The President’s Fiscal Commission: It’s a Start
Today POLITICO Arena asks
Will implementing President Obama’s Fiscal Commission recommendations require that everyone take a hit?
My response (with tax insights from Jagadeesh Gokhale):
President Obama’s Fiscal Commission Report offers a useful start in reducing our budget deficits and national debt, but it hardly goes far enough. As several of my Cato colleagues have just noted here, here, here, and here, the report recognizes, to its credit, that our corporate income tax structure puts U.S. corporations at a considerable competitive disadvantage against their foreign competitors. And the report keeps military spending cuts on the table, even if there is much more to be cut. Yet by proposing a reduction in government spending from 24.3 percent of GDP today to 21.8 percent over the next 15 years — total federal spending as recently as 2000 was just 18.4 percent of GDP – it plays the old Washington game of calling a slower increase than previously projected a “cut.”
As for taxes, this report should be read in the context of a powerful argument in last Friday’s Wall Street Journal to the effect that over the past six decades, tax revenues as a percentage of GDP have averaged just under 19 percent, regardless of the top marginal personal income tax rate or whether taxes were cut or raised. What this suggests is that low tax rates spur income growth to leave the government’s revenues undiminished over the long-term. High tax rates do the opposite. It doesn’t take a large leap of faith to believe that this effect would be stronger for those who earn more and pay more in taxes. Indeed, among high earners are the nation’s business leaders – innovators who create new products and jobs – who would respond positively to the growth opportunity provided by a stable, low-tax-rate environment. So those who believe that we help ourselves by more heavily taxing the rich need to ask themselves whether it might not be better to cut rates and keep them stable instead. Wouldn’t that promote a robust economy and lift all boats – with the government continuing to generate 19 percent in revenues?
None of this has anything to do, of course, with whether our current out-of-control federal government is constitutionally authorized to do all it is doing. But it’s a start toward returning the government to within its constitutional limits. Had those limits been respected – as the Framers understood, unlike New Deal progressives — we wouldn’t be in this mess.
Deficit Reduction Commission Says Military Spending Can and Must be Cut
President Obama’s Fiscal Commission’s report is out and they have wisely kept military spending on the table. Having not seen the accompanying list of specific cuts, it seems that rather than micromanage DoD’s decisions with respect to which weapons systems to cut or keep, the commissioners have laid down a different marker: find the cuts that make sense, but understand that the business-as-usual of the past decade is over.
The report fixes on a number of spending cuts and reforms that Benjamin Friedman and I call for in the Cato Policy Analysis “Budgetary Savings from Military Restraint” including cuts to the civilian workforce (see recommendation 1.10.4). They also hold fast to the proposition that all spending must be on the table, and reject out of hand the notion that military spending must be held sacrosanct. This is bad news for the “defending defense” crowd.
I am not going to comment on the Commission’s other proposals with respect to taxes, social security, health care, etc. As for specific military spending cuts, this report is less detailed than the preliminary report issued a few weeks ago by Co-chairs Bowles and Simpson. It is appropriate, however, to task the Department of Defense with identifying additional savings (as they do in recommendation 1.11). Responsible cuts can be made if the Pentagon and the White House adopt a strategy of restraint, one that husbands American resources, focuses on a few core missions vital to U.S. national security, and requires other countries to take primary responsibility for their defense.
Barney Frank: Cut Military Spending by Following Cato Plan
U.S. Representative Barney Frank (D-Massachusetts) believes that cutting the military means rethinking the purpose of our military. He argues that the far-flung adventures that have killed thousands of American soldiers and consumed trillions of dollars simply haven’t been justified by U.S. defense needs. He also takes issue with President Obama exempting military spending from his so-called “spending freeze” proposed earlier this year. He spoke at the Cato Institute November 19, 2010.
Conservative Rift Widening over Military Spending
More and more figures on the right — especially some darlings of the all-important tea party movement — are coming forward to utter a conservative heresy: that the Pentagon budget cow perhaps should not be so sacred after all.
Senator-elect Rand Paul of Kentucky was the latest, declaring on ABC’s “This Week” on Sunday that military spending should not be exempt from the electorate’s clear
desire to reduce the massive federal deficit.
His comments follow similar musings by leading fiscal hawks Sen. Tom Coburn of Oklahoma and Gov. Mitch Daniels of Indiana, a presumptive contender for the GOP nomination in 2012. Others who agree that military spending shouldn’t get a free pass as we search for savings include Sen. Johnny Isakson, Sen. Bob Corker, Sen.-elect Pat Toomey—the list goes on.
Will tea partiers extend their limited government principles to foreign policy? I certainly hope so, although I caution that any move to bring down Pentagon spending must include a change in our foreign policy that currently commits our military to far too many missions abroad. To cut spending without reducing overseas commitments merely places additional strains on the men and women serving in our military, which is no one’s desired outcome.
If tea partiers need the specifics they have been criticized for lacking in their drive for fiscal discipline, they need look no further than the Cato Institute’s DownSizingGovernment.org project. As of today, that web site includes recommendations for over a trillion dollars in targeted cuts to the Pentagon budget over ten years.
Meanwhile, the hawkish elements of the right have been at pains to declare military spending off-limits in any moves toward fiscal austerity. That perspective is best epitomized in a Wall Street Journal op-ed by Ed Feulner of the Heritage Foundation, Arthur Brooks of AEI and Bill Kristol of the Weekly Standard published on Oct. 4—a month before the tea party fueled a GOP landslide. (Ed Crane and I penned a letter responding to that piece.) Thankfully, it looks like neoconservative attempts to forestall a debate over military spending have failed. That debate is already well along.
British Military Cuts, Conservatives, and Neocons
Yesterday, Prime Minister David Cameron announced Britain’s biggest defense cuts since World War II. The cuts affect the British military across the board.
The Army will shed 7,000 troops; the Royal Navy and Royal Air Force will each lose 5,000 personnel; the total workforce in the Ministry of Defence, including civilians, will contract by 42,000. The Navy’s destroyer fleet will shrink from 23 to 19. Two aircraft carriers — already under construction — will be completed, but one of the two will be either mothballed or sold within a few years. Whether the one remaining flattop in the British fleet will actually deploy with an operational fixed-wing aircraft is an open question. They’ve decided to jettison their Harriers; a technological marvel when it was first introduced, it has a limited range and a poor safety record. In its place, the Brits still intend to purchase Joint Strike Fighters, but not the short take-off and vertical landing (STOVL) version.
And right on cue, Max Boot argues in today’s Wall Street Journal, following the Heritage Foundation’s James Carafano’s example, that fiscal conservatives should not use these cuts as an example of how to reign in deficits. According to Boot and Carafano, military spending is off-limits. Period.
But as I note at The Skeptics, most Americans do not buy into this argument:
In Boot’s telling, Cameron’s decision inevitably places a heavier burden on the shoulders of American taxpayers and American troops.
But why should Americans perform a function for other governments that they are obligated by tradition, law and reason to perform for themselves? Defense is, as Boot notes, “one of the core responsibilities of government.” I would go one better: defense is one of the only legitimate responsibilities for government. So why does Max Boot think that Americans should simply resign themselves to take on this burden, doing for others what they should do for themselves?
I suspect that he fears that most Americans are not comfortable with the role that he and his neoconservative allies have preached for nearly two decades, hence his preemptive shot across the bow of the incoming congressional class that will have been elected on a platform of reducing the burden of government. True, the public is easily swayed, and not inclined to vote on foreign policy matters, in general, but as I noted here on Monday, it seems unlikely that the same Tea Partiers who want the U.S. government to do less in the United States are anxious to do more everywhere else. And, indeed, such sentiments are not confined to conservatives and constitutionalists who are keenly aware of government’s inherent limitations. Recent surveys by the Chicago Council of on Global Affairs (.pdf) and the Pew Research Center (here) definitively demonstrate that the public writ large is anxious to shed the role of global policeman.
Click here to read the entire post.
The Tea Party and Foreign Policy
There has been an on-going discussion recently about the Tea Party’s foreign policy views and how this might influence the upcoming election and new members of Congress. In an essay at the Daily Caller last week, the Heritage Foundation’s Jim Carafano addressed this question and the claim that the new “Defending Defense” initiative— led by Heritiage, AEI, and the Foreign Policy Initiative—is aimed at co-opting the Tea Party movement (for more on the substance, or lack thereof, of “Defending Defense,” see Justin Logan’s response here).
Over at The Skeptics blog, I take issue with Carafano’s assessment of the Tea Party’s foreign policy views:
With respect to Carafano’s assessment of the Tea Partiers’s views on foreign policy and military spending, most of what he puts forward is pure speculation. Little is actually known about the foreign policy views of a movement that is organized primarily around the idea of getting the government off the people’s backs. It seems unlikely, however, that a majority within the movement like the idea of our government building other people’s countries, and our troops fighting other people’s wars.
Equally dubious is Carafano’s claim that the Tea Party ranks include “many libertarians who don’t think much of the Reagan mantra ‘peace through strength’” but an equal or larger number who are enamored of the idea that the military should get as much money as it wants, and then some. Carafano avoids a discussion of what this military has actually been asked to do, much less what it should do. By default, he endorses the tired status quo, which holds that the purpose of the U.S. military is to defend other countries so that their governments can spend money on social welfare programs and six-week vacations.
Tea Partiers are many things, but defenders of the status quo isn’t one of them. This movement is populated by individuals who are incensed by politicians reaching into their pockets and funneling money for goo-goo projects to Washington. It beggars the imagination that they’d be anxious to send money for similar schemes to Brussels, Paris, Berlin and Tokyo, and yet that is precisely what our foreign policies have done — and will do — so long as the United States maintains a military geared more for defending others than for defending us.
Click here to read the entire post.
Cut (Really Cut) Military Spending
Today ForeignPolicy.com has a feature article examining possible “Plan B’s for Obama,” with contributions coming from numerous experts. My contribution to the feature is titled “Cut (Really Cut) Military Spending.”
It is time for President Obama and the administration to finally notice the increasing calls—from across the political spectrum—that the Pentagon’s budget should not be off limits when reducing the deficit. From the Foreign Policy article:
Despite all the hype about Defense Secretary Robert Gates and his cuts of big-ticket military projects, the Pentagon’s $680 billion budget is actually slated to increase in coming years. This is unconscionable at a time when taxpayers are under enormous stress and when the U.S. government must reduce spending across the board. Barack Obama can save big bucks without undermining U.S. security — but only if he refocuses the military on a few, core missions.
…
The hawks will scream, but America will be just fine. Obama can capitalize on the country’s unique advantages — wide oceans to the east and west, friendly neighbors to the north and south, a dearth of powerful enemies globally, and the wealth to adapt to dangers as they arise — by adopting a grand strategy of restraint. The United States could shed the burden of defending other countries that are able to defend themselves, abandon futile efforts to fix failed states, and focus on those security challenges that pose the greatest threat to America. A strategic shift of this magnitude will not only reduce conflict and make the United States safer, but it will enable Obama to reshape the military to suit this more modest set of objectives, at a price that’s far easier for taxpayers to swallow.
Click here to read the full article
Actually We Aren’t Running the World
Bloggers have already noted the most glaring problems with Arthur Brooks, Edwin Feulner and Bill Kristol’s Monday Wall Street Journal op-ed, “Peace Doesn’t Keep Itself,” which worries that conservatives are figuring out that trying to run the world is not conservative.
The op-ed pretends that the fact that defense spending isn’t the largest cause of the deficit means it isn’t a cause of the deficit. It obscures the fact that we spend more on defense than we did in the Cold War by counting the defense budget as a portion of the economy without noting the latter has grown faster than the former.
So I can limit myself to less obvious angles. The first is that neoconservatives like Kristol are for increasing the defense budget no matter what. For them the military is basically an expression of national awesomeness (to use an academic term). Enemies and other details, like what we spend already, come up mainly in the justification phase.
In 2000, when U.S. defense spending was nearly $180 billion lower than today—excluding the wars and adjusting for inflation—Bill Kristol and Robert Kagan wanted to increase defense spending by $60 to $100 billion a year. After September 11, they called for a “large” and “substantial” increase. Having got that and then some, Kristol, at least, wants even more. The neoconservative appetite for military spending is insatiable because their militarism is.
Second, I want to pick on one point the op-ed makes because it is both wrong and widely believed: “Global prosperity requires commerce and trade, and this requires peace. But the peace does not keep itself.”
More on Phony Defense Spending Cuts
On Saturday the Washington Post published a letter I wrote chastising their editorialists for inventing defense budget cuts:
The Aug. 12 editorial “Mr. Gates’s rough cuts” and David S. Broder’s Aug. 12 column, “Gates’s budget warning shot,” applauded the defense secretary for his plans to cut spending even though the plans will do no such thing. As Mr. Broder wrote, Mr. Gates proposed closing the U.S. Joint Forces Command and shedding contractors and generals in the Pentagon’s employ. But neither piece noted that these proposals are part of a plan to shift some Pentagon spending from administration to force structure — not to cut total spending.
The impetus for the cost-shifting plan is the White House’s reluctance to increase Pentagon spending by more than 1 percent above inflation for the next few years. Rapid growth in procurement and personnel spending makes that increase insufficient to cover the military’s programmatic costs.
Bloated administrative overhead is a good place to find funds for that end. But taxpayers gain nothing.
Mr. Gates has requested substantial increases in defense spending every year that he has been secretary. He opposes spending cuts, even after the wars end, even though the United States now spends more on defense than at any time during the Cold War, adjusting for inflation. He openly hopes that these proposals to heighten administrative efficiency deflect pressure to cut spending. By pretending that these changes do so, The Post helps shield Pentagon spending from scrutiny.
The point is straightforward: Stop confusing reforms explicitly intended to prevent spending cuts with real spending cuts.
The Post, however, repeated the error that my letter complained about in the title they gave it both online (“Will the defense cuts do what Robert Gates says they will?”) and in the actual newspaper (“Scrutinizing Mr. Gates’s Defense Budget Cuts”). The editor has yet to respond to my email noting the irony.
I wrote more on the media’s failure to portray these reforms accurately for the National Interest’s new Skeptics blog. (Chris Preble and I have already discussed this topic here.)
The Post’s editorial page typifies the fawning coverage that the Washington commentariat gives Gates. He has a knack for getting even otherwise discerning analysts to portray him as a pragmatist/ realist/ conservative even as he asks Congress to increase a defense budget that is already larger than at any point during the Cold War and advocates endless nation-building warfare in Afghanistan. The keys to his success, I say, are (a) appearing moderate in contrast to the rest of the foreign policy elites in his party, which is easy, (b) skillful management that distracts people from his embrace of policies that are not realistic, pragmatic, or conservative, and (c) eloquently saying things that contradict his actions.
Fareed Zakaria’s latest column, for example, asserts that the only two conservatives in Washington are Gates and the portrait of Eisenhower hanging in his office. Like many, Zakaria is taken with Gates’ recent speech at the Eisenhower library, which praised Ike for restraining defense spending and avoiding intervention in Vietnam. It was such a good speech that you can almost forgive those that fail to note the irony of Gates’ sounding like someone proposing defense cuts and exiting Afghanistan.
Bob Gates Against the World
Defense Secretary Robert Gates has again made headlines with a proposal to slow the growth of the Pentagon’s budget — already higher than at any point since World War II — by cutting overhead, waste and a top-heavy command structure.
The proposed shuttering of Joint Forces Command (Jif-Com) has elicited most of the press attention today, and prompted an impassioned plea from Virginia politicians, including Gov. Bob McDonnell, that the command remain open. Unhelpfully for Gov. McDonnell, outgoing Jif-Com head James Mattis (who will assume the title of CENTCOM), reportedly supports Gates’s decision.
But this isn’t the first time that opportunistic politicians have latched onto defense spending as a way to sprinkle economic benefits to their constituents, and at the expense of the rest of us. (In the same vein, Gates reportedly repeated his pledge to kill the entire DoD appropriation if it includes the unwanted C-17 and the alternate engine for the Joint Strike Fighter that some members of Congress continue to push.)
Leaving aside the predictable political wailings, the reforms that Gates proposed are neither revolutionary, nor particularly controversial to most objective observers. Politico‘s Gordon Lubold and Jen DiMascio in their ever-helpful Morning Defense newsletter point out that “The cuts seemed to take several pages out of the Defense Business Board task force led by [Arnold] Punaro that recently recommended many of the same trims.” (For more on that report, see here.)
What Is a ‘Strong’ Defense?
The good people at the Stimson Center’s Budget Insight blog invited me to contribute a guest post discussing the Sustainable Defense Task Force report Debt, Deficits, & Defense: A Way Forward. Here’s an excerpt:
The most common response [to the report] has been some sympathy for our argument that military spending should be subjected to the same scrutiny that should be applied to other government spending. There are still a fair number of people, however, who share our concern about the deficit, but who counter “But I want a strong defense.”
Who doesn’t?
The task force report was written with a single consideration in mind: in what ways, and where, could we make cuts in military spending that would not undermine U.S. security?
[...]
A leading conservative in the Senate, Tom Coburn (R-OK) wrote that the deficit reduction commission “affords us an opportunity to start some very late due diligence on national defense spending… [as well as] reduce wasteful, unnecessary, and duplicative defense spending that does nothing to make our nation safe.”
Read the rest here.
How Much Is Enough?
In yesterday’s Daily Caller, I responded to an article questioning cuts in military spending. Although the author focuses on a few of the specifics proposals put forward by the Sustainable Defense Task Force (SDTF), he seems to imply that any cuts in a budget that has grown 86 percent since 1998 (in real terms) would undermine our security.
I was able to respond to his more outrageous claims, including his assertion that Barack Obama plans to cut $1 trillion from the Pentagon budget over the next ten years. In fact, Obama has now submitted two DoD budgets, each larger than the year before. We are spending more money (in real, inflation-adjusted dollars) on the military today than at any time since World War II.
One of the other assertions in an article riddled with errors deserves a response. The author claims that cuts in military spending would leave as vulnerable as we were in the early 19th century, when:
Strapped for money, Jefferson cut the navy by two-thirds and built small gunboats instead, saying they “are the only water defense which can be useful to us, and protect us from the ruinous folly of a navy.” What were the results of Jefferson’s version of a low cost ‘policy of restraint?’ Britain’s navy brushed the gunboats aside and burned the White House in 1814.
Fortunately, the British superpower of 1814 did not have an air force, a strategic missile force, or a large amphibious Marine Corps. If they had, they would have burned the Declaration of Independence, too.
Historical analogies are always tenuous, but this one might work…if you imagine that we were the British in the 19th century, and any other country in the world was the adolescent United States. The American superpower of the 21st century doeshave “an air force, a strategic missile force, [and] a large amphibious Marine Corps” and we will continue to have all of those things in the extremely unlikely event that Congress adopts all of the SDTF’s recommendations for cuts.
Here is how the SDTF report addresses the question of relative military spending:
In 1986, US military spending was only 60% as high as that of its adversaries (taken as a group). Today, America spends more than two and one-half times as much as does the group of potential adversary states, including Russia and China. This means that if the United States were to cut its spending in half today, it would still be spending more than its current and potential adversaries – and the balance would still be twice as favorable as during the Cold War.
The notion that we can’t cut anything from the military budget without diminishing American security, that we need to spend more money on the military today than at the height of the Cold War, is absurd. Even some prominent conservatives are beginning to question the wisdom of spending hundreds of billions of dollars every years on the military. Let’s hope this sensible thinking starts to catch on.
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