On Tuesday night, President Trump began to confront the reality of transforming his campaign slogans into actual policies that must be passed by Congress and paid for. It is no accident that he delivered his address at an odd time in the political calendar — months before he unveils his actual budget details in May. But based on the early evidence, we can already see huge flaws in the president’s budgetary arithmetic.
The centerpiece of Trump’s proposals is a $54 billion bump in military spending. This is the amount that the Pentagon budget has allegedly lost due to budget caps Congress put in place back in 2011. But the Pentagon has bypassed those restrictions through a parallel budget called “Overseas Contingency Operations” (OCO). This fund, originally established to pay for post-9/11 war spending, has morphed into a slush fund. More than $400 billion in extra OCO money has been funneled to the military since 2011, much of it with little or no direct relationship to the wars. If you add OCO spending to the regular defense budget, the military is already funded at close to its highest level since World War II.
Nevertheless, do not expect to hear cheers for Trump’s proposal from diehard defense hawks in Congress. From their perspective, $54 billion is a rise of “only” 9.4 percent — well below the double-digit increases that occurred during the 1980s under President Ronald Reagan. They also worry that OMB director Mick Mulvaney — a longtime critic of the OCO fund — will quietly shift money from OCO into the base budget and call it an “increase” in defense spending.
Lost in this discussion is any attention to the massive waste and inefficiency at the Defense Department, which has flunked its financial audit every year since 1990. Last year, the Pentagon’s own Defense Business Board, a federal advisory panel of corporate executives, identified $125 billion in waste in the department’s overhead and business operations. But rather than slogging through the tough job of cutting overpriced contracts and reining in runaway IT spending, the President’s first instinct is simply to throw more money at the problem.
US military readiness is fundamentally sound, according to retired General David Petraeus and Michael O’Hanlon. Raising the defense budget without tackling the waste at the Pentagon is like fattening up the alligators in the swamp. It won’t help our troops cope with long deployments and endless wars, but it will further line the pockets of out-of-control military contractors.
Trump’s plan is to fund those extra defense dollars through cuts to domestic programs. Since he doesn’t dare touch the two-thirds of the budget spent on Social Security, Medicare, and other “entitlement” programs, the Trumpian axe will instead fall on transportation, scientific research, food safety, and other core priorities. Ironically, his proposed cuts will damage many agencies that support national security — including the State Department, Homeland Security, and programs that fight global pandemics. Unlike the Pentagon, these agencies have already lost funding due to the 2011 budget caps. There is little fat on the bone and further budget reductions would harm their core missions.
At the same time that he is calling for higher defense spending, Trump is also proposing to slash taxes and to begin a massive infrastructure program.
This plan doesn’t add up. Cutting domestic programs can’t produce nearly enough revenue to fund America’s wars, build walls, and lower taxes. Historically, Americans have paid higher taxes during wartime — with top marginal rates of income tax reaching 92 percent during the Korean War and 75 percent during Vietnam. Today nearly all Americans pay lower taxes than we did before we invaded Afghanistan and Iraq.
Instead, we have borrowed the money to fight these wars, running up the national debt and shifting the cost to future generations. This was made possible by ultra-low interest rates and a thirst for US Treasury bonds around the world. It would be folly to expect this situation to last forever. The Congressional Budget Office predicts that the federal government will amass $9.4 trillion in deficits over the next ten years. China’s growth is slowing. The cost of borrowing is on the rise.
In short, Trump’s vision for America is flawed, as is his math. Our strength derives not only from guns, but from our economic standing in the world, core government programs, and our ability to pay our debts. Trump proposals, if enacted, would leave us with a country that is fundamentally less secure.
Linda J. Bilmes is the Daniel Patrick Moynihan Senior Lecturer at the Harvard Kennedy School. She served as assistant secretary and CFO of the US Department of Commerce under President Clinton and is coauthor of “The Three Trillion Dollar War.”