Defense Spending and the Shrinking Federal Surplus

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Defense Spending and the Shrinking Federal Surplus

August 25, 2001 3 min read
The Heritage Foundation
In the last three years -- with a budget surplus in Washington -- non-defense domestic discretionary spending has skyrocketed. Defense spending has suffered because of this. Three graphics found on this page examine federal outlays from three perspectives: discretionary spending on defense; discretionary spending on non-defense; and mandatory spending.

This year's budget surplus is estimated to be $158 billion (the Congressional Budget Office numbers will be released August 28). This surplus is the second largest in U.S. history.

Despite this many lawmakers are tying increases in defense spending to raiding of the Social Security surplus. "Nonsense," said Daniel Mitchell at a Heritage Foundation media briefing, and you can read more in his new paper, Ten Deceptive Myths About Social Security, The Budget and the Economy.

Mitchell's comments, excerpted in The Washington Post's " For the Record," focused on budget and spending issues. Citing historical numbers from the Office of Management and Budget, Mitchell said defense spending has hovered around $300 billion a year -- adjusted for inflation -- except twice: just prior to W.W.II and in the 1970s before Ronald Reagan took office. It is down again, and has been dropping for the last decade.

"At not time did Roosevelt or Reagan say 'Well we can't do what's best for our country because we'll go into deficit,'" Mitchell said. Besides the fact that "the trust fund contains nothing but IOUs--government bonds that represent nothing more than a claim on future generations."These IOUs have value, but only in the sense that future politicians can "redeem" the bonds by collecting more tax revenue, reducing spending, and/or issuing new debt to the public. These bonds do not reflect real savings."

Baker Spring and Jack Spencer, both Heritage defense analysts, delivered comments at the briefing on the importance of funding military programs.

Spencer explained how the military is still relying on weapons systems bought in the 1980s, and President Bush's request for $18 billion is a "bare bones request just to stop the decline."

Spring went into depth addressing missile defense spending. Current requests for missile defense spending stand at $8.3 billion for 2002, just 2.5 percent of the defense budget. "In the scope of the debate, it's much smaller than that," Spring said. "It is less than half a percent of the federal budget."

Just last week, for example, a House Committee voted down an amendment - by only one vote-- that would have stripped $1 billion from the request. Spring further outlined the rationale for the investment, "We need to consider what we're supposed to defend. What is the cost of an American city? The lives of all the citizens at risk? What is the price you could put on that?"


The Heritage Foundation