2.09.2006
Military Spending, The U.S. Budget
There's a good explanation of some of the stupid things our current government is spending money on in an article by Fred Kaplan over at Slate, entitled Defense Budget 101 - How much are we really spending?.
I am not one of the leftist "deficits don't matter" types who thinks we should just slash the defense budget to $50 billion from $583 billion (where it stands now when you include all the Iraq and Afghanistan spending). I would however, like to see it trimmed to $200 billion and get rid of a ton of weapons programs that are targeted at nonexistent foes. Kaplan's article does a great job discussing this phenomenon.
What to do with the $383 billion saved? This money would take a big chunk out of the deficit, especially going into the future. But not enough.
The Intractable Budget Deficit
Because voters are mainly foolish and believe fancy, expensive ad campaigns that basically lie to them and oversimplify complicated policy discussions, my hope for Americans, on their own terms, to cut the deficit into the future... well, it's slim at best. The only hope I have is that some members of Congress who vote on principle at least half the time (there are actually a number of them) will eventually restrain two huge areas of spending:
1) Entitlement spending (set to go through the roof in a decade)
2) Military spending (often far too high for our uses)
Obviously we cannot just slash both right away. We have to "finish" the Iraq and Afghanistan campaigns first, rather than leaving those regions to be boiled into authoritarian regimes (again). As long as we're promoting liberal democracies (those words subsume "capitalist" as well) we may as well make sure they actually work out.
Entitlement spending is tricky. While social democrats think it is the most important goal of government in the twenty-first century, I think it's safe to say that we cannot afford much of their "prescriptions" for success any time soon. The costs of transitioning to a more ambitious universal coverage system in healthcare are enormous, no matter what you think of the post-transition costs of maintaining it (which might be lower than our current system due to scale efficiencies, price controls, etc). Furthermore, social security is in a bad, bad way now, no matter how many articles Paul Krugman writes rejecting its incipient demise. Part of the problem is political, and part of the problem is historical. Since the "trust fund" has been raided ever since it began, there is basically no money in it, only government IOUs from one branch to another (legislative --> executive agency). Furthermore, while the system is sustainable until 2038 or something by its own estimates, the word "sustainable" hides some pretty draconian tax measures that will be required to sustain it. That is, we'll see massive income tax increases, and slashes in other areas of the budget (transportation, education, etc).
What's wrong with this picture? Economic growth, ceteris paribus, isn't going to happen at levels we need it to if we tax the hell out of everyone. When I say "ceteris paribus" I mean without more; I mean that we have had growth at other times in history while having huge taxes but that was short-lived and due to other extraneous factors. The fact is, if we jack up taxes, capital will leave out country over time -- that's the "problem" of a globalized economy. Tax rates drive away investment -- hence the Irish miracle of the 1990s (where they slashes income taxes across the board and experienced phenomenal growth). Why do we need economic growth? Without growth, or in the face of economic decline, NO ONE will be able to pay into social security at levels high enough to pay out the benefits we've "guaranteed" baby boomer seniors. We are implicitly relying on continuous economic growth to fund the wealth transfer that is social security!
So we cannot severely raise taxes to fund SSI -- or even go further to fund a universal healthcare transition, and we're also "starving the beast" on all of our social policy goals by deficit spending on the military. What to do?
That's tough. My instinct right now is to say: jack up taxes now on income, investment income, and eliminate favorable tax benefits and subsidies for a whole host of industries and groups of people; gradually cut all new weapons programs unless they can be shown to be important for our missions in Iraq, Afghanistan and as "world cop"; get out of Iraq and Afghanistan ASAP as they move to more stable governmental systems; slash defense spending generally by $100s of billions; lower the promises social security benefits by means-testing more aggressively and raising retirement age to 70 or 73; slash education spending and allow states and local governments to fund their damn schools and choose their curriculums.
Any dissent on those ideas? There oughtta be...
I am not one of the leftist "deficits don't matter" types who thinks we should just slash the defense budget to $50 billion from $583 billion (where it stands now when you include all the Iraq and Afghanistan spending). I would however, like to see it trimmed to $200 billion and get rid of a ton of weapons programs that are targeted at nonexistent foes. Kaplan's article does a great job discussing this phenomenon.
What to do with the $383 billion saved? This money would take a big chunk out of the deficit, especially going into the future. But not enough.
The Intractable Budget Deficit
Because voters are mainly foolish and believe fancy, expensive ad campaigns that basically lie to them and oversimplify complicated policy discussions, my hope for Americans, on their own terms, to cut the deficit into the future... well, it's slim at best. The only hope I have is that some members of Congress who vote on principle at least half the time (there are actually a number of them) will eventually restrain two huge areas of spending:
1) Entitlement spending (set to go through the roof in a decade)
2) Military spending (often far too high for our uses)
Obviously we cannot just slash both right away. We have to "finish" the Iraq and Afghanistan campaigns first, rather than leaving those regions to be boiled into authoritarian regimes (again). As long as we're promoting liberal democracies (those words subsume "capitalist" as well) we may as well make sure they actually work out.
Entitlement spending is tricky. While social democrats think it is the most important goal of government in the twenty-first century, I think it's safe to say that we cannot afford much of their "prescriptions" for success any time soon. The costs of transitioning to a more ambitious universal coverage system in healthcare are enormous, no matter what you think of the post-transition costs of maintaining it (which might be lower than our current system due to scale efficiencies, price controls, etc). Furthermore, social security is in a bad, bad way now, no matter how many articles Paul Krugman writes rejecting its incipient demise. Part of the problem is political, and part of the problem is historical. Since the "trust fund" has been raided ever since it began, there is basically no money in it, only government IOUs from one branch to another (legislative --> executive agency). Furthermore, while the system is sustainable until 2038 or something by its own estimates, the word "sustainable" hides some pretty draconian tax measures that will be required to sustain it. That is, we'll see massive income tax increases, and slashes in other areas of the budget (transportation, education, etc).
What's wrong with this picture? Economic growth, ceteris paribus, isn't going to happen at levels we need it to if we tax the hell out of everyone. When I say "ceteris paribus" I mean without more; I mean that we have had growth at other times in history while having huge taxes but that was short-lived and due to other extraneous factors. The fact is, if we jack up taxes, capital will leave out country over time -- that's the "problem" of a globalized economy. Tax rates drive away investment -- hence the Irish miracle of the 1990s (where they slashes income taxes across the board and experienced phenomenal growth). Why do we need economic growth? Without growth, or in the face of economic decline, NO ONE will be able to pay into social security at levels high enough to pay out the benefits we've "guaranteed" baby boomer seniors. We are implicitly relying on continuous economic growth to fund the wealth transfer that is social security!
So we cannot severely raise taxes to fund SSI -- or even go further to fund a universal healthcare transition, and we're also "starving the beast" on all of our social policy goals by deficit spending on the military. What to do?
That's tough. My instinct right now is to say: jack up taxes now on income, investment income, and eliminate favorable tax benefits and subsidies for a whole host of industries and groups of people; gradually cut all new weapons programs unless they can be shown to be important for our missions in Iraq, Afghanistan and as "world cop"; get out of Iraq and Afghanistan ASAP as they move to more stable governmental systems; slash defense spending generally by $100s of billions; lower the promises social security benefits by means-testing more aggressively and raising retirement age to 70 or 73; slash education spending and allow states and local governments to fund their damn schools and choose their curriculums.
Any dissent on those ideas? There oughtta be...
# posted by Vanity @ 12:27 
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I would like to know more about military programs born out of the Cold War that are no longer feasible or intelligent. I can think of two examples right away that have been tanked -- the Seawolf attack submarine program and the Crusader artillery piece. Neither of which is conducive to fighting a modern "brushfire" war predicted by analysts. Just how much CAN the military budget be cut? That's what I want to know --how much of this pork-style Cold War malarkey can be axed without sacrificing our vital edge in training and equipment?
Did you read the article I linked to? I think it makes the case that $50-100 billion could be cut, including our ridiculous "Star Wars" missile defense system. Furthermore, the occupations we're involved in at the moment are costing us something like $100-120 billion per year. I also think they we don't need as many carriers as we do, as many nuke subs as we do, as many stealth bombers as we do, or any new tanks, stealth fighter jets, or ballistic missiles. We have plenty of all of them, and in every single category we have more, larger, and better armaments than the rest of the world. And don't argue that "the enemy is catching up" -- there is no such enemy, and no one is anywhere near us. China doesn't even have ONE equivalent aircraft carrier task force to our TWELVE. And we're building more -- look at the CVN-21 program.
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