An Emerging Defense Budget Deal?
by PETER HUESSY
April 18, 2016
Last October I wrote a budget essay for FSM about the broken budget process and what could be done to fix it. An update is necessary.
The American public is understandably fed up and this is in large part due to Washington's inability to pass fiscally responsible budgets.
What does that mean?
The administration and Congress almost always wait until the end of the year to agree to a budget.
With a filibuster rule in the Senate, efforts to cut spending which 41 Senators vote to oppose will bring the government to a halt. This gives a big spending administration a lot of power.
In politics, seizing the narrative is the lifeblood of electoral success. If you get the dominant media to tell only your story, you get to paint your political adversaries as racists and lacking in compassion.
In Washington for many years, the national media have distorted this process by largely coming down on the side of the big spenders. The media wring their hands at the prospect of any threat "to shut the government down".
Why is this distorted picture so dominant?
In 1996, the media along with the Clinton administration artfully blamed the Republican Congressional majority for the administration's veto of spending bills it disliked which led to a temporary government shutdown.
The media played along with precooked stories of how the national parks would be ruined and hot dog inspectors would be unavailable if the "government shutdown".
To explain this phenomenon, we have to step back and do a little digging. (This used to be called "journalism".)
The roots of this budget problem are two.
One is the nature of the Senate rules-requiring 60 votes to move legislation. The other is an equally serious roadblock, the 1974 Budget Act.
For the first time, this law required the newly created Budget Committees in the House and Senate to allocate funding for the year among all 11 appropriations subcommittees and pass a budget resolution with such limits. Without this framework, spending bills brought to the floor would all be subject to an objection and point of order.
But by requiring all discretionary spending to be allocated in one budget bill in order to consider appropriations bills on the floor of the House and Senate, each element of the Federal government could only be funded if all other funding levels for other discretionary elements of the government had also been agreed to.
When I first worked in the Senate, Senator Stennis (D-Mississippi) was asked during one floor debate why the defense bill should not be cut given the projections that the budget deficit would hit $21 billion that year. The Senator noted there was plenty of money in the Treasury to pay for the defense bill in that it was the first appropriations bill to be considered that year.
Unfortunately, the 1974 budget act baked big government into the budget cake.
Stephen Smith, then director of the Weidenbaum Center on the Economy, Government, and Public Policy at Washington University in St. Louis, explained why in "The Senate Syndrome": "Motions to object to considering legislation went from 30 in 1970 to over 410 in 2007, while votes subject to a cloture motion [increased] from 10 in 1969 to 150 in 2006."
Thus when spending bills are delayed until the end of the fiscal year, getting the necessary 60 votes to move appropriations bills-overcoming Senate rules that require a "60-vote majority"-- is a daunting task because if you don't cave-in to the big spenders in order to pass a budget, you will be accused of "threatening to shut the government down".
In addition, by waiting until the end of the fiscal year to complete the budget, regular appropriations bills escape the normal debate and amending process, oversight that can reduce unnecessary spending and change policy. Instead, huge continuing resolutions [CRs] are negotiated by Congressional leaders and the administration, with little input from most legislators and virtually none from the public.
As a result, an administration dead set against, say more defense spending, can make sure their Senate allies object to consideration of any and all appropriations bills up to near the very end of the fiscal year.
Then the choice would come down to either passing a huge, unwieldy, pork filled "Omnibus" spending bill or "closing down the government" because no overall spending agreement could be reached unless "more spending" was the guiding principal-except of course more spending for defense offset by cuts elsewhere.
To make things go smoothly, each political party then has an incentive to "log roll"--each party supports the spending wants of the other party, everything is added up together and the bill is passed all the while with declarations (largely false) that fiscal responsibility has been observed.
When looked at from the perspective of some 40 years in place, the 1974 budget act has worked just as the big governments enthusiasts had hoped.
In 1974 spending was $269 billion, the deficit ended up at $6 billion and the total national debt was $505 billion.
The current yearly spending is $4 trillion, the annual debt is over $544 billion and the total national debt is $18.6 trillion, increases since 1974 of roughly 1500%, 9000% and 3700% respectively.
Not only is the budget process broken but despite spending $4 trillion a year on all Federal government programs, extensive testimony before Congress from this administration lays out a defense establishment in terrible shape and starved for resources.
Readiness is critically low with less than half of our Air Force airplanes able to operate for lack of spare parts and necessary maintenance. This is true for elements of the Navy, the Army and Marines as well.
Our military leaders are warning we are outmanned and outgunned by our enemies. In short, we don't have enough stuff.
Last October I asked Representative Adam Smith, the ranking Democratic member of the House Armed Services Committee whether he could support a ten year balanced budget agreement as part of an overall deal that also increased defense spending.
He said that doing so in ten years would not be possible.
But I then asked whether he could support splitting the difference---cutting in half the projected deficit over the next decade while also fixing defense.
He said yes.
Is there thus a window through which a more fiscally responsible budget could be passed?
Maybe. But here's the problem.
The ranking member of the Senate Appropriations Committee, Barbara Mikulski of Maryland, says that defense spending could go up but only if other spending goes up the same amount, a perfect example of traditional Congressional "log rolling". No prospect of a balanced budget under those rules.
In short what the Maryland Senator is arguing is that to protect our national security we have to be fiscally irresponsible. Any increase in defense must be matched with an increase in non-defense. Even if not necessarily needed. Even if as a result the deficit goes up. Even if nearly everyone readily acknowledges the security of our country is in jeopardy without more resources for defense.
None of this makes any sense.
Especially in that it is a Democratic administration who's military and civilian leaders are warning-correctly-- about a weakening defense capability and the lack of resources, what Republicans have been warning about for years.
But we cannot fix the defense problem and maintain fiscal discipline because apparently some Democrats have to be "bribed" with more pork barrel spending to do what is right with defense.
Nowhere have we heard why non-defense spending has to be increased for some serious national priority-only that certain legislators will hold hostage the security of the country unless they get their new spending.
However, Mr. Adam Smith of Washington opened the door to a solution by agreeing in principle to cut the deficit in half in five years while also adding to defense.
After all between 1996-2000 the United States simultaneously balanced the budget and increased annual defense spending by 13% or $35 billion.
On the other side of the political spectrum, the Freedom Caucus-a conservative group of House Republicans-wants a balanced budget in no more than ten years.
And they want an annual overall $30 billion cut in discretionary spending in order to keep to the old 2010 budget caps. (This is out of a $4 trillion budget). But they will also support simultaneously more defense spending if other cuts are made to keep within the budget spending caps.
In the past 8 years the defense budget has experienced nearly $1.5 trillion in cumulative budget cuts. The past three Defense Secretaries have now told us the cuts have, unfortunately, seriously undermined our security.
Are other parts of the government somehow immune to budget discipline? Can we not find the necessary offsets to provide for the necessary additional defense spending?
The GAO says there is annually $125 billion in tax fraud and other improper payments (an increase of $19 billion in the last year. Why cannot we curtail 20-30% of that and use the funding to repair defense? And while we are at it isn't it time to stop funding urban gardening, public television, and "green" subsidies that even the once pro-solar German Chancellor phased out in Germany after calling them a bottomless "money pit"?
Think maybe the leadership in Washington might want to seize such an opportunity?
A deal looks possible.
The door's open.
Will an emerging leader walk though it?
Peter R. Huessy is President of Geostrategic Analysis and a guest lecturer at the U.S. Naval Academy. He was formerly Senior Fellow in National Security at the American Foreign Policy Council.