Defense Spending Not to Blame for Deficit

About Doug Berenson:

Douglas Berenson is a partner with the Avascent Group, and directs the firm's Defense and Aerospace Group. He has been with the firm since 1998. Berenson specializes in analyzing defense and aerospace markets, providing clients with advice on U.S. and international procurement trends, program assessments, marketing and competitive strategies, and budgetary assessments.

Cutting defense spending is not necessary to reduce the federal budget deficit and the national debt. Focusing on defense ignores the central causes of growing deficits and debt: lower tax revenues and expanding entitlement programs.

There is no doubt that the defense budget grew rapidly over the past decade. Between 1990 and 2010, outlays for Department of Defense and Department of Energy nuclear weapons activities grew by more than 130 percent, according to the Office of Management and Budget. Much of that growth supported operations in Iraq and Afghanistan. Between 2001 and 2010, Congress provided over $1 trillion in contingency operations funds. However, current plans are to withdraw U.S. troops from Iraq by the end of 2011, and from Afghanistan through 2014. Thus, defense spending will significantly decline from the 2010 peak.

[See photos of U.S. troops in Afghanistan.]

But for the goal of containing deficit spending, the defense budget—and, indeed, all discretionary programs—is a distraction. The real task is to contain growth in healthcare and entitlement spending, and to increase federal revenue.

Health and Entitlement Spending: Federal outlays grew by over $2.2 trillion between 1990 and 2010. Over one third of this growth came from Social Security and Medicare. (By contrast, defense accounted for less than 18 percent of this growth.) But what makes these programs truly daunting is their rate of growth over the next decade. OMB projects that the Social Security and Medicare programs will grow by more than 80 percent between 2010 and 2021.

Other federal healthcare programs, whether for Medicaid, veterans, or retired federal employees, are subject to the same growth dynamic.

[See a collection of political cartoons on the budget and deficit]

Whether it is by raising the retirement age, indexing benefits to income level, or some other means, these are the portions of the budget that must be contained to curb the explosion in outlays.

Taxes: On the opposite side of the ledger, federal revenue has declined significantly. In 2010, federal receipts dropped to less than 15 percent of gross domestic product, the lowest level since 1950, according to OMB. (The average level since 1980 is 18 percent.) This decline has been prompted by two factors: the Bush tax cuts of the early 2000s, and the recent period of recession and slow economic growth.

Reasonable people can debate the appropriate level of defense spending. There may be efficiencies to be gained in an agency as sprawling as DoD. But the solution to our growing fiscal peril simply lies elsewhere.

• See a slide show of 6 vulnerable potential terrorist targets.
• Check out our editorial cartoons on Afghanistan.
• See photos of the prison at Guantánamo Bay.

Tags:

deficit and national debt,

defense spending