Category Archives: Economics

Trump’s 2018 Budget: Big Boost in Military Funding, But at What Cost?

The Trump administration has issued its final 2018 budget and its standout proposal is a $52.7 billion dollar spending increase for the Department of Defense above and beyond the $521.8 billion in the current 2017 Defense Department budget.  This equates to an increase of 10.1%.  The total increase in military spending will top $54 Billion when increased funding for nuclear weapons programs under the control of the Department of Energy and other national defense programs are included.

In some respects the increase of $4.3 billion in the budget of the Department of Veterans Affairs above and beyond $74.5 billion in this year’s budget is also military related. This calculates as a 5.8% increase. Now as a veteran of the Vietnam era myself I am certainly not one to argue with additional funding for our vets. I view this type of expenditure as a “sunk costs”.  It is an expense we  already incurred when we asked our young men and women to protect us and the freedoms we enjoy as Americans, and then sent them off to war from which they all too often returned physically and/or mentally broken.  It is a debt that has now come due and it must be paid.

On the other hand I am certainly not at all happy with the $1.6 billion portion of the $2.8 billion (6.8%) increase in the budget of the Department of Homeland Security allocated specifically to build a wall along the Mexican border.  If Trump can’t get Mexico pay for his wall as promised (and I hope they spit on his taco salad instead), I think that it would be fitting for him to can pay for that monument to stupidity himself if he still wants it built.

Those three federal departments are the only ones slated for increased funding in Trump’s 2018 budget and the increased funding for veterans and homeland security amount to pocket change compared to the over all federal budget. However, the $543 billion dollar increase in defense spending is huge by anyone’s estimation.  Then consider that Republicans in Congress have stated that they intend increase the military spending by an addition $37 billion above and beyond $54 billion increase proposed in Trump’s budget. Now are these increases necessary?  When I learned that only a small portion of that money will go to increase the pay of our military personal (2.1% – barely larger than the inflation rate so it not really an increase at all), I began to have my doubts.

Now one would think that the general and admirals will always prefer as much additional funding as they can persuade the President and Congress to allocate to them.  However, after doing some research I learned that the Pentagon’s defense request for 2018 amounted to only a 4.6% increase when compared with their budget for 2017.   I also learned that our present military budget not only is much larger than any other country in the world, it is larger than the military budgets of the next 8 countries combined.

In addition, the US spends $1,859 on its military for every man, woman and child living in our country which is more per capita than each of the next 8 big military spenders pictured above.  Only Great Britain ($1,066 per capita – 57% of US) and France ($977 per capita – 52.6% of US) come anywhere close.  Russia and China lag very far behind by this measure.

Unlike the US, the Russian Federation recently cut its military expenditures due to its failing economy.  Estimates of the cuts to Russia’s military budget from 2016 to 2017 range from 7% to 25%.  The best estimate of Russian 2017 military spending is 2.84 rubles.  At the current exchange rate that equates to $47.8 billion – or 7.8% of our 2017 military budget.  On the other hand China increased its military budget to 1.021 trillion Yuan ($148.1 billion) in 2017.  That is an increase of 7% more than its 2016 military budget as it tries to modernize is rather antiquated military hardware.  However, in 2017 the Chinese will still spend just 24% as much as we will spend on our military this year.

Now it is true that as the only super power the US has responsibilities that the rest of the countries of the world do not have. In addition it also true that our military budget has fallen substantially from the $711 billion we spent in 2011.  While the most of that decrease can be attributed to the fact that we have greatly reduced our expenditures on our military efforts in Afghanistan and Iraq, it can not argued that the sequestration measures (across the board automatic budget cuts unwisely allowed to go in affect by Congress) also took it toll on our military spending from 2013 on.

Okay, let’s assume for the moment that some increase in our defense budget is reasonable and in the best interest of our country and its people.  (Here we may be referring to the 4.6% budget increase requested by the Pentagon, not the 10.1% advocated by Trump or additional billions more that Congressional Republicans want to lavish on the military.) What is really detestable about Trump’s budget is that it doesn’t raise taxes on those who can best afford it – his buddies and his family, the nation’s richest individuals -in order to secure the additional money for our defense budget.  Instead it makes the budget additions revenue neutral by taking the money out of federal programs that benefit all of us and which least align with his populist/conservative agenda.

It is no surprise that the Environmental Protection Agency is slated to experience some of Trump’s deepest budget cuts – $8.2 billion to $5.7 billion in 2018 – a 31% decrease.  Trump not only announced his intention to withdraw the US from the Paris Climate Accords. With these cuts to the EPA he also so seeks to insure that our country is unable to follow through on our environmental promises.  The EPA budget cuts would eliminate almost all EPA’s work on climate change including stopping all climate research.

In addition, the budget also cuts by a third the money allocated to states to monitor air pollution and cuts by 27% the funding for the Superfund cleanup of dangerous chemicals which have been dumped into local communities.  The Energy Star program, a voluntary appliance energy efficiency rating program managed by the EPA, would be totally eliminated.  Thus far that program has been estimated to save consumers $430 billion in energy bills and prevented 2.7 billion metric tons of greenhouse gas emissions from being pumped into the atmosphere. The new EPA budget also would eliminate funding for federal efforts to clean up the pollution in the Great Lakes, the source of drinking water for 40 million people.

In accordance to Trump’s “America first, the rest of the world be damned” policy, in 2018 Trump proposed cuts of 29.1% for the State Department and our international aid programs – $39.7 billion to $28.2 billion.  Trump has never been able to grasp the concepts that diplomacy often eliminates the need to employ our military and that “soft power” turns more potential enemies into friends than the threat of military force.

The new budget seeks to slash aid to developing countries by over one-third.  Global health funding is also targeted.  Not only has our investment of international funding for health initiatives saved millions of lives, it has helped keep American safe from the threat of a global pandemic.  Cuts would also reduce foreign aid aimed at preventing food shortages in developing countries and, of course, it would also cut aid to vulnerable countries dealing with the effects of climate change.  These budget cuts which are opposed by every recent Secretary of State, won’t make “America great again”.  Their affect will be instead to reduce our stature and influence in the rest of the world.

If Trump’s 2018 budget were to be approved by Congress as is, the funding of the Department of Labor would be cut by 19.8% – $12.1 billion to $9.7 billion.  As you would expect, programs which help everyday Americans will bear the brunt of funding reductions.  Targeted for cuts are job grant programs as well as job training programs for seniors and disadvantaged youths.  Funding for the U.S. Chemical Safety and Hazard Investigation Board, which investigates accidents in the chemical industry, would be eliminated completely. With the obvious intention of reducing the enforcement of federal regulations, there are also deep cuts proposed in funding for the Wage and Hour Division and OSHA which respectively protect workers’ wages and safety.

The Department of Housing and Urban Development is slated for a 13.2% cut in funding from $46.0 billion to $40.7 billion.  Again those in need of the most help will feel the budget ax.  Funding for affordable housing programs would cut.  On the budget funding chopping block are programs that provide public housing to the disadvantaged, rental assistance programs, and housing for the elderly, people with disabilities and families who experience hardships.

The cuts to the Department of Education also follow the Trump mindset.  The DoE is slated to lose $9.2 billion dollars of its 2017 budget allocation – a reduction of 13.5%. According to the Education Week website, proposed are “cuts to spending for teacher development, after-school enrichment, and career and technical education, while ramping up investments in school choice.”  Grants for special education would decrease by $112 million while grants for charter schools would get a $158 million increase.  A $2.1 billion program for teacher development and reducing class size would be eliminated completely.

The proposed funding cuts to the federal departments listed above are the largest in terms in actual size and/or percentage, but together they won’t pay for the $54 million in increased funding national defense and the much smaller funding increases for Homeland Security and the Department of Veterans Affairs.  Every other federal Department also take a hit and those cuts also reflect the Trump philosophy.  But up to now we have only been discussing Trump’s 2018 budget.

If you think Trump’s 2018 budget cuts were onerous, wait until you see his budget plans for the foreseeable future.  Trump has also provided Congress with his blueprint for balancing the federal budget over the next 10 years.  As you would expect from braggadocious Trump, on the revenue side for the next ten years he predicts a very rosy picture of continuous economic growth (a virtual impossibility).  On the spending side he depends on deep cuts to social safety net programs including food stamps and Medicaid.  Also on the funding chopping block are the federal assistance program for student loans and the pension benefit plans of federal employees. Also thrown in additional increases in funding for defense and boarder security, including money for finishing “the wall”.

We can debate among ourselves whether increased military spending is needed, and if so, what level of increase is actually necessary.  However, I think that most of us can agree that to use Trump’s term, his method of paying for increased defense spending is just plain “mean”.  Now Congress has always regarded Presidential budgets as “wish lists” and there is virtually zero chance that Trump’s 2018 budget will ultimately be approved by both the Senate and the House of Representative without many major changes.There is also a possibility that Democratic members of Congress will be willing and able to bring the entire government to a standstill if they are not able to convince the Congressional Republicans to adopt a “kinder and gentler” budget.

However, whatever budgets are ultimately adopted for 2018 and beyond, look for a an element of meanness to dominate federal funding until Democrats regain control of the House, the Senate, and/or the White House.

Cajun    6/24/2017