August 30, 2014

The defense budget should not be off limits

If fiscal responsibility calls for significant changes in the big federal entitlement programs, shouldn’t the defense budget face scrutiny and reductions as well?

That question comes up a lot when The Concord Coalition emphasizes the need for entitlement reform. The answer is, “Yes.”

About a fifth of the federal budget goes to the Pentagon, and it is clear that there are many opportunities to achieve significant savings without jeopardizing national security.

Petty turf wars, bureaucratic bloat, poor planning, lax bookkeeping, no-bid contracts, illogical personnel policies and simple extravagance all inflate the defense budget in ways that knowledgeable taxpayers understandably resent.

In addition, short-sighted members of Congress often champion unnecessary defense spending -- or at least turn a blind eye to it -- in deference to the special interests that stand to profit.

All of this adds to the nation’s fiscal imbalances and massive borrowing. That’s why The Concord Coalition supports careful review of the defense budget to identify reasonable reforms and spending cuts.

In calling for a bipartisan fiscal commission that would submit recommendations to Congress, for example, we have stressed the importance of giving the panel a broad mandate that puts everything on the table. That includes defense spending as well as entitlement programs.

With defense spending, as with health care and many other areas of the federal budget, we could do better with less. In fact, former U.S. Comptroller General David M. Walker argues in his new book, Comeback America, that if the Pentagon bureaucracy were 25 percent smaller, it could become 50 percent more effective.

“The Pentagon’s business operations are a mess,” Walker writes. “This huge bureaucracy is the only major agency whose books are so jumbled that it cannot withstand a financial audit.”

To their credit, some members of Congress recognize that far more needs to be done to improve efficiency and accountability in the Department of Defense.

Sen. John McCain (R-AZ) is among the those who have sought a complete audit of Pentagon financial statements. He said last year: “We owe it to our men and women in uniform and the American taxpayer to fix the Pentagon’s broken bookkeeping without further delay . . .  While (the Department of Defense) has made progress in improving its financial management, much more needs to be done.”

On the Democratic side, Sen. Claire McCaskill of Missouri calls the Pentagon “historically wasteful” and has been particularly critical of dubious contracting policies.

But while the defense budget is large and often wasteful, it does not pose the same threat to long-term fiscal stability that the big federal entitlement programs do.

Defense, Social Security and Medicare/Medicaid are currently all about the same size. But Concord is more concerned with the long-term structural problems than with short-term balance. Consequently, we tend to focus on the parts of the budget that will grow the most relative to the Gross Domestic Product (GDP).

By that measure, long-term projections from the Congressional Budget Office show that defense spending will actually shrink. But Social Security, Medicare and Medicaid are on track to grow by about 60 percent relative to GDP through 2035.

In doing so, the big entitlement programs would claim more and more of the resources that would go to meet the nation’s many other needs – including investments that would be crucial to maintaining its economic and military strength in the decades ahead.

So while it is important to look for more efficiency and reasonable savings in the defense budget, it is absolutely critical for the nation to get the big entitlement programs on a more sustainable path.