Economy in Numbers
War Spending Placed above Domestic Priorities
This article is from the November/December 2007 issue of Dollars & Sense: The Magazine of Economic Justice available at http://www.dollarsandsense.org/archives/2007/1107morrissey.html
This article is from the November/December 2007 issue of Dollars & Sense magazine.
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Claiming the mantle of fiscal discipline, President Bush has threatened to veto domestic spending bills for fiscal year 2008 that exceed his budget request. His threat cannot be justified by a claim that Congress is being unusually profligate: Congress's non-defense appropriations bills approximately keep pace with economic growth, and earmarks are down sharply.
Meanwhile, the administration has asked for significant increases in both war appropriations and regular defense appropriations for FY08: $524 billion for defense, military construction, and veterans' affairs, and $193 billion (so far) for war funding. If Congress agrees to these requests, defense spending, which rose from 3.0% of GDP when Bush came into office in 2001 to 4.0% in 2005, 2006, and 2007, will resume its upward climb to between 4.3% and 5.0% of GDP in 2008. (The 4.3% estimate assumes that the ratio of actual outlays to appropriations, as measured by the Congressional Budget Office, is the same in FY08 as in FY07. The 5.0% estimate assumes that all moneys appropriated are actually spent.)
The chart below illustrates what happens if the president gets his way on military spending. It shows that even if Congress gets its way on domestic spending, the entire increase in discretionary spending as a share of GDP since 2002 (the first year President Bush had any input on the budget) will be due to growth in defense spending rather than domestic initiatives. ("Discretionary spending" refers to budget items appropriated by Congress each year, as opposed to mandatory spending, authorized by permanent laws, on programs such as Medicare and Social Security.) The chart actually understates the full cost of the "war on terror," because Homeland Security, State Department, and Foreign Operations funding is counted under non-defense spending. Plus, the figures shown do not include significant long-term war costs, for veterans' health care, for example.
Defense and Non-Defense Discretionary Spending as a Percent of GDP
Sources: Author’s calculations, based on Congressional Budget Office (CBO), www.cbo.gov/budget/historical.shtml; CBO, The Budget and Economic Outlook: An Update, August 2007; CongressDaily, “Dems Lay Groundwork for Challenging Bush over Vetoes,” September 28, 2007; Center on Budget and Policy Priorities, The Fight over Appropriations: Myths and Reality, June 21, 2007.
Note: Where they differ, Senate and House appropriations bills are averaged. The chart assumes that the ratio of outlays to appropriations is the same in FY07 and FY08. In the case of defense spending, the difference between outlays and appropriations reflects the fact that war funds are not necessarily spent within a fiscal year, and appropriations bills are not cleanly split along functional lines. In the case of non-defense spending, the discrepancy is due to spending from the Highway Trust Fund and the Airport and Airway Trust Fund, which is not included in appropriations bills.
The proposed $70 billion increase in defense appropriations for FY08 would be more than enough to fund the $35 billion expansion of the State Children's Health Insurance Program that the president just vetoed. In addition, it would make up the $21 billion difference between the president and Congress on the domestic appropriations bills that the president has threatened to veto. Polls show that voters are concerned that defense spending—especially on the Iraq war—is placed above government spending on health care, education, and other domestic priorities. The voters are right.