From the Council on Foreign Relations: Trends in U.S. Military Spending

This is simply offered to augment the section on budgeting - as well as foreign policy. I stumbled across it and it helps address issues associated with military spending, so I offer it as a general resource.

- Click here for the article.

Some handy charts from the article:

Military spending in the US

The Economist reports that we still spend more than any other country, and almost as much as the rest of the developed world combined.

The Disease Olympics

Here's a good look at the battles that happen between different "disease lobbies" who try to maximize spending on their preferred malady (be it cancer, HIV/AIDS, or whatever). Increasingly, this includes taking cases directly to members of Congress rather than to the different agencies set up to fund that research. $1,000 in lobbying seems to correspond to $25,000 in research funds. It's a terrific look at the networks that develop around spending items.

Special attention is given to the recently signed Recalcitrant Cancer Research Act.

Here's an additional look at how the sequester might impact funding for research on disease in general. Might there be increasingly contentious fights over limited resources? Let's hope if you get sick you get sick with a disease that has forceful advocates.

credit: The Dish.

Is federal spending really out of control?

Ex Reagan and HW Bush official Bruce Bartlett says no. Except for interest payment on the debt, federal spending is stable if it is looked at as a percentage of GDP, which tends to grow despite the recent setback.

Click to the story here. He offers this chart, with data based on a report linked to in his article:



And this commentary:

. . . we see that spending for every single government program going forward is remarkably stable as a percentage of GDP. Those who complain loudest about spending and deficits nearly always base their concerns on projections of nominal spending that are unadjusted for inflation, growth of the population or growth of the economy. This is intellectually dishonest.

In fact, virtually all the growth in projected spending comes not from entitlements or giveaways to the poor and lazy, as Republicans would have us believe, but rather from interest on the debt. This is a problem, but not nearly to the extent that it appears.

The reason is that interest on the debt is what economists call a pure transfer. Economically, it is little different from taking money out of your right pocket and putting it into your left pocket. That is because the vast bulk of interest goes to people and institutions who simply use it to buy more Treasury securities.

Not that it's all paid for of course, or that someone might raise a stink about what the programs do, but his point is simply that spending as projected now is stable when compared to GDP - a point that is quite often made. Data can be presented in different ways to try to make different points.

Since we cannot project events like terrorist attacks and recessions, we don't know what will actually occur. Notice that the lines are far more volatile prior to 2012 than after it. The peaks and valleys are the result of changes in the economy, but they do seem to vary in a manner that averages out to the base line he draws going forward. The spike just before 2010 is the spending related to the Great Recession. This points out the need to be mindful of policies that lead to the creation of bubbles.

- The Dish comments here.

A little detail on the spending side of the fiscal cliff

This is meant to accompany the post below on the revenue increases set to occur if we go over the fiscal cliff. This is a very quick look at the decreases in spending that are also set to occur.

According to the Washington Post, there are four types of cuts set to occur.

1 - The first are those related to the sequester, which are automatic spending cuts mandated by the Budget Control Act passed in the summer of 2011. They are designed to cut $1.2 trillion dollars during the next 8 years in discretionary spending, both domestic and defense. As written, it cuts over $100 billion from next year's budget. This was part of a deal to allow the debt ceiling to be raised last year, and it automatically kicks in unless a separate deal can be made.

2 - Overall discretionary spending is to be capped.

3 - The "doc fix" will be allowed to end. In 1997 Congress passed a law - the Medicare Sustainable Growth Rate - which attempted to limit spending on Medicare. The increase in the amount doctors would be provided when they see Medicare patients would not exceed GDP. But medical costs have exceeded GDP, so the doc fix has prevented this from occurring. Ending the fix means reimbursements are reduced.

4 - Unemployment insurance will not be extended. It has been set at 99 weeks due to the slow recovery since 2008's financial crash.

As with the revenue side - more detail as it becomes relevant. Notice that there is nothing in the existing dispute about non-discretionary spending like Social Security and Medicare. It's non-discretionary after all and would require separate legislation to change.

US military spending in two handy graphs

Both come courtesy of Andrew Sullivan, who stole them from other people.

Here's a description of spending over time - adjusted for inflation.



We are spending more now than we have in at least 50 years - it would be nice if the graph went back through WW2 at least. Believe it or not, after the end of the Cold War, people spoke of the peace dividend since a large military was no longer needed - but notice the impact of 9-11.

This graphs shows US military spending compared to that in the next nine nations in the top ten:



We spend considerably more than the next nine combined, and likely more than the rest of the world along with it. The question is whether this is necessary to secure the nation, or just pork. A reward for well connected military contractors and jobs for people in key congressional districts.

One argument in favor of having the dominant military in the world is that it helps cement the US's economic dominance as well. We own both the seas and space. That does contain dividends.

From WonkBlog: Defense spending in the U.S., in four charts

Here's useful data for a future look at foreign policy and defense spending.

Worth a preliminary look.

John McCain Thinks the President Should Have Line Item Veto Power over Earmarks

From Politico:

Republicans and Democrats may have temporarily outlawed earmarks in the Senate, but Sen. John McCain (R-Ariz.) said Tuesday that the president still needs the authority to block specific items from spending bills.


“The battle is not won. It is, at best, a truce,” McCain said about his decades-long battle against congressional pet projects. “This is just one tool we want the president of the United States to have. … This is one small, tough decision that is going to have to be made.”

McCain was joined by a bipartisan group of senators who back legislation introduced by McCain and Sen. Tom Carper (D-Del.) that would give President Barack Obama authority similar to a line-item veto. Under the plan, several version of which have been introduced over the years, the president would have the power to single out earmarks and other non-entitlements in spending bills, and send them back to Congress for an up or down vote.

This is What Protests to Proposed Spending Cuts Look Like in Britain

Story here.

Is Defense Spending Too High?

From the Economists.

Background Reading:

- World Military Spending.
- Wikipedia: Military Budget of the United States.

A neat little quote from James Madison: Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes … known instruments for bringing the many under the domination of the few.… No nation could preserve its freedom in the midst of continual warfare.