production of their output to Congressional districts throughout the country, the better to maximize political support. Pork is always added so that assorted nabobs can wet their beaks. The problem is not the add-ons. It’s the fundamentally misconceived military strategy (big land war, nukes) underlying the total.

My final pet peeve is about the attacks from the left when some progressive Democrat votes for a defense budget. The way the entire budget gets rolled together, approval of defense spending keeps the wheels turning for non-defense. Periodically a member of Congress can trade his or her support for something valuable to his or her personal political interests. The big bill is going to pass anyway, by hook or crook, so there is no shame in adding a piece elsewhere in the budget that does some good.

My three part Federal budget opus for the Center for Economic and Policy Research starts here.