Memo to GOP: To Avoid New Defense Cuts, Pay for Old Wars
Last summer, Congress ended the debt ceiling hostage-taking drama by agreeing to $1.2 trillion in automatic budgets cuts, half of them from the Pentagon, if a so-called "super committee" failed to come up with a plan to do so. Of course, now that the Republican refusal to raise even a dime in new tax revenue has scuttled that debt panel, GOP leaders are predictably reneging on their deal. But rather than freezing the pay and eliminating the positions of federal workers in order to avoid $500 billion in new defense reductions, John McCain, Jon Kyl and friends should start by finally paying for the unfunded wars the U.S. began fighting a decade ago. After all, the unpaid bill for Iraq and Afghanistan will top $3 trillion.
Last week, the Obama administration unveiled $487 billion in defense spending reductions over the next decade. After growing every year of the Obama presidency, the Pentagon's budget would drop by 1 percent in 2013.
But with last year's debt agreement requiring another $600 billion in automatic sequestration from the Department of Defense, Congressional Republicans are backing out of their 2011 deal. Following a similar proposal House Armed Services Chairman Buck McKeon (R-CA), GOP Senator John McCain (R-AZ), Jon Kyl (R-AZ), Lindsey Graham (R-SC), John Cornyn (R-TX) and Kelly Ayotte (R-NH) proposed the "Down Payment to Protect National Security Act of 2012" to delay if not completely avoid the defense sequestrations. As TPM explained:
Senate Republicans unveiled a proposal Thursday to avoid or delay looming, automatic cuts to defense and security programs by reducing the federal work force by five percent and freezing federal pay for two and a half years.
In a bid to recruit Democratic support for their legislation, the authors of the plan say it saves enough money to forestall automatic cuts to domestic programs, also set to kick in on January 2013. But they continue to oppose using any new tax revenues to offset any of these costs -- and in so doing they exposed a contradiction at the heart of their fiscal policy. They oppose tax increases, they say, because of their impact on economic growth -- yet their plan to avoid tax increases involves deliberately shrinking demand for jobs.
John McCain summed up the Republicans' approach by declaring, ""Let's not let a domestic issue such as tax increases interfere...with our nation's security."
Of course, that's precisely how we got into this mess. By cutting taxes during war-time, George W. Bush and his Republican allies produced a torrent of red ink as far as the eye can see.
To be sure, America's open tab for its wars in Afghanistan and Iraq is staggering. In May, the National Journal estimated that the total cost to the U.S. economy of the war against Al Qaeda will reach $3 trillion. In 2008, Nobel Prize-winning economist Joseph Stiglitz put the price of the Iraq conflict alone at $3 trillion.
But by 2020 and beyond, the direct cost to U.S. taxpayers could reach $3 trillion. In March, the Congressional Research Service put the total cost of the wars at $1.28 trillion, including $806 billion for Iraq and $444 billion for Afghanistan. For the 2012 fiscal year which began on October 1, President Obama asked for $117 billion more. (That war-fighting funding was over and above Secretary Gates' $553 billion Pentagon budget request for the year.)
But in addition to the roughly $1.5 trillion tally for both conflicts through the theoretical 2014 American draw down date in Afghanistan, the U.S. faces staggering bills for veterans' health care and disability benefits. Last May, an analysis by the Center for American Progress estimated the total projected total cost of Iraq and Afghanistan veterans' health care and disability could reach between $422 billion to $717 billion. Reconstruction aid and other development assistance represent tens of billions more, as does the additional interest on the national debt. And none of the above counts the expanded funding for the new Department of Homeland Security.
But that two-plus trillion dollar tab doesn't account for the expansion of the United States military since the start of the "global war on terror." U.S. defense spending has doubled since 2001 and, as a percentage of the American economy, jumped from 3.1% in 2001 to 4.8% by 2010. While ThinkProgress noted that the Pentagon's FY 2012 ask was "the largest request ever since World War II," McClatchy explained:
Such a boost would mark the 14th year in a row that Pentagon spending has increased, despite the waning U.S. presence in Iraq. In dollars, Pentagon spending has more than doubled in 10 years. Even adjusted for inflation, the Defense Department budget has risen 65% in the past decade.
All in all, Americans are on the hook for about $3 trillion to the U.S. Treasury by 2020 (and $4.1 trillion by 2030, according to an analysis by the American Prospect). But if the GOP gets its way, we won't have to pay it back. Not now. Not ever.
And that's because President Bush and his Republican allies refused to pay for it from the beginning. Even as the World Trade Center site was still smoldering, Bush told the American people not to sacrifice but to go shopping and "get down to Disney World." In 2003, George W. Bush was the first modern president to cut taxes during wartime. (Barack Obama was the second.) And that made the fiscal hemorrhaging much, much worse.
An analysis by the Center on Budget and Policy Priorities found that Bush tax cuts accounted for almost half of the mushrooming deficits during his tenure; increased defense, DHS and international aid spending represented only 35% of the additional red ink. And as a 2010 CBPP study revealed, over the next 10 years, the Bush tax cuts if made permanent will contribute more to the U.S. budget deficit than the Obama stimulus, the TARP program, the wars in Afghanistan and Iraq, and revenue lost to the recession - combined.
As the Washington Post summed up the CBO's conclusions regarding the causes of the nation's mounting debt last year, "The biggest culprit, by far, has been an erosion of tax revenue triggered largely by two recessions and multiple rounds of tax cuts." An analysis by the New York Times echoed that finding:
With President Obama and Republican leaders calling for cutting the budget by trillions over the next 10 years, it is worth asking how we got here -- from healthy surpluses at the end of the Clinton era, and the promise of future surpluses, to nine straight years of deficits, including the $1.3 trillion shortfall in 2010. The answer is largely the Bush-era tax cuts, war spending in Iraq and Afghanistan, and recessions.
It was with good reason that Utah Republican Senator Orrin Hatch summed up the Bush years by explaining:
"It was standard practice not to pay for things."
Of course, there are plenty of options for Congressional Republicans now panicking about the defense sequestrations they agreed to. For starters, they could simply end the Bush tax cuts for families earning over $250,000 a year. That $700 billion over ten years is more than enough to keep funding the U.S. military at its highest levels since World War II. Or as Ezra Klein, Matthew Yglesias, the New York Times and the Los Angeles Times all noted, Congress could simply do nothing. As the LA Times pointed out:
The annual deficit would be cut in half by next fiscal year if Congress allows laws to stand that would let Bush-era tax cuts end and impose deep budget cuts, the Congressional Budget Office reports.
As Yglesias explained, "If Congress consistently deadlocks on everything, there is no medium-term deficit problem."
But McCain and company would never allow taxes to go up under any circumstances. "We're not going to use a millionaire tax to fix every problem around here," Lindsey Graham complained, adding, "We have a problem with that because we think it's about jobs." Which is more than a little ironic, given the GOP proposal to shed tens of thousands of federal workers in order to avoid any new reductions in defense spending.
Instead, Republicans should start by paying for the old wars they already asked America to fight.