Budget Freeze as Political Theater

President Obama has sent to Congress a proposed $3.8 trillion budget for the federal government for fiscal year 2011 – three percent more than the current fiscal year (a little more than a billion dollars).  Although Obama inherited a more than a trillion-dollar deficit from the Bush administration, his new budget will result in a projected deficit of $1.3 trillion in 2011 (although projected future deficits are lower, federal fiscal forecasting is legerdemain at best).  And the proposed 2011 budget continues the trend of Washington largesse comprising more than 20 percent of the total economy (represented by gross domestic product or GDP).  Prior to World War I, the federal budget was less than 5 percent of GDP.  After World War I and just prior to World War II, it grew to about 10 percent of GDP.  After World War II and during most of the Cold War, it hovered around 15 percent of GDP.  And beginning in the 1980s (ironically, when Ronald Reagan – a proponent of smaller government – was president), the federal budget grew to more than 20 percent of GDP (also ironically, there was a steady decline during the Clinton administration).  So while it may be fashionable to complain about Obama being a big spender (he is), it’s worth noting that he’s not alone nor is it the sole domain of Democrats.

In an effort to make it look like he’s doing something to bring rampant spending under control, Obama proclaimed in his message to Congress accompanying the budget:

To help put our country on a fiscally sustainable path, we will freeze non-security discretionary funding for 3 years.  This freeze will require a level of discipline with Americans’ tax dollars and a number of hard choices and painful tradeoffs not seen in Washington for many years.  But it is what needs to be done to restore fiscal responsibility as we begin to rebuild our economy.

But simple math shows that this is just sound and fury signifying nothing.

To begin, limiting the budget freeze to discretionary spending means that more than half the federal budget is off limits.  Mandatory, i.e., non-discretionary, federal spending amounts to $2.1 trillion (55 percent of the total federal budget).  Of that $2.1 trillion, $730 billion is for Social Security, $491 billion is for Medicare, and $297 billion is for Medicaid.  So any talk about reducing the size of the federal budget must include non-discretionary spending programs – especially since they are projected to nearly double in ten years – otherwise it’s just talk.

Just as importantly, any talk about freezing discretionary spending as a way to bring the budget under control must include security spending.  In the 2011 proposed budget, discretionary security spending is $895 billion versus $520 billion for non-security.  Put another way, security spending accounts for 63 percent of discretionary spending (and 23 percent of the total federal budget).  The Department of Defense’s share alone is $708 billion – more than all of the other federal departments combined.

But we don’t need to spend $708 billion (not only more than the rest of the federal government combined, but also more than what the rest of the world combined – friend and foe alike – spends on defense) to be secure.  The United States is not confronted by a hegemonic superpower that we have to contain militarily – as we were in the form of the former Soviet Union during the Cold War.  No country (friend or foe) possesses global power projection capability as a threat to invade America.  And the U.S. strategic nuclear arsenal acts as a powerful deterrent against any country contemplating direct military action against the United States.  So we no longer need a large military spread around the globe – especially since the terrorist threat is not a threat that can be contained by the military.  Moreover, it is our military presence in other countries – particularly Muslim countries – that stokes the flames of anti-American sentiment that is the basis for terrorism.

And although it pales in comparison to the Department of Defense, the Department of Homeland Security’s (DHS) $43 billion budget shouldn’t be immune from freezing (or reducing) either.  Created in the wake of 9/11 by throwing 23 different federal agencies under a single umbrella without thinking about what should be cut out before pasting together, DHS seems more like an organization of political convenience – politicians can claim that they’re doing something and when something goes wrong (like the Christmas underwear bomber) they have someone to blame.

The reality is if both non-discretionary spending and discretionary security spending are considered off limits, only 13 percent of the total federal budget is subject to freezing – which won’t result in any significant change.   At best, the result might be a 10 percent reduction in federal spending and the more likely case is that spending might remain flat (the administration’s projection are for the federal budget to grow to $5.7 trillion in 2020).  In other words, it’s all just political theater – full of sound and fury signifying nothing.

Author: Charles V. Peña

Charles V. Peña is a senior fellow at the Independent Institute, a senior fellow with the Coalition for a Realistic Foreign Policy, a former senior fellow with the George Washington University Homeland Security
Policy Institute
, an adviser to the Straus Military Reform Project, and an analyst for MSNBC television. Peña is the co-author of Exiting Iraq: Why the U.S. Must End the Military Occupation and Renew the War Against al-Qaeda and author of Winning the Un-War: A New Strategy for the War on Terrorism.