In Defense of Defense, and Social Security

  • by Pete O'Brien
  • 08-16-2020
The tentative Democratic Platform proposes $1.2 trillion in Defense cuts over the next ten years (nearly a 20% cut). In one article on the subject the author commented that “nearly half of all US discretionary spending goes to national security.” Hmmm…
Things are getting sporty in Belarus; President Lukashenko, who received 80% of last week’s vote, faces mounting unrest as it has occurred to many Belarus citizens that 80% seems just a tiny bit high. Demonstrations continue; Sviatlana Tsikhanouskaya didn’t really expect to win (Lukashenko has been president for 26 years and was going to win, one way or another…), but the brazen nature of the clearly skewed vote-count has prompted a ground-swell of support for Tsikhanouskaya, and now Lukashenko is asking Tsar Putin for help… Not that the US or any of our European allies intend to get involved in Belarus, but things aren’t sweetness and light in Eastern Europe. 
In the South China Sea China continues to pressure its neighbors - and continues to threaten international order and the right of freedom of navigation, even as China faces some interesting problems: food shortages, flooding, inadequate fresh water, and possibly even a dam in trouble - one of the largest dams in the world.
Tensions between Turkey and Greece are boiling to the surface once again, with the two countries disputing each other’s claims for drilling grounds in the Eastern Mediterranean. 
In fact, while the bulk of the media focus ever more attention on the Wuhan virus, the world is stirring…
So, some numbers:
The US federal budget for 2020 was supposed to be approximately $4.8 trillion. Of that, $1.5 trillion was discretionary, and half of that was National Security spending, about $740 billion. The rest, more than $3 trillion, were entitlement programs.
Thus Defense spending, despite the clever wording of those who want to cut the budget and spend it elsewhere, is (or was) less than 16% of federal spending.
Meanwhile, courtesy of the Wuhan virus, US Federal spending is far more than the $4.8 trillion projected less than a year ago. 
Total federal spending for 2020 will probably run close to $7 trillion as a result of stimulus money spent in the last five months. And instead of a deficit of $1 trillion, the deficit for the year will be almost $3 trillion. Defense and National Security spending for the year will this total perhaps 11% of all federal spending, and maybe less.
But, the objection will be made, we need to cut Defense spending or we’ll have no money and then we would need to cut health care support and Social Security.
No, we won’t.
Very simply, the federal government, because it can - and does - regulate virtually every facet of the financial sector of the economy, can generate money when there is, seemingly, none. Tax revenues, and Social Security payments come in, and federal funds are spent on all sorts of things, and Social Security and other payments go out, and if they don’t match, the Treasury can - and does - make up the difference. The Treasury, working with the Federal Reserve bank, can loan money, borrow money, print money, change the rate at which money is circulated, etc.; pretty much anything it wants to do it can do (as long as Congress agrees). 
The confusion is that we all tend to view the federal budget in terms analogous to our own budget: money in, money out, spend too much on “A” and you can’t spend as much as you planned on “X.” 
But it doesn’t work that way. This isn’t to say that it shouldn’t work that way, sort of, but that’s an argument for another day.
I once watched an accounting professor work through the federal budget using generally accepted accounting standards. He then also “ran the numbers" of a major oil company using the accounting method of the federal government rather than standard accounting methods. By the time he finished he’d made his point in glaring fashion: the federal government only functioned because it had the authority to print money and raise debt nearly at will.
Does it matter?
Yes. Current budgetary problems are so vast they can only be fixed by changing how we think about the role of government. Total debt represented by the huge unfunded annuities that stand behind various public retirement accounts and entitlement programs now total well in excess of $200 trillion, more than two orders of magnitude greater than total national security spending, and well beyond the capability of federal and state governments.
Cutting the Defense budget thus becomes analogous to the standard cry when a city budget shortfall appears and the City Council’s manipulative response is to cut the Fire Department and claim the only answer is to raise taxes.
Just as the city’s debt wasn’t caused by the Fire Department and can’t be solved by cutting the Fire Department’s budget, the Federal Debt won’t be solved by trimming the Defense budget. Nor will spending on Defense mean cutting Social Security checks.
The left wants to reduce National Security (Defense, Homeland Security, Intelligence, Veterans Affairs) spending even as the world seems to be slowly growing more dangerous. At the same time, there’s this strange “reflection in the mirror;” we have increased violence in a number of cities across the US and the answer from the same end of the political spectrum is “Defund the Police.”
The primary role of the federal government is to protect the nation (just as the primary roles of the states and cities are to provide law and order). There is always room to argue exactly how to do that. But just as this is not the time to defund the police, this is also not the time to reduce Defense spending.