Several days ago I read a comment that an entire generation of social programs were being destroyed by the Trump administration. It was suggested that President Trump plans to, through the vehicle of the next budget, reduce funding to a number of entitlement programs. The individual further commented that our defense spending was far too great and needed to be cut. Hmmm…

Some thoughts on US spending:

1) The last time the US government spent less – that is to say, the total federal outlays actually decreased from one year to the next – was 1965. The change was less than 1%, but it did drop. (That there had been a 6.5% increase in spending between 1963 and 1964 is relevant.) Previous to that, the only serious reduction in spending since the end of World War II was from 1953 to 1954, a 7% decrease in spending. For every other year since 1949, federal spending has increased from one year to the next.

2) As has been repeated often, national security spending keeps dropping; the trend line is significant. In 1950 US defense spending represented just over 30% of all federal spending. By 1953, with the Korean War — and the intensification of the Cold War, national security spending jumped to nearly 70% of the budget. Since then it’s been falling, with a few up-ticks for short periods; during the height of the Vietnam War spending peaked at 45% of federal spending then began to fall again (with another up-tick under Reagan, rising from 22% to about 27% under Reagan, then falling to about 17% by 2000, and then rising to the current level of about 22% of total federal spending.

3) The debt has grown substantially, with massive amounts of growth since 2008. It’s popular to suggest that if we hadn’t been engaged in the war on terror, and if we hadn’t gone into Iraq, that the debt wouldn’t be that bad. More numbers: Since 2002, when the War on Terror spending really began, the national debt has grown from $6.2 Trillion, to $20 Trillion. During that 15-year period the US spent approximately $9.3 Trillion on national security.

Stated differently, if the US had spent ZERO on defense over the last 15 years, beginning in 2002, the national debt would still have increased $4.6 trillion, a 74% increase.

What can we learn from this? First, anyone who thinks Congress can actually spend less from one year to the next (except in defense) needs a reality check. It doesn’t happen and it hasn’t happened in two generations. And it won’t happen. There are no serious plans to reduce federal outlays on any of the major entitlement programs. All that might happen is that the rate of increase might be adjusted down from one year to the next, but that are no plans to actually reduce any major entitlement.

Second, the debt, short of some major economic growth, is projected to grow. Before President Obama left office the Congressional Budget Office projected the national debt would increase by another $5.5 trillion by 2025.

So, where does that leave us?

To begin, Congress is incapable of stopping spending. Hoping that somehow it will happen “next year” is probably less productive than buying a lottery ticket; at least you have a remote chance of winning the lottery. The only possible course that leads to a real reduction our debt is real growth (growth beyond any inflation). That’s been done in the past, and might be again. The number needed is 3-4% real growth – sustained. But that requires that our economic efforts be focused on stimulating that growth. There is only one path to do that and that is to reduce taxation while also reducing government regulation. The President appears to understand that and the tax reform he has pushed through Congress, and should sign this week is an attempt to start that.

Meanwhile, complaints about excessive defense spending simply don’t match with the facts. There is a separate argument about miss-spent defense dollars. But for now we need to recognize that we have under-funded our national security for most of the past two decades, even as the threats around us continue to multiply. That needs to stop. We need security and we need real economic growth. But we mustn’t try to fix the national debt on the back of our nation’s security.

Copyright 2017 Arrias
www.vicsocotra.com