“Americans like security,” Niall Ferguson concludes in his book Colossus. “But they like Social Security more than they like national security.”[1]

With defense spending’s share of GDP plummeting and entitlement spending’s share exploding, the numbers suggest this is more than a clever turn of phrase. Yet if Americans have settled the guns-or-butter debate and decided to expand domestic programs, shrink defense and grow the federal government into an EU-style behemoth, it couldn’t come at a worse time.

After all, there is no peace dividend to be allocated because there is no peace: With Russia redrawing the borders of Europe, China fashioning itself into a global power, ISIS tearing through the Middle East, and rogue regimes from Iran to North Korea menacing U.S. allies and interests, America still needs its military—and the military still needs resources.

Whittling Away

First things first: The title of this essay uses “social security” (note the lower case) in the classical sense, to describe the family of government programs—welfare, health care, retirement—that serve as America’s social safety net.[2] In other words, the purpose here is not to build a case against the Social Security system—an essential program that has secured and stabilized America’s middle class since 1935—but rather to build a case against an unsustainable spending trajectory that could lead to less security and less stability at home and abroad.

The numbers paint a worrisome picture.

Defense spending is 15 percent of the federal budget and 3.2 percent of GDP—headed for just 2.3 percent of GDP by 2022-23.[3] As recently as 2009-10, Americans were investing 4.8 percent of GDP in defense.[4] The last time America invested less than 3 percent in defense was, ominously, 1940.[5]

“Sequestration”—the term used to describe automatic cuts to defense spending and certain domestic programs of $1 trillion (evenly divided) between FY2012 and FY2021[6]—is accelerating this decline. Recall that the $500-billion cut to projected defense spending comes in addition to the $487 billion the Pentagon carved from its spending plans before sequestration.[7]

The payoff of this bipartisan gamble: “The smallest ground force since 1940, the smallest number of ships since 1915 and the smallest Air Force in its history,” as then-Defense Secretary Leon Panetta warned in 2011.[8]Some of the consequences of sequestration are already on display.

·         According to Army Chief of Staff Gen. Ray Odierno, today’s Army has “the lowest readiness levels” since he entered the service (38 years ago).[9]Other Pentagon leaders have warned that sequestration could force Army end-strength to shrink to 420,000 active-duty soldiers.[10] Pentagon documents leaked to USA Today indicate sequestration will produce an Army at “high risk to meet even one major war.”

·         Sixty-two percent of non-deployed Marine units “are missing some kind of necessary equipment,” Military Times reports.[11]As Gen. Jim Amos noted before retiring as Marine Corps Commandant, “We are beyond muscle” and will soon “cut into bone.”

·         The Air Force is reducing its fleet by 286 planes. In 2013, the Air Force stood down 31 squadrons due to funding constraints. “Back when I was a young pilot growing up in the ‘80s and ‘90s,” Gen. Herbert Carlisle of Air Force Combat Command recalls, “we used to make fun of the Soviet Union because they only flew 100 to 120 hours a year. That’s what our pilots are flying now.”[12]

·         At the height of President Reagan’s buildup, the Navy boasted 594 ships.[13]Today’s fleet numbers 289 ships, with experts predicting the Navy will ebb to just 240 ships.[14]“For us to meet what combatant commanders request,” explains CNO Adm. Jonathan Greenert, “we need a Navy of 450 ships.”[15] That gap has real-world implications: When Tehran threatened to close the Strait of Hormuz in 2012, CENTCOM’s request for an extra aircraft carrierwas denied because it was needed elsewhere. When President Obama ordered warplanes from the carrier USS George HW Bush to blunt the ISIS advance in northern Iraq, Greenert admitted “they stopped their sorties” over Afghanistan to do so.[16]

“Until it’s used,” economics writer Robert Samuelson warns, “military power is mostly invisible, so the general public doesn’t notice reductions.”[17] 

But America’s enemies do. As Washington whittles away at the big stick, China’s military-related spending has jumped 170 percent the past decade, giving it the capability to challenge America’s once-unquestioned primacy in the Pacific. Russia, in the midst of a 108-percent increase in military spending, is reversing the once-settled outcomes of the Cold War. ISIS is dismembering Iraq and threatening allies in Turkey, Jordan, Kuwait and Saudi Arabia. Iran is methodically building a nuclear arsenal,[18] while bankrolling bad guys from Afghanistan to Lebanon.[19] And North Korea seems more paranoid and less stable than ever.

Spending Away

As President Johnson’s Great Society mushroomed domestic spending, some warned that Washington could not expand the social safety net indefinitely and maintain a military force capable of defending America’s global interests. “The American people are being promised guns and a lot more butter—guns almost smothered in butter,” former President Eisenhower observed in 1965. “I don’t believe it’s possible.”[20]

Ike was right. Sequestration is a consequence of buying lots of guns and lots of butter—policies that have led to runaway deficit spending and the explosion of the national debt.[21]

The deficit was only $483 billion in FY2014.[22] But between 2009 and 2012, the deficit surpassed $1 trillion each year,[23] which helps explain why the national debt has grown to $17.86 trillion—a 78-percent increase since FY2009.[24]

Some argue the declining deficit is proof that sequestration is working, but it’s not working for America’s Armed Forces. While the Pentagon is an easy target for deficit hawks and entitlement defenders, consider this: We could have eliminated the entire defense budget in 2013 ($633 billion that year) and turned the Pentagon into a mega-mall. Yet we still would have faced a budget deficit ($680 billion that year)—and wouldn’t have put a dent into the national debt.[25]

That’s because the main drivers of the debt and deficit are safety-net programs. Again, the numbers tell the story.

Social Security ($863 billion in outlays in 2014[26]), Medicare ($513.1 billion in outlays in 2014[27]) and Medicaid ($308.6 billion in federal outlays in 2014[28]) account for 45 percent of federal spending—up from 25 percent in 2002.[29] Medicare spending is projected to grow 6.6 percent annually through 2022.[30]Medicaid spending jumped 12.2 percent in 2014, and is projected to grow 6.8 percent annually through 2022.[31]Importantly, Social Security and Medicaid are not subject to sequestration, and only a tiny sliver of Medicare—capped at 2 percent—is impacted.[32]

“By 2048,” a Heritage Foundation study concludes, “Social Security, Medicare and Medicaid will absorb the entire tax revenue of the United States.”[33]

This is the very definition of unsustainable. What would become of defense, agriculture, education, veterans care, transportation, homeland security? The answer to that question should spur us to action.

A good place to start is from a foundation that in a wealthy and decent nation like ours, there is a place for programs that provide a safety net when and where it’s most needed.

Thanks to Social Security, some 14 million senior citizens who otherwise would be destitute are not living in poverty today.[34]  Before Medicare, 35 percent of senior citizens lived in poverty; today, just 9 percent live in poverty.[35] The federal-state Medicaid program provides health care for the poorest Americans. In 2010, after the worst of the Great Recession, about one in five Americans accessed Medicaid.[36]

However, these programs have grown beyond what was originally intended.

Along with a pension and personal savings, Social Security was supposed to be one leg of a three-legged stool to support Americans during retirement. But fewer employers offer pensions (less than 20 percent of salaried workers have pensions today[37]). Americans don’t take full advantage of what replaced pensions (only five percent of 401(k) participants save the maximum allowed[38]). And Americans don’t save like they used to (Americans saved more than 10 percent of after-tax income in 1975 but only 4 percent by 2012[39]).

Moreover, Social Security and Medicare were never intended to deliver decades of retirement and healthcare benefits to each retiree. In 1935, when the government set the retirement age at 65, life expectancy was 63. When Medicare was created in 1965, average life expectancy was just under 70. Nowadays, Americans can expect to live deep into their 80s.

In other words, systems envisioned as helping people at the end of their working years—and relatively close to the end of life—are being asked to supply nearly a quarter-century of benefits.

Exacerbating the problems facing Medicare and Social Security are massive demographic shifts. In 1950, there were 16 workers per Social Security beneficiary; in 1965, the ratio was 4 to 1; today it is 3 to 1; by 2025, it will be just 2.3 to 1.[40]

Rather than scaling back benefits in response to these fiscal-demographic pressures, more benefits are being added. Consider the popular prescription benefit (Medicare Part D), which was added in 2006. It took in $9.9 billion in premiums in 2013—and paid out $69.3 billion in benefits.[41]

Finally, the needs-based Medicaid program was intended to provide basic health care for the very poorest Americans. Congress expressly limited eligibility to the “medically needy” whose income was 133.33 percent of the poverty level.[42] But Medicaid has been expanded—both in eligibility and in the kind of care offered.[43] Today, individuals earning up to 138 percent of the poverty level are eligible.[44] Medicaid participation jumped from 21.6 million in 2000 to 58 million in 2012—and, fueled by the Affordable Care Act, is projected to grow by another 15.9 million by 2019.[45]Medicaid is on track to cost $1 trillion per annum by 2020.[46]

Add it all up, and 49 percent of the population lives in a household that receives government benefits—up from 30 percent in the 1980s.[47]The worry is that America could be nearing a tipping point where so many people depend on government for so many things that the impulse to restrain the growth of government programs is overwhelmed by blocs of voters dependent on government programs.

Roadmap

In December 2010, a bipartisan commission appointed by the president offered a roadmap to a more sustainable fiscal future.

The Simpson-Bowles Commission put everything on the table: creating a Cut and Invest Committee to trim 2 percent from discretionary spending annually; reforming the tax code, eliminating tax loopholes and broadening the tax base; cutting congressional and White House budgets by 15 percent; freezing pay for Members of Congress and other civilian federal employees; reducing the federal workforce through attrition; ending Medicare-Medicaid dual eligibility; reforming the medical-malpractice tort system; changing the way civil-service pensions are calculated; gradually increasing the Social Security retirement age by indexing it to life-expectancy.

The result was a plan that would slash $4 trillion from projected deficits through 2020; reduce the deficit to 2.3 percent of GDP; steer federal spending back to the historical average of 21 percent of GDP; ensure long-term solvency for Social Security; and reduce the debt to 60 percent of GDP by 2023 (40 percent by 2035).[48]

Yet the president refused to endorse the commission’s recommendations, and Congress never acted on them.[49]

As the nation meanders through a fiscal mess of its own making, the commission’s roadmap still offers a way forward.

One thing is certain: Sequestration’s meat-cleaver approach is the wrong way to get our fiscal house in order. It will limit not only America’s role and reach in the world, but also, paradoxically, Washington’s capacity to deliver sustainable safety-net programs.

How? America’s economic vitality and military capability are self-reinforcing: America’s military buttresses a liberal global order that favors free governments, free markets and free trade—all of which benefit America’s economy.America’s economy, in turn, not only underpins much of today’s global system; it also enables Americans to enjoy a high standard of living, maintain safety-net programs and field a power-projecting military for a small fraction of GDP. Thus, the decline of America’s military strength will lead to less stability in the world, which will negatively impact America’s economic vitality, which will weaken the safety net.

Safety

Beneath this blizzard of billions and trillions is a simple truth that too many Americans fail to grasp: There can be no social security (note the lower case) without national security.

The nation’s Founders understood this. Just consider the words of the thinkers who most influenced them: John Locke argued that government exists to “preserve…life, liberty and estate”[50]—a phrase echoed in the Declaration of Independence. Adam Smith described “protecting the society from the violence and invasion of other independent societies” as “the first duty of the sovereign.”[51]In The Federalist Papers, John Madison listed “security against foreign danger” as the primary purpose of government and an “essential object of the American Union.”[52] 

Hence, the Constitution calls on the government to “provide for the common defense” in the very first sentence; grants Congress the power to “raise and support armies…provide and maintain a navy” and “provide for organizing, arming and disciplining the militia”; authorizes the president to serve as “commander-in-chief of the Army and Navy…and of the militia of the several states”; and emphasizes the importance of a “well-regulated militia” in the Bill of Rights.

On the other hand, the Constitution, although it vaguely mentions the “general welfare,” says nothing about social safety nets. Perhaps that’s because the Founders recognized that if America’s government didn’t provide for the common defense, it ultimately wouldn’t be able to provide much else.

[1] Niall Ferguson, Colossus, p.269

[2]Merriam-Webster, http://www.merriam-webster.com/dictionary/social%20security

[3] http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/tables.pdf and http://www.brookings.edu/research/opinions/2014/09/09-budget-crisis-end-two-ways-haskins

[4] OMB, Fiscal Year 2014 Historical Tables: Budget of the U.S. Government, 2014, pp.57-59.

[5]http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/hist.pdf.

[6]http://fas.org/sgp/crs/misc/R42050.pdf

[7]http://www.usnews.com/opinion/blogs/world-report/2013/02/14/sequester-defense-cuts-would-undermine-us-world-power

[8] http://security.blogs.cnn.com/2011/11/14/panetta-details-impact-of-potentially-devastating-defense-cuts/

[9]http://www.defensenews.com/article/20131116/DEFREG02/311160009/US-Army-s-Roller-Coaster-Readiness%3E.

[10]http://www.defensenews.com/article/20140113/DEFREG02/301130024/Trouble-Brewing-Between-US-Army-s-Active-Duty-Guard-Forces

[11]http://www.marinecorpstimes.com/article/20140326/NEWS/303260056/Paxton-Budget-cuts-causing-downward-spiral-Marine-Corps-unit-readiness.

[12]http://www.usatoday.com/story/news/nation/2014/07/10/air-force-china-putin/12432067/

[13]http://www.history.navy.mil/branches/org9-4.htm#1993.

[14]http://docs.house.gov/meetings/AS/AS28/20130226/100319/HHRG-113-AS28-Wstate-LehmanJ-20130226.pdf.

[15]http://www.military.com/daily-news/2014/03/12/cno-tells-congress-the-us-needs-450-ship-navy.html.

[16]http://www.navytimes.com/article/20140816/NEWS08/308160039/Navy-fighter-jets-ended-Afghan-sorties-go-Iraq.

[17]http://www.washingtonpost.com/opinions/robert-samuelson-americas-neglected-defense/2014/09/07/3acd5de4-3518-11e4-9e92-0899b306bbea_story.html

[18]http://www.washingtontimes.com/news/2014/nov/11/former-un-inspector-despite-negotiations-west-dark/

[19]http://www.longwarjournal.org/archives/2014/08/herat_police_chief_a.php.

[20] Quoted in Nancy Gibbs and Michael Duffy, The Presidents Club, 2012, p.186.

[21]http://fas.org/sgp/crs/misc/R42050.pdf.

[22]http://www.treasury.gov/press-center/press-releases/Pages/jl2664.aspx

[23]http://online.wsj.com/articles/u-s-budget-deficit-in-2014-narrows-to-lowest-level-in-six-years-1413385493

[24]http://www.treasurydirect.gov/NP/debt/current; http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm

[25]http://www.defense.gov/News/newsarticle.aspx?ID=118913 and http://money.cnn.com/2013/10/30/news/economy/deficit-2013-treasury/

[26]http://www.ssa.gov/pressoffice/factsheets/basicfact-alt.pdf

[27]http://www.hhs.gov/budget/fy2015/fy-2015-budget-in-brief.pdf, p.56

[28]http://www.hhs.gov/budget/fy2015/fy-2015-budget-in-brief.pdf, p.77

[29]http://www.heritage.org/research/reports/2013/08/federal-spending-by-the-numbers-2013

[30] Centers for Medicare and Medicaid Services, NHE Fact Sheet, 2012.

[31] Kaiser Family Foundation, Average Annual Growth in Medicaid Spending, accessed October 16, 2014;

[32] Karen Spar, "Budget 'Sequestration' and Selected Program Exemptions and Special Rules," CRS Report for Congress, June 13, 2013, http://fas.org/sgp/crs/misc/R42050.pdf.

[33] David Mulhausen and Patrick Tyrrell, “2013 Index of Dependence on Government,” Heritage Foundation, pp.9 and 21.

[34]http://www.cbpp.org/cms/?fa=view&id=3261#_ednref18

[35]http://www.politifact.com/wisconsin/statements/2011/aug/25/ron-kind/us-rep-ron-kind-says-thanks-medicare-75-fewer-seni/

[36] http://americanactionforum.org/uploads/files/research/OHC_Medicaid_Primer_Update_0.pdf

[37]http://www.ssa.gov/policy/docs/ssb/v69n3/v69n3p1.html

[38]http://business.time.com/2013/01/08/how-to-rock-your-401k-in-2013/

[39]http://www.hamiltonproject.org/multimedia/charts/u.s._personal_saving_rate_1970-2012/

[40]http://www.ssa.gov/history/ratios.html and http://www.ssa.gov/history/reports/ObamaFiscal/SocialSecurityProposals.pdf

[41]http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2014.pdf, pp.102-103.

[42]http://kaiserfamilyfoundation.files.wordpress.com/2008/04/5-02-13-medicaid-timeline.pdf

[43]http://www.aei-ideas.org/2014/05/study-which-states-have-the-most-and-least-generous-welfare-programs/.

[44]http://www.hca.wa.gov/hcr/me/documents/ME2014_Fact_Sheet.pdf

[45]http://obamacarefacts.com/medicaid-expansion-kkf.pdf; http://aspe.hhs.gov/health/reports/2012/medicaidtakeup/ib.shtml; Mulhausen and Tyrrell, p.23.

[46]http://www.cms.gov/Research-Statistics-Data-and-Systems/Research/HealthCareFinancingReview/downloads/00fallpg105.pdf and http://medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Financing-and-Reimbursement/Downloads/medicaid-actuarial-report-2013.pdf  and http://americanactionforum.org/uploads/files/research/OHC_Medicaid_Primer_Update_0.pdf.

[47]http://blogs.wsj.com/economics/2012/05/26/number-of-the-week-half-of-u-s-lives-in-household-getting-benefits/

[48] Recommendations of the National Commission on Fiscal Responsibility and Reform, December 2010.

[49]http://www.nytimes.com/2012/02/27/us/politics/obamas-unacknowledged-debt-to-bowles-simpson-plan.html?pagewanted=all&_r=0 and http://thehill.com/policy/finance/275115-simpson-bowles-bemoan-qmissed-opportunityq-to-strike-debt-grand-bargain.

[50]John Locke (1690). Of Civil Government: The Second Treatise. Wildside Press 2008.

[51] Adam Smith (1776/1991), The Wealth of Nations, p.689.

[52] Alexander Hamilton, Federalist 41, Federalist Papers.