Mr. Gates is calling for the Pentagon’s budget to keep growing in the long run at 1 percent a year after inflation, plus the costs of the war. It has averaged an inflation-adjusted growth rate of 7 percent a year over the last decade (nearly 12 percent a year without adjusting for inflation), including the costs of the wars. So far, Mr. Obama has asked Congress for an increase in total spending next year of 2.2 percent, to $708 billion — 6.1 percent higher than the peak under the Bush administration.
A number which is put into context when you realize that military spending now is higher now than it has been at any time in the post World War II era (although it does take up a smaller percentage of GDP):
The problem is that, while most people look at the Pentagon budgets and think about $ 400 hammers and multi-billion dollar weapons systems, the real costs are elsewhere:
Jonathan Chait says they'd better- the social service spending sector in the US, depsite the decades of demonizing it has endured from conservatives (when they weren't fattening the calf for the elderly themselves, hello, Medicare Part D), just isn't that big as a part of the budget:Two-thirds of Pentagon spending is on personnel costs. It is possible that the Pentagon will have to look for the first time at cuts to the health benefits provided to active and retired military personnel and their families.
David Brooks says the deficit should be reduced mainly through spending cuts:
The international evidence shows that if you want to balance the budget, something like 66 percent to 80 percent of your effort should go into cutting spending and something like a third to a fifth should consist of tax increases. If you rely on tax increases too much, you end up messing up the incentives for people who save and invest.
International evidence, huh? That's usually the liberals' tool. The problem with using this comparison to apply lessons to the United States is that we already have low levels of government spending compared with most countries:
Moreover, a disproportionately high share of American spending goes to defense. So, first of all, tax hikes hurt less in the U.S. than in most other because countries because tax rates start from a lower level. (And taxes in the United States are less redistributive than in most Western countries.) Second, social spending is very low in the U.S., since overall spending tends toward the low end and defense spending consumes an unusually high proportion. So the United States has less room to cut social spending than most advanced countries do.
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