America's debt threatens our national security

America's debt threatens our national security
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As the coronavirus and the ensuing lockdown hits the American economy, Congress has passed over $2.7 trillion in the stimulus. This includes subsidized loans to businesses, increased unemployment insurance, direct payments to Americans, and funding for hospitals and state and local governments.

As a result, the federal deficit will be at least $3.7 trillion for the fiscal year 2020 — because we already were running a $1 trillion deficit before we added the coronavirus stimulus. Now, federal debt held by the public is set to exceed 100 percent of GDP, a level that was only ever seen during the peak of World War II.

As debt moves higher, the interest costs alone on the debt will begin to overwhelm other government spending. Already by 2023, interest on the debt will exceed the cost of our current defense budget. That’s a huge threat to our national security.

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Aside from entitlements, a big driver of our current debt and deficits is our military entanglements overseas. That’s both paradoxical and extremely unfortunate. 

Our current defense budget is $740 billion. In real terms, this is higher than when President Ronald Reagan was out-spending the once-mighty Soviet Union. The Soviet Union was an existential threat to the country. It had thousands of nuclear missiles pointed at the United States and was attempting to spread communism across the globe. 

Today, the Pentagon budget is as much as the military spending of the next ten countries combined. Much of this money is spent on necessary weapons systems and preparedness for great-power competition. But this being government, there’s also plenty of waste. The Pentagon spent almost $5 million on crab and lobster in 2018. In fact, the Pentagon is plagued by waste, lost inventory, and accounting issues. The bureaucracy has never passed an audit and made $35 trillion in accounting adjustments in one year alone. 

Aside from all this, much is spent on “overseas contingency operations,” including our presence in Iraq and Afghanistan. This adventurism directly accounts for 10 percent of the $740 billion budget, and probably quite a bit more when indirect costs are factored in. 

Afghanistan, where America has been for over 18 years, has cost over $2 trillion, 2,400 American lives lost, and over 20,000 U.S. troops wounded. Some estimates place the cost of America’s War on Terror at $6.4 trillion so far.

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Aside from the direct fiscal costs of this overseas adventurism, there’s also the opportunity cost of war. These wars take policymakers’ focus off of great power competition — including the rise of China — and arguably reduce the focus on domestic issues that are important to Americans.

Critics contend that the current $740 billion budget is a drop in the bucket when it comes to the overall debt and deficit. If we only spent $600 billion per year in defense, this would only result in a $140 billion deficit reduction, they say.

That’s just not true, and anyone who makes that argument is either being disingenuous or doesn’t know how Washington works. One large political faction prioritizes more defense spending, while the other prioritizes entitlements and discretionary domestic spending. The first faction is willing to give up spending cuts in exchange for the other agreeing to spend more on defense. They come together to make a spending deal by agreeing to spend more on everything. 

When it comes to the entitlement black hole, unpaid-for promises America has made on entitlements, stretched out into the future, total up to $70 trillion. When many of the country’s fiscal conservatives prioritize defense spending increases above all else, entitlement reform won’t be achieved until a crisis occurs. Discretionary spending is less of a driver of debt and deficits, but the same goes for wasteful domestic discretionary spending. Cuts are impossible as long as too many policymakers make the Pentagon a sacred cow. 

Unwinding this fiscal mess starts with a change in foreign policy strategy. Right now, we still have thousands of troops in Iraq and Afghanistan, and just added over 3,000 troops to Saudi Arabia — not to mention a troop presence elsewhere throughout the Middle East and North Africa.

U.S. foreign policy should reform toward realism and restraint. That starts with pulling out of Afghanistan. It makes no sense that we are thereafter 18 years without any strategy to win. And it isn’t true that we must remain there to keep Afghanistan from becoming a terrorist safe haven. Refocusing our priorities also means pulling out of Iraq, Syria, and Saudi Arabia. None of these places fall into America’s core interests, and America’s prolonged stay compounds regional issues.

Instead, America should focus on great-power competition, and building up our deterrence capabilities. We should refocus on domestic priorities. America’s current economic crisis demands such a refocus. None of this is to say we should simply cut defense spending and use that to expand domestic spending. Rather, policymakers should employ a shrewd strategy focusing our limited resources on core U.S. priorities.

Willis L Krumholz is a fellow at Defense Priorities. He holds a JD and MBA degree from the University of St. Thomas and works in the financial services industry.