Beat Entitlements before Boosting Defense

After having failed to reform Obamacare, and having been dragged kicking and screaming to President Trump’s tax reform, Congressional Republicans are leaving 2017 with a record that has more inertia on it than accomplishments. This does not bode well for the new year, especially for the pending budget talks on Capitol Hill.

In light of rising international tensions, GOP defense hawks want to make the Pentagon budget the center piece of those talks. Right off the bat, they are setting themselves up for failure: the tough pro-defense rhetoric is in reality the greatest threat to a Republican bid to rebuild the military.

Superficially, Speaker Paul Ryan (R-WI) shows unwavering support for more money to the Pentagon. On January 5 he declared that “nothing is more important than rebuilding our military” and that “our military readiness is in desperate need of repair.”

Rank-and-file Republicans support him. Representative Liz Cheney (R-WY), for example, has made clear that without more defense spending, “nothing else Congress does will matter.” This statement echoed her position from June last year, when she explained that “no balanced budget, no health-care reform, no tax reform, no entitlement reform” will matter until national defense is again treated as “the most sacred constitutional obligation” of Congress.

In other words, Republicans are entering the budget talks, determined to grow the military budget before they do anything to any other spending.

Right here, they have written a recipe for failure. It is simply not possible to grow defense spending without substantial, cost-curbing reforms to the rest of the federal budget.

Over the past half century the federal government has fundamentally changed its role in the US economy:

  • in 1962 the federal budget gave $2 to the Pentagon for every $1 it spent on welfare-state entitlements;
  • in 2017 defense spending amounted to 22 cents for every $1 to entitlements.

The Pentagon’s share of the federal budget has fallen from 49 percent under President Kennedy to just below 15 percent today.

Without more tax revenue, Congress cannot increase that 15 percent without reducing the remaining 85 percent (most of which is entitlement spending; the rest goes to law enforcement and administration). It is safe to say that neither Cheney nor Ryan want higher taxes; unfortunately, it is equally safe to say that the newly passed tax reform is not going to generate much of either economic growth or new tax revenue.

In fact, the tax reform will probably entrench the welfare state, and thus reinforce the spending priorities that currently define the federal budget. Entitlements are going to continue to provide formidable competition with national defense for increasingly scarce tax dollars.

There is more. The problem that Ryan and Cheney face in trying to grow the defense budget is, in fact, embedded in the fiscal DNA of the American welfare state. Our entitlement programs, from Medicare and Medicaid to food stamps (SNAP) and welfare (TANF), are built on egalitarian principles. Their purpose is not to provide poverty relief, but to actively redistribute income and consumption between citizens.

At the heart of this fiscal DNA lies the so-called relative definition of poverty. According to this definition, poverty is not about lacking basic necessities such as subsistence food, shelter and a minimum set of clothes. The commitment of the welfare state goes far beyond that: under the relative definition of poverty, a family is poor if it earns 60 percent of median-family income. When median-family income grows, the poverty threshold automatically increases — as does federal spending.

Since the War on Poverty started, spending on education, health care (including Medicare and Medicaid), and income security (including but not limited to Social Security) has almost always increased faster than defense spending:

Raw data: Office of Management and Budget.

This imbalance in growth will remain so long as our entitlement programs are based on an egalitarian architecture. The only way that Ryan, Cheney, and other defense hawks in Congress will ever be able to increase defense spending, is by putting an end to the egalitarian era itself.

What does this mean in practice?

1. Change the definition of poverty currently used in SNAP, TANF, Medicaid, and other welfare-state programs. Replace the relative poverty definition with an absolute concept. This will get government out of the business of income redistribution and place a firm cap on taxpayers’ commitment to last-resort poverty relief.

2. Designate the money that is hereby freed up to a fiscally sustainable, long-term predictable plan for expansion of defense spending.

Together, these two steps provide the only path to a permanently better funded military. They require political courage and patriotic selflessness of a kind that is rare among today’s members of Congress.

Will Ryan and Cheney lead the way?

Image: Speaker Paul Ryan.

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