Two-Thirds On Defense (Degree of Defence funding exposed)

[mom cat]

Two-Thirds On Defense
by Jurgen Brauer
and Nicholas Anglewicz
June 19, 2005

http://www.zmag.org/content/showarticle.cfm?SectionID=51&ItemID=8112

Tom Paine Printer Friendly Version

Many Americans believe that 19 cents on defense for every 81 cents on non-defense is a reasonable way to spend a tax dollar. But by another calculation, the tax dollar splits 68 cents for defense and 32 cents on everything else. It is a common misconception that U.S. defense expenditure is equivalent to the Department of Defense outlays. Instead of $436.4 billion of defense expenditure, as Congressional budgeteers count, government statisticians in the Bureau of Economic Analysis (BEA) counted $548.0 billion for calendar year 2004—a whopping $112 billion difference. And by our own calculations, U.S. defense expenditure is much higher than even the BEA's numbers suggest, namely $765.6 billion in calendar year 2004—about $330 billion or 75 percent more than the Department of Defense outlays.

To account for the difference, one needs to recognize that, for example, nuclear weapons-related outlays are budgeted under the Department of Energy line item, not that of the Department of Defense. Likewise, Veterans Affairs has its own department and budget. It is a defense-related category, reflecting obligations incurred to American servicemen and women on account of past U.S. military activity. Picking through the budget, the BEA, housed in the Department of Commerce, reclassifies each line item into "defense" and "non-defense" categories. For calendar year 2004, national defense outlays thus amounted to the aforementioned $548.0 billion.

The BEA also recognizes that the total fiscal year 2004 federal outlays of $2,292.2 billion consist to a very large degree of Social Security, Medicaid and other trust fund payments. These trust funds happen to be run via federal government accounts, but as they merely transfer funds among citizens, they do not constitute expenditures for federal government functions per se, such as agriculture, education, transportation or diplomacy. Thus, subtracting transfer payments out of the federal budget, the BEA calculates that in addition to the $548.0 billion for defense, the federal government spent only another $262.1 billion on all other federal government functions, for a total of $810.2 billion. Hence, BEA arrives at the ratio of 68 cents for defense as against only 32 cents on everything else.

While the BEA's reasoning is economically correct, even the BEA leaves out an important item: the allocation of federal interest payment on the government's debt. Most years, the U.S. federal government runs a budget deficit. That deficit needs to be financed by borrowing. The resulting interest expense should therefore be allocated to defense and non-defense spending in proportion to their respective share in causing the annual deficits. If for example overall non-interest outlays are $90, split between $60 for defense and $30 for everything else, and revenue was only $81, then the $9 deficit should be attributed as $6 on account of defense, and the remaining $3 on account of non-defense federal government outlays. The interest on the resulting debt should be allocated in like fashion.

[punpirate]

1. Well, finally someone is saying what...

... I've been harping about for quite literally decades. This business of spreading defense spending around in the budget has been going on since at least the early `80s and possibly as early as the mid-`70s.

This also doesn't take into account the large amount spent on the intelligence services and the black-world paramilitary groups supported by them and the DoD, which are increasingly offensively oriented, rather than strictly predictive in nature.

When Head Start gets cut in your community, or the federally-financed school meals disappear, this is one major reason why.

[mom cat]

3. Looks like you've been right for decades! I knew the split was bad.

But I didn't realize it was this bad! There must be a lot of Democrats in Congress who also know this is how the cookie crumbles. But I guess they're getting their crumbs.

[brindis_desala]

2. When Eisenhower warned us beware of the Military Industrial Complex

few heeded. Now that it has destroyed our economy not even rampant corruption can rouse the slumbering masses. Thank you for this post. It explains so much about our current problems. American workers are the most productive in the world but they spend their hard labor propping up the corrupt namely, weapons dealers, ex-politicos, dictators and generals. Those who trade liberty for security end up with neither, to paraphrase Ben Franklin.

Hidden defense costs add up to double trouble
By David R. Francis
The US is "last of the big-time spenders" on defense in the world, notes a table from Hellman's Center for Arms Control and Non-Proliferation.

At the moment, Petter Stålenheim at the Stockholm International Peace Research Institute figures the US will account for between 45 and 50 percent of the world's military spending in 2003. The US boosted spending by 6 percent last year; Britain raised defense spending 1 percent; France 1.8 percent, and Russia 14 percent, says Mr. Stålenheim. Germany cut spending a little. Italy fell 8 percent. The Bush budget for 2005 calls for a 7 percent hike in DoD spending.

Right now, Wheeler says, the defense budget is "gigantic ... compared to any potential foe."
http://www.csmonitor.com/2004/0223/p17s01-coop.html

[mom cat]

4. Thanks for your great article too! This certainly explains a lot!

[punpirate]

5. I sort of wish Eisenhower had...

... actually done something about it as president, instead of bemoaning it after the fact. His own first Secretary of Defense, Charles Wilson, was the one who set up the program of propping up defense firms and keeping them up on a war production footing. By late 1956, as a mild recession was building, it was Eisenhower himself who suggested increasing defense spending as a means of averting recession....

Truth is, Eisenhower didn't actually do anything to prevent it from happening (and he used the CIA's paramilitary functions much like previous presidents had used the Marines--it was much less detectable by the public and the domestic press).

All people remember now is what he said as he was leaving the presidency. Many of the people in the Pentagon were his underlings in WWII, and if he'd said, "we have to put the clamps on this problem," it probably would have happened.

[brindis_desala]

6. One can look at his decision two ways and both answers may suggest he

was naive. The Morgan Rockefeller oil and banking magnates had created the Cold War and no doubt Eisenhower believed in the "Communist Threat"
much like some in Congress in doubt "believe in Peak Oil and Global Terrorism" and so eschew more efficacious approaches. He may have thought that covert operations would be less risky for world stability without taking into account the danger to democracy of secret paramilitary outfits without real oversight. Whether he could have supported Kennan and reined in the Dulles brothers and their ilk who were pushing the arms race is the question. As JFK discovered those guys play hardball. But your point is well taken- if any president was in a position to accomplish it, it was the ex-general war-hero president....and he folded.

[punpirate]

7. I've read a couple of accounts...

... which strongly suggest that Eisenhower was well aware of some of the less distinguished accomplishments of the CIA--because he signed off on them. One, as I recall, clearly implicated Eisenhower in the decision to overthrow Arbenz in Guatemala--specifically because of the Arbenz program of land reform.

As for Kennedy, Eisenhower pretty much also ignored the growing tendency toward right-wing extremism in the top echelon of the Pentagon, and that was yet another problem with which Kennedy was left to cope.

I think Eisenhower believed that Nixon would win handily, and would have carried on with the status quo developed under Eisenhower (albeit with Nixon's penchant for usurpation of power). If Nixon had won, I suspect Eisenhower's farewell message might have been somewhat different.