The American Legion Magazine | 3.1.15
By Alan W. Dowd
like security,” Niall Ferguson concludes in his book Colossus. “But they like Social Security more
than they like national security.”
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.
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.
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. 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
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. As
recently as 2009-10, Americans were investing 4.8 percent of GDP in defense. The last
time America invested less than 3 percent in defense was, ominously, 1940.
term used to describe automatic cuts to defense spending and certain domestic
programs of $1 trillion (evenly divided) between FY2012 and FY2021—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.
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.Some of the consequences of sequestration are already on
to Army Chief of Staff Gen. Ray Odierno, today’s Army has “the lowest
readiness levels” since he entered the service (38 years ago).Other Pentagon leaders have warned that sequestration
could force Army end-strength to shrink to 420,000
active-duty soldiers. 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.As Gen. Jim Amos noted before retiring as
Marine Corps Commandant, “We are beyond
muscle” and will soon “cut into bone.”
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.”
the height of President Reagan’s buildup, the Navy boasted 594 ships.Today’s fleet numbers 289 ships, with experts predicting the Navy will ebb to
just 240 ships.“For us to meet what combatant commanders request,” explains CNO Adm. Jonathan
Greenert, “we need a Navy of 450 ships.” 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.
it’s used,” economics writer Robert Samuelson warns, “military power is mostly
invisible, so the general public doesn’t notice reductions.”
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, while
bankrolling bad guys from Afghanistan to Lebanon. And North
Korea seems more paranoid and less stable than ever.
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
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.
deficit was only $483 billion in
FY2014. But between
2009 and 2012, the deficit surpassed $1 trillion each year, which helps
explain why the national debt has grown to $17.86 trillion—a 78-percent
increase since FY2009.
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.
because the main drivers of the debt and deficit are safety-net programs. Again,
the numbers tell the story.
($863 billion in outlays in 2014),
Medicare ($513.1 billion in outlays in 2014) and
Medicaid ($308.6 billion in federal outlays in 2014) account
for 45 percent of federal spending—up from 25 percent in 2002. Medicare
spending is projected to grow 6.6 percent annually through 2022.Medicaid spending jumped 12.2 percent in 2014, and is projected to grow 6.8
percent annually through 2022.Importantly, Social Security and Medicaid are not subject to sequestration, and
only a tiny sliver of Medicare—capped at 2 percent—is impacted.
2048,” a Heritage Foundation study concludes, “Social Security, Medicare and
Medicaid will absorb the entire tax revenue of the United States.”
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
to Social Security, some 14 million senior citizens who otherwise would be
destitute are not living in poverty today. Before Medicare, 35 percent of senior
citizens lived in poverty; today, just 9 percent live in poverty. 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
these programs have grown beyond what was originally intended.
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
Americans don’t take full advantage of what replaced pensions (only five
percent of 401(k) participants save the maximum allowed). 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).
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.
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
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.
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. But Medicaid
has been expanded—both in eligibility and in the kind of care offered. Today, individuals
earning up to 138 percent of the poverty level are eligible. 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.Medicaid is on track to cost $1 trillion per annum by
all up, and 49 percent of the population lives in
a household that receives government benefits—up from 30 percent in the 1980s.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.
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).
the president refused to endorse the commission’s recommendations, and Congress
never acted on them.
As the nation meanders through a fiscal mess of its
own making, the commission’s roadmap still offers a way forward.
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.
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.
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
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”—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.”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.”
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.
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.
 Niall Ferguson,
 OMB, Fiscal
Year 2014 Historical Tables: Budget of the U.S. Government, 2014, pp.57-59.
 Quoted in Nancy
Gibbs and Michael Duffy, The Presidents Club, 2012, p.186.
http://www.defense.gov/News/newsarticle.aspx?ID=118913 and http://money.cnn.com/2013/10/30/news/economy/deficit-2013-treasury/
 Centers for
Medicare and Medicaid Services, NHE Fact Sheet, 2012.
 Kaiser Family
Foundation, Average Annual Growth in Medicaid Spending, accessed October 16,
 Karen Spar,
"Budget 'Sequestration' and Selected Program Exemptions and Special
Rules," CRS Report for Congress, June 13, 2013,
 David Mulhausen
and Patrick Tyrrell, “2013 Index of Dependence on Government,” Heritage
Foundation, pp.9 and 21.
http://www.ssa.gov/history/ratios.html and http://www.ssa.gov/history/reports/ObamaFiscal/SocialSecurityProposals.pdf
http://obamacarefacts.com/medicaid-expansion-kkf.pdf; http://aspe.hhs.gov/health/reports/2012/medicaidtakeup/ib.shtml; Mulhausen and
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.
of the National Commission on Fiscal Responsibility and Reform, December 2010.
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.
John Locke (1690). Of Civil
Government: The Second Treatise. Wildside Press 2008.
 Adam Smith
(1776/1991), The Wealth of Nations,
Hamilton, Federalist 41, Federalist Papers.