Saturday, November 10, 2012

Path to Fiscal Sustainability Requires Taking the Long View

I’d like to suggest that solving our fiscal problem requires more than just sacrifice, which most assuredly will be necessary. It requires smart people with the ability to take the long view. We need to think strategically when we envision the fiscal future we desire, and implement structural reforms that put us on a long-term path to fiscal sustainability.
Let’s take defense spending as an example. During the presidential campaign, Mitt Romney promised to increase defense spending by $2 trillion over the next decade. President Obama argued that the United States already spends more on defense than the next 10 countries with the largest defense budgets combined. He actually understated the disparity. We spend more than the next 13 countries combined, and this includes China and Russia. This year American tax payers shelled out $718 billion for troops, and tanks, and airplanes, and ships, and etcetera. That accounted for 20% of the $3.6 trillion  federal budget.

Failing to reach agreement on reducing the United States’ federal deficit by the end of this year will result in automatic spending cuts as mandated by the Budget Control Act (BCA) of 2011. Among other things, this would slash an estimated $55 billion from defense spending in 2013. Making such cuts willy-nilly will degrade our national security in ways we can’t fully appreciate, and damage the US economy in ways we can -- America’s humongous military-industrial complex accounts for an estimated 10 million jobs. Cut defense by the 10% sequestration in the BCA and you’re looking at upwards of 1 million jobs lost.

Now that doesn’t mean we should buy tanks the army doesn’t want just because the manufacturing plant is in some congressman’s district. Nor should we keep plants open in order to manufacture advanced weapons systems to sell to our new friends in the Middle East. Friendships there change more often than Mitt Romney’s policy positions. What’s needed is a reduced defense budget based on an overarching defense strategy that reflects national security realities now and in the future and the military force structure needed to effectively deal with them.

We must move to this new force structure incrementally, and the spending cuts we realize must be allocated not just to deficit reduction, but to new programs aimed at helping veterans adjust to civilian life, and elements of the military-industrial complex convert to commercial endeavors.

If we were to take Mr Romney at his word, his presidency would have moved us toward war with Iran; an indefinite presence of thousands of US troops in Iraq; a more militant posture towards Russia; a trade war with “currency manipulator” China; a troop presence in Afghanistan until at least 2014; and a Reagan-like military buildup at home. If Mr Romney’s positions still reflect Republican foreign policy objectives, we are in for a knock-down, drag-out battle right here at home on the defense budget alone.

Then we have Medicare and Social Security to address. And once again, America is at war on multiple fronts.

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