To the extent that spending cuts are called for in the coming years, the right focus for such cutting should be in areas different from those the Republicans have been targeting. Here are the reasons why.
Setting aside this severe economic downturn, which inevitably leads to increases in spending on the safety net to help hard-pressed families survive, there has been no great recent increase in federal spending. Federal non-defense spending has been pretty stable, as a percentage of GDP, over the past thirty-five years (as shown on this graph ).
[ http://calculatedriskimages.blogspot.com/2010/09/government-spending-as-percent-of-gdp.html ]
Discretionary Domestic Spending (Non-defense):
Despite the fact that in constant dollars, this non-defense domestic discretionary spending has not increased at all in the past decade, it is this area that the Republicans have been targeting for cuts. Indeed, the Ryan Plan the Republicans passed in the House would take this part of federal budget down to a level (2.1 percent of GDP) not seen in generations. (This category includes a great many things that go into making America a great, humane, decent society, such as: education, commerce, energy, health, science, income security, international affairs, and a good deal more.)
Another area that should not be considered ripe and relevant for a discussion of cuts to bring down the deficit is Social Security. For one thing, Social Security does not add a cent to the federal budget deficit. For another, Social Security has relatively minor, long-term problems that can be fixed without subjecting this vital and popular program to the "crisis" mentality that the supposed deficit hawks are trying to use for ulterior purposes. (These points are discussed further in "Social Security Needs No Big Fix.")
The enemies of the Social Security program use the strategy of illegitimately combining Social Security --under the banner of "Entitlements"--with Medicare, which truly IS central to our problem of federal expenditures. The problems with Medicare are mostly not due to the program itself, however, but rather to the continuing explosive rise in health-care costs generally in the United States. Our whole health-care system --costing twice as much as the systems of other advanced countries--has gross inefficiencies and perverse incentives.
The federal budget would be in surplus if the cost of health care in the U.S. were comparable to those in other countries --whose systems do a better job of delivering good health care to their populations--the federal budget would be in surplus. That change alone, in other words, would more than solve our budget deficit problem.
For more about the ways this problem of health care costs should be addressed in terms of federal policy, see "Health Care and Medicare."
The other major area of spending that is a proper focus for cutting is the defense budget. The defense budget has been increasing in recent years, even while the economy and federal revenues have been in decline.
Is this increase justified?
It is true that the United States must protect itself from the threat of terrorism, but most of what this requires should not involve large-scale military forces and the expenditures that go with them. It is far from clear that either of the wars that the United States has engaged in --Iraq and Afghanistan--has contributed to our national security. Almost certainly, in neither have the benefits outweighed the costs. Winding down both these wars as quickly as prudence will allow seems wise even aside from the issue of expense.
The expansion of the U.S. military budget has not been confined to those wars, and it is difficult to see what reason there is for spending THAT much. After all, we are now spending nine times more than the nation (China) whose defense budget is the second highest in the world. If we were strong enough when we had an adversary those defense spending was roughly equal to ours, why should we have to spend this much when there is no nation that is our clear enemy, and the one that is our closest rival spends scarcely 10 percent as much as we on defense?
Our military expenses --almost half of the total amount of military spending in the entire world--make up a huge part of the total federal budget. (It is a good deal more than half of total discretionary spending of the federal government.) And it is perhaps the ripest area for spending cuts that could be made without harm to the well-being of the nation and its people.