Mar 03, 2009
A front page article in the New York Times starts out with
the sentence: "The budget that President Obama proposed on Thursday is
nothing less than an attempt to end a three-decade era of economic
policy dominated by the ideas of Ronald Reagan and his supporters." Not
Ronald Reagan, despite his carefully crafted
"small-government" image, and all of the Republican presidents after
him, were big-government Republicans. They all increased government
spending as a portion of the nation's GDP. In fact, in nominal terms,
Reagan doubled the size of government. His ideological heir, George W.
Bush, crowed about the benefits of small government, while turning on
the spigot for the largest hikes in non-defense spending since Lyndon
Johnson's Great Society program. This spending included a $700 billion
dollar bail out of banks, which included their partial socialization.
So Obama's spending is more of the same, rather than a sharp break with
Taking a lesson from George W. Bush-and many
presidents before him-Obama is using a crisis to justify doing other
unrelated things. Bush used the tragedy of 9/11 to dupe the nation into
an unrelated, unneeded, disastrous, and costly invasion of Iraq. Obama
is using the economic meltdown to attempt to achieve expansion of
government involvement in health, education, and energy. The $787
billion stimulus package plus all of this extra spending will bring the
federal budget to $3.6 trillion in 2010.
The problem is that
with the economic stagnation, which slows down the government's tax
intake, and fighting two simultaneous and expensive foreign wars, the
federal government shockingly can afford only two out of every three
dollars it spends. This leaves a whopping $1.2 trillion deficit in 2010
(with Obama's stimulus package and Bush's bank bail out, the deficit in
2009 is an even more humongous 1.75 trillion). Add to this Obama's
overly optimistic economic forecast (common among presidents, who
usually want to make the federal budget projections look better than
they are) and upcoming entitlement crisis in which the Social Security
and Medicare systems become insolvent, which make Obama's promise to
eventually halve the post-World War II record deficits (even bigger
than Reagan's red ink) difficult.
To reduce the deficit, in
2009 standing at an amazing12 percent of GDP, Obama will need to look
to the non-entitlement portion of the budget, which is called the
discretionary spending. The Social Security, Medicare, and Medicaid
entitlement programs are examples of the government on autopilot-and
are very difficult to reduce.
More than half of the
discretionary budget is defense spending (slightly less than $700
billion per year), making it a big and deserving target for cuts.
Actually security spending-which in addition to defense spending should
include the budgets of the State and Homeland Security Departments, the
Veterans Administration, and the interest on the national debt that
arises because of such security spending-is yet a third higher, coming
in at almost $900 billion. All of these departments should also be cut
But since defense is by far the biggest chunk, let's
focus on that huge pie. During the George W. Bush years, even after the
Cold War had long ended, national defense spending ballooned a whopping
78 percent. Recently, Congressman Barney Frank (D-Mass.) made the bold
proposal to cut defense spending 25 percent. That sounds about right,
and here's how to get started on achieving that goal.
has proposed withdrawing all combat forces from Iraq by August of 2010,
but this only seems to save about $14 billion because he is leaving
them in Iraq three months longer than his campaign promise of a
16-month withdrawal, is retaining as many as 50,000 troops in that
country and simply re-labeling them into "non-combat" roles, and is
simultaneously escalating the war in Afghanistan. He should withdrawal
from Iraq faster and abandon the nation-building quagmire in
Afghanistan, which is only inflaming anti-U.S. Islamism in Southwest
Asia and the rest of the world.
Even more boldly, Obama should
realize that with the economic meltdown, we can no longer afford the
expansive U.S. overseas empire. By withdrawing from Iraq and
Afghanistan and vowing to end imperial policing and nation-building, he
could scrap the expensive plan to increase the Army and Marine Corps by
92,000 troops. Personnel costs already make up two-thirds of the
Pentagon's budget and adding people is expensive.
Obama should make each of the services cancel major unneeded or
excessively expensive weapons systems. Here are some suggestions: The
Air Force's tanker aircraft and F-22 fighter, the Navy's Littoral
Combat Ship, the Marine Corps' V-22 tilt-rotor aircraft for
transporting troops, the Army's Future Combat System (a fleet of
fighting vehicles needed for fighting a future great power rival, which
doesn't exist), and the Joint Strike Fighter, a fighter that the Navy,
Marine Corps, and Air Force are working on together.
Obama's promise to eventually cut the deficits seems problematic with
all of the added stimulus and other spending, surprisingly most modern
day Democratic presidents have been better at cutting deficits and
government spending as a portion of GDP than Republicans, who usually
increase government spending as a portion of GDP, thus rendering their
perennial tax cuts to be fake. Because Obama has a tough row to hoe to
equal his Democratic compatriots Jimmy Carter and Bill Clinton at
deficit reduction, he needs to start with big cuts in the defense
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