Over to the right is a Heritage Foundation chart that shows what will happen if the United States' federal government continues on its current spending binge. In the best-case scenario from the Congressional Budget Office, federal revenues creep up to about 19 percent of GDP while spending surges to around 35 percent of GDP by the year 2035. The spending surge comes mostly from Medicare (government-subsidized health care for the old); Social Security (poorly performing guaranteed income for the old, regardless of need) and Medicaid (objectively rotten health care for the poor of all ages), interest on the federal debt (at $15 trillion and climbing), and all sorts of other nickel-and-dime programs add to the rising red line too.
Heritage runs through some "Solutions for the Super Committee" and most of them make sense, including structural reforms of entitlements (hey, why not abolish them except for some safety net programs for the very poor?) and not raising taxes (increases might well strangle any recovery that may or may not be happening).
But then Heritage hocks this looey out of right field:
* Fully Fund National Defense: Providing for America’s national defense is the primary duty of the federal government. The super committee should ensure full funding for America’s armed forces rather than making additional cuts.
Elsewhere in the same document, the Heritage bully boys note that cuts triggered by the failure of the Super Committee would place "our national defense at risk." After all, "Defense spending, excluding war costs, is only 3.7% of GDP—under the 60-year average—and will be cut further under the Budget Control Act, exacerbating our readiness crisis."
This is a less-convincing line of argument than Newt Gingrich suggesting he was raking in millions of dollars from Freddie Mac as a "historian." Our "readiness crisis" is not the result of cheaping out on national defense. It's the result of waging multiple wars without end and clear missions for a decade-plus.
Heritage's whining that defense is in any way being shortchanged now or in the future has some powerful allies in the Obama administration. There's Defense Secretary Leon Panetta, warning in a letter to Sen. John McCain that
In FY 2013, the reduction in defense spending under maximum sequestration would amount to 23 percent if the President exercised his authority to exempt military personnel....The situation does not get better beyond FY 2013. In this period, cuts to the DoD budget under maximum sequestration would equal about $100 billion a year compared with the FY 2012 plan. Facing such large reductions, we would have to reduce the size of the military sharply. Rough estimates suggest after ten years of these cuts, we would have the smallest ground force since 1940, the smallest number of ships since 1915, and the smallest Air Force in its history.
The polite word for this sort of numbers-crunching is bullshit. Whatever Panetta and Heritage and all the other deficit hawks cum defense Chicken Littles are talking about, it ain't cuts to Defense because of sequestration. Reason columnist and Mercatus Center economist Veronique de Rugy (follow her on Twitter) has produced a chart worth poring over like a treasure map:
Assuming maximum sequestration, Defense would increase only 16 percent in current dollars over the next decade, rather than 23 percent without sequestration. [Note: the original version of this post linked to a chart with a slightly different start date and hence slightly different percentages for increases. Both charts are correct, though the one starting in 2012 allows for a slightly cleaner comparison.] And check out the chump-change difference in the overall spending increase: $1.8 trillion vs. $1.65 trillion! That ain't draconian and neither is the threat of sequestration over all.
And before we go any further, let's not forget something that Sen. Rand Paul (R-Ky.) has helpfully pointed out:
We have increased military spending by 120% since 2001 [in nominal dollars]. We have doubled military spending.
So whatever else you say about the wisdom of increasing Defense by 23 percent vs. 16 percent, at least recognize that either figure comes after a decade of runaway increases. What you're fighting over is the size of the cherry on top of the sundae.
Heritage Foundation, like most groups on the right, is quick to announce that the government is generally inefficient and incompetent when it comes to spending money. Except for Defense, one of the most obviously bloated, inefficient, and unsupervised parts of the governments. That's a bit of a contradiction now, isn't it? Which is why so many cons wrap themselves in the flag to exempt military spending from the same sort of penny-pinching scrutiny that, say, school-lunch programs deserve. Indeed, as scholars at the conservative American Enterprise Institute will tell you, "the price of greatness" demands that we never shield military spending from massive increases.
Say what you will about the war machinists, but they've got a strong ally not just in Defense Secretary Panetta but in President Barack Obama. In his ridiculous budget plan released earlier this year, Obama envisioned a 10-year span in which "security spending" increased from $815 billion dollars to slightly over $1 trillion (in current dollars; see Table S3). The Republican alternative, written by Rep. Paul Ryan of Wisconsin, suggested spending just (just!) $801 billion in 2012 and a mere (mere!) $838 billion in 2021 (summary table S3; total spending = security + "global war on terror").
As Peter Suderman noted earlier today, all indications are that the Super Committee is almost surely headed to a failure as unsurprising as its members are unspectacular. The reasons are as obvious as the nose on your face. The Republicans aren't interested in cutting the sort of spending they like, and the Democrats aren't interested in cutting the sort of spending they like. And given the remarkable consistency of federal revenue - it's tough as hell to goose it up or down for any length of time - any sort of budget fix has got to come from the spending side.
The real pity of the situation involves that blue revenue line up there on the Heritage chart. If in fact federal revenue, absent any significant changes from current policy, can climb to 19 percent of GDP, we know exactly how to balance the budget over the next decade without raising taxes. As Veronique de Rugy and I argued in our March 2011 Reason article "The 19 Percent Solution," it requires small, year-over-year cuts to expected increases in spending that would effectively freeze spending around current levels. In 2021, we'd be spending roughly as much as we took in. Here's a chart outlining how that might happen:
Sure, sticking to a budget isn't as much fun as screwing the other guy while boosting your own preferred type of spending, but it has the not-inconsequential benefit of keeping the country from going broke. So there's that.
Here's a video that explains the 19 Percent Solution: