With less than a week to go in the presidential election and the economy in a tailspin, Sen. John McCain is claiming, "We [McCain and Sen. Barack Obama] both disagree with President Bush on economic policies. My approach is to get spending under control."
That would certainly be a change of pace from recent Republican administrations, with both Reagan and Bush II running up the federal deficit (in contrast, the Clinton administration balanced the budget and created surpluses). In fact, with the $500-billion-and-counting cost of the Iraq war plus the at least $700 billion bailout of Wall Street, the federal government is likely to find itself $1 trillion or more in the hole this year. According to Rudolph Penner, a senior fellow at the Urban Institute who served as director of the Congressional Budget Office under Reagan, the Bush administration is "going to make Ronald Reagan look like a piker in terms of deficit creation."
In the second presidential debate, McCain articulated how he would get spending under control: "I recommend a spending freeze that except for defense, Veterans Affairs, and some other vital programs, we’ll just have to have [an] across-the-board freeze." But exempting the Defense Department from spending cuts assumes that all of such spending is absolutely essential (as well as that none of it is wasteful), and it ignores the single largest chunk of so-called discretionary government largess.
The fiscal year (FY) 2009 budget request by the Bush administration is $3.1 trillion ($200 billion more than FY 2008). Let’s assume that McCain’s "vital programs" means so-called mandatory or non-discretionary spending that would not be cut:
- $644 billion for Social Security
- $408 billion for Medicare
- $224 billion for Medicaid and the State Children’s Health Insurance Program (SCHIP)
- $360 billion for unemployment/welfare/other mandatory spending
- $260 billion for interest on the national debt
So more than half the budget ($1.9 trillion) would be untouchable. Of the $1.2 trillion left, the Department of Defense accounts for nearly half:
- $515.4 billion for the Department of Defense
- $70.4 billion for the Department of Health and Human Services
- $70 billion for the Global War on Terror
- $59.2 billion for the Department of Education
- $44.8 billion for the Department of Veterans Affairs
- $38.5 billion for the Department of Housing and Urban Development
- $38.3 billion for the Department of State and other international programs
- $37.6 billion for the Department of Homeland Security
- $25 billion for the Department of Energy
- $20.3 billion for the Department of Justice
- $20.8 billion for the Department of Agriculture
- $14.3 billion for the National Aeronautics and Space Administration
- $11.5 billion for the Department of Transportation
- $12.5 billion for the Department of Treasury
- $10.6 billion for the Department of the Interior
- $10.5 billion for the Department of Labor
- $8.2 billion for the Department of Commerce
- $5.8 billion for the Gulf Coast/hurricane recovery
- $46.4 billion for other on-budget discretionary spending
(Note: The actual FY 2009 budget summary table S-8, "Budget Summary by Category," shows $1.2 trillion for total discretionary spending, yet summary table S-2, "Discretionary Funding by Category," and summary table S-3, "Discretionary Funding by Major Agency," show $987.6 billion total discretionary funding. [.pdf])
Total discretionary security spending (the Defense Department plus other government-wide homeland security) is $730 billion. Including Veterans Affairs ($44.8 billion), only about $425 billion (about 35 percent of the discretionary budget and only about 14 percent of the total federal budget) is left to trim. McCain hasn’t said how much he’d cut, but simple math demonstrates that cuts at the margins won’t make a big dent in getting spending under control:
|Money Saved||% of discretionary spending||% of total budget|
|10% Reduction||$42.5 billion||3.5%||1.3%|
|20% Reduction||$85 billion||7.1%||2.7%|
By way of comparison, President Reagan was able to decrease discretionary spending by about 14 percent during his first term, so the above probably represents reasonable upper and lower bounds.
So as long as defense spending (even narrowly defined as just the Department of Defense) is considered off limits for budget cuts, talk about cutting spending is just a lot of political hot air. (And McCain’s talk about cutting out earmarks certainly a good idea is largely political sleight of hand when it comes to reducing spending. Earmarks also known as pork-barrel spending are congressional add-ons that exceed the president’s budget request. So while getting rid of earmarks would reduce unnecessary, excessive spending, it would not make any real change in the budget submitted to Congress by the president. Moreover, according to the Citizens Against Government Waste 2008 Congressional Pig Book, pork-barrel spending totaled $17.2 billion equal to about 1.6 percent of total discretionary spending and about one-half of 1 percent of the total federal budget in FY 2008.)
President Bush recently signed off on a record $578 billion defense budget ($512 billion for the Department of Defense and $66 billion for military operations in Iraq and Afghanistan) for FY 2009 exceeded only by spending during World War II and nearly equal to the rest of the world’s combined military expenditures . Reportedly, the Pentagon wants $57 billion more for FY 2010. But the United States doesn’t need to spend $600 billion to meet its security requirements which does not include being the world’s policeman (even beyond military operations in Iraq and Afghanistan, a significant portion of the defense budget is to pay for the manpower and equipment for legions of U.S. troops deployed to all four corners of the globe).
If John McCain is serious about getting spending under control, then he has to be serious about reining in defense spending, too (especially with a projected FY 2009 budget deficit of over $400 billion and McCain’s pledge not to raise taxes). Otherwise, all the talk of fiscal responsibility is, as the great bard once said, simply sound and fury, signifying nothing.