Thursday, March 25, 2010

Funding Defense

(fm the BC thread "It's For the Children")

Military spending is only $658 Billion (21%)

Thank you for your reply. You understand I believe that I am broadly sympathetic with your goal of reducing federal expenditures in areas not included in the enumerated powers. There are only four points that I would like you to consider at this time.

First, you elide from desiring a 10% ceiling on Income taxes to fund the entire government to calling for a government that consumes 10% of GDP. These are two different, although linked, things.

Second, even if the expenditures that you wish to eliminate totaled a trillion dollars a year it is not physically possible to simply defund Medicare etc. What is needed is a practical 20 year path to getting out from under the rock that the Baby Boomers lifted over our heads. During some considerable period of time we simply will have to keep paying for the follies of the past. Once we begin the glide path back to solvency the interest on the debt will begin to decline. If my idea of withholding the vote from the tax eaters were adopted this would be much easier but there is no benefit in dreaming that we can simply repudiate half the budget. Even in my dreams I like to follow a workable path to my goal. If I could simply close my eyes and be surrounded by beautiful and friendly women it would nice but in my dreams I tend to be exploring the stony path to my goal more than the goal itself. If my dreams start to get more interesting I may share them with you.

Third, you accept the current level of military spending as a base line. Why? While it is true that the Left wants to see it cut in half or more it is already far below what we have maintained over most of the last 60 years. My personal expectation is that during peacetime, or nominal peacetime given that we are in an effective, if officially unrecognized, Cold War with China and Russia again, we should expect to spend between 6.5% and 7.5% of GDP on Defense. The Armed Forces should be tripled in size over an eight year period, and then increased a further 50% over the following four years. Doing so would not make the military larger as a percent of the population or as a percent of the economy than we have been able to support during periods of growth. Such an expansion would not only solve many of our economic and social problems but it would also forestall a wave of aggressive conduct overseas that is arising in the face of America's retreat.

A larger military consuming the taxpayers money in training is a better investment for both America and the world than a smaller military stretched by constant conflict. As I see it a smaller military in accordance with a more Isolationist policy is, while admittedly in the absence of external conditions desirable to many for understandable reasons, simply to dangerous. VA and associated expenditures are also underfunded and should be counted separately. All of this is expensive but a reasonable response to the conditions we face.

My expectation is that for the near term, at least 10 years, we will need to spend at least 2.5 trillion dollars a year, even if we reorder our priorities. Your desire to get the budget down to the $1.5 trillion line is one that I share but do not expect us to get to under any scenario for at least 15 years.

Finally, I am concerned by how you expect to pay for a genuine crisis.
during time of war they could ask the American people for donations

Now that is not serious. Yes during WW-II we held Bond Drives.

We had people in Iowa hanging blackout curtains, but not to pay for the war but to build morale and a sense of solidarity with the war effort. War time rationing was economically irrational, as were most scrap metal collections, but they were politically important. The worst thing about them is that they established the popular emotional connection with economically irrational recycling under government mandate that has been hijacked by the environmental movement. Such efforts are often desirable under wartime conditions and we may need more of them but they are not part of a sound financial policy.

To be blogged under the title "Funding Defense."

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