The Defense Budget in Perspective

Peter Huessy – Warrior Senior Nuclear Weapons Analyst, Senior Fellow – Warrior Maven, Atlantic Council, Hudson Institute

The US annual budget deficit now approaches $1.5 trillion which nearly matches both the entirety of US discretionary spending each year and the amount of interest we will soon pay each year on the overall government debt of $32 trillion. The newly elected House is now controlled by the Republican party with some of its key members proposing that as a country we must move toward a more prudent economic and budget policy that gets the US to a balanced annual budget and in a position to begin to pay down our overall national debt.

Most economists now concur that the massive increase in spending since the pandemic began but especially in the past two years has driven up inflation to the 8-10% average, the highest in four decades. To simply adjust all government spending to keep pace, the Congress would have to add $600 billion to government expenditures every year, an amount equivalent to the entire Federal budget of 1980.

To get spending under any semblance of control will be a daunting task. But there is a right way and a wrong way to go about it.

Historically, whenever government spending becomes an issue in Congress, the narrative generally approved for debate is that spending for more guns or butter is at issue and only the roughly $1.6 trillion now spent for domestic discretionary spending, such as for EPA, the Department of the Interior, the State Department and Department of Defense can be candidates for cuts.

Today, of that amount, $814 billion is scheduled to be spent in the US Department of Defense and an additional $30 billion for the defense programs at the Department of Energy and the National Nuclear Security Administration and as such defense spending is often the top candidate for spending cuts.

In 2010-11 the last time Congress held the spending line (modestly) was under the Budget Control Act, which capped domestic discretionary spending over a decade at roughly $1.3 trillion adjusted for inflation, with defense spending at $670 billion rising modestly to $705 billion, but providing a reduction in overall spending that would have occurred without the caps.

But once the Budget Control Act expired, and as poverty programs and social entitlements increased markedly, especially as the baby boom began to draw Medicare and Social Security benefits, and the work requirement for public assistance was abandoned, plus pandemic related spending kicked in, the annual US Federal budget climbed to $6 trillion annually, and with annual debt exceeding $1 trillion.