The Real Budget “Third Rail”

The Republicans in the House of Representatives are busy blowing smoke about how they are going to cut discretionary spending (12% of the budget) and solve the budget deficit problem we have. What nonsense, but at least they haven’t yet attacked Social Security. Exempting Social Security, the supposed “third rail” of politics, from budget cuts doesn’t affect the deficit one way or the other. Social Security is not now, nor has it ever been, part of the deficit problem. I know that GOP ideologues don’t want to bother with facts, but the facts show that the small deficit Social Security has at present is caused by high unemployment, unemployment they want to increase by forcing the layoff of thousands of federal workers.

Social Security is solvent and able to pay full benefits through 2037. After that, it still would bring in enough funding through its own dedicated revenue source to fund payments at 80% or more, according to experts who have studied the system. There is a long-term problem out there because of the declining number of future workers paying into the fund and the rising number of retirees. That will require fixes. The good thing is that if we don’t fix it, the next generation has time to  do it. The second good thing is that no matter what we might do, a future Congress can change it any way it wishes.

The real “third rail” of the budget isn’t any social program. It’s military spending, which accounts for more than 50% of the federal budget. The United States spends almost twice what the rest of the world spends on its military, six times more than China, the nation in 2nd place. Unlike the other parts of the federal government, the defense department can’t even produce an audit of its programs, tell us exactly where all that money goes.

As I’ve watched Sen. Mark Warner on television lately discussing the work of the so-called “Gang of Six,” a bipartisan group of senators discussing how to bring the growing structural budget deficit under control, I have waited in vain to hear from them how Pentagon spending can also be brought under control.

Yes, the group is rightly seeking tax reform in order to eliminate many of what Warner calls tax expenditures. And, yes, we need to control the rate of growth in discretionary spending. However, barring controls on military spending, solutions for the deficit will remain forever elusive.

Let’s remember how we got where we are. The Great Recession is a big part of it, but three central policies of the Bush administration and the Republican-controlled Congress guaranteed that we would have severe structural deficits. Tax rates were slashed while spending increased. Two wars and a vast, new Homeland Security apparatus were undertaken without figuring out how to pay for them. Medicare was given a prescription benefit without finding any revenue to fund it.

This is the second time that America has fallen for the absurd idea that slashing taxes (government income) and keeping the same level of spending, or even increasing spending, would result in increased revenue and balanced budgets. The Clinton administration corrected the tax and budget mistakes the Reagan administration caused. George W. Bush, however, and the GOP-controlled Congress stubbornly refused to accept basic fiscal reality. Plus, the American people are in love with the myth that they can pay less in taxes and get the same level of government services.

I wish the “Gang of Six” the best of luck in coming up with legislation to address our revenue and expenditure problems. I simply don’t believe they can be successful unless they are willing to touch the real “third rail” of politics: the huge military apparatus we have.