In a previous article, I discussed the fact that two-thirds of the federal budget is comprised by Social Security, Medicare/Medicaid, payments to veterans, and interest on the debt.
That leaves Congress little wiggle room in trying to address continual budget deficits and the burgeoning national debt.
Aside from interest payments (which cannot, and will not, be avoided), the other items are social contracts, or promises that have been made to the American people.
It is conceivable, if not likely, that the retirement age will be raised from 66 to accommodate longer current life spans, and that the Social Security earnings cap may be lifted as well.
However, Social Security payments are recirculated back into the U.S. economy and increase domestic consumption. They boost consumer spending and overall GDP. Without question, these payments are massive and — due to the extraordinary size of the Baby Boom generation (76 million strong) — they are growing.
Yet, neither Social Security or Medicare/Medicaid is the single largest budget item or expenditure. Rather, that distinction would go to defense and Homeland Security. Taken together, the two add up to $706.4 billion in the fiscal 2010 budget.
Officially, spending on veteran’s medical care and pensions is classified as an entitlement expenditure, as opposed to part of the defense budget. If these items were included, the defense budget would be even more massive.
According to an analysis of the 2011 Federal Budget by the War Resister's League (an annual project), when the cost of two concurrent wars, veterans benefits, and the interest on the debt created by military spending are added to the current military budget, overall defense spending equals 48 percent of the total Federal Budget.
That's truly stunning.
Despite the fact that the Cold War ended two decades ago, the U.S. still spends more on its military budget than all of the other nations of the world — combined.
The U.S. is presently maintaining its global military empire at an untenable expense. More than a third (500,000) of its 1.4 million active duty military personnel are deployed on over 700 bases in more than 150 countries and territories — including 37 European nations.
In fact, more six decades after the end of WWII, the U.S. still has more than 50,000 troops in Germany and 30,000 in Japan.
This is bloating the budget and it cannot continue much longer.
In June, Federal Reserve Chairman Ben Bernanke told a House committee, "The federal budget appears to be on an unsustainable path."
No kidding.
The national debt has eclipsed $13 trillion dollars, and is approaching 90 percent of the GDP. The size of our debt is creating a major drag on our economy. This is critical because by some accounts a 1 percent increase in GDP can create almost a million jobs.
With that in mind, White House budget planners are working to trim five percent from federal spending by 2012. However, they'll have to cut an equal amount in successive years to really make a difference.
And since two-thirds of federal spending is mandatory, defense (which is discretionary) is the area that will need to be trimmed most aggressively.
The nation's deficit and debt issues have gotten the attention of none other than Admiral Mike Mullen, chairman of the Joint Chiefs of Staff.
"I think the biggest threat we have to our national security is our debt," the Admiral warned in June.
That's powerful. And imagine; it came from a military man, of all people.
However, it's not a new line of thinking. Dwight Eisenhower famously warned that a strong economy is essential to a strong defense.
During a recent Washington speech, Mullen noted that within two years just the annual interest on the debt will be close to $600 billion.
Since that would approach the size of the defense budget, it is simply unsustainable.
As noted, at more than $700 billion a year, defense is the biggest part of the federal budget. It's worth repeating that the United States is now spending as much on defense as the rest of the world combined.
According to Harvard professor and historian Niall Ferguson, empires — such as the former Soviet Union and the Roman empire — can collapse quite quickly and the tipping point is often when the cost of servicing an empire’s debt is larger than the cost of its defense budget.
At the 2010 Aspen Ideas Festival in July, Ferguson provided a stark warning about the increasing prospect of the American “empire” suddenly collapsing due to the country’s rising debt level. Most ominously, Ferguson warned that this could happen "within the next two years."
Defense spending is driving our rather dangerous deficits and debt. And, unlike Social Security payments, that money is not recirculated to consumers and into the economy at large.
Remarkably, defense spending has doubled over the last ten years, according to Ashton Carter, the Defense Department's undersecretary for acquisitions.
The Military-Industrial Complex is massive and incredibly powerful. It is geared toward self-preservation and will battle for its survival. It will fight to maintain all the money flowing its way through the federal pipeline, as well as to maintain all of its power, its deep resources and its sprawling reach.
However difficult the fight may be, the Defense Department will have to learn to live, and fight wars, with less. America's national security depends on it.
Just ask Admiral Mike Mullen.
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