Another Reason to Cut Taxes
Lower taxes lead to strong defense.

Mr. Gaffney is president of the Center for Security Policy
March 2, 2001 11:35 a.m.

ear Mr. President,

As someone who tends to worry first about national security and only secondly about domestic issues like taxes, it may surprise you to learn that I — like millions of others in the national-security community — strongly support your efforts to reduce the financial burden imposed by the federal government on the American taxpayer.

This support is due to a conviction that your program for across-the-board tax reductions offers not only a necessary stimulus to our civilian economy and morally imperative relief for our countrymen from excessive taxation. Your tax-cut plan also appears entirely consistent with, indeed highly conducive to, the realization of another of your deeply held priorities — namely, your commitment to rebuild the nation's military so as to enable it to contend with the serious security challenges we will likely face in the twenty-first century.

After all, to the extent that your program of tax simplification and reductions translates into — as you have put it — a "refund" for every American who pays taxes, the effect will assuredly be to contribute to long-term economic growth. Such growth will, in turn, add to future federal revenues and thereby facilitate the very substantial recapitalization of the armed forces. This step has been made absolutely necessary by roughly a decade of under-investment in the uniformed services, a practice that has seriously degraded the maintenance, training, and modernization activities critical to the combat readiness of today's military — and tomorrow's.

As you know, responsible estimates vary greatly as to what it will take to effect such a recapitalization. Among the most conservative of these analyses has been that performed by the Congressional Budget Office (CBO). The CBO has found that the necessary refurbishing of the military will require a minimum additional $50 billion over each of the next five years.

But I suspect that if the review of strategy and requirements recently launched by Secretary of Defense Rumsfeld is done in an objective and rigorous manner, the actual figure will come closer to $100 billion per year, perhaps more, over the next five years. This would have to start in fiscal year 2002, following an $8-10 billion supplemental for the remaining months of the current fiscal year.

While these sums seem large, even the higher add-ons would translate into an allocation of roughly 4 percent of Gross Domestic Product to national security. Four cents on the national wealth "dollar" for safeguarding our freedoms at home and interests abroad hardly seems excessive — especially since we have generally spent a far higher percentage of GDP for these purposes since the end of the Second World War.

Even in the unlikely event that the economy experiences more than the two downturns over the next 10 years already built into the CBO models of projected revenues, it would appear that federal-income streams will be seen as adequate to meet the needs of both the Defense Department and your other domestic priorities. This will be due in part to the fact that the last Clinton budget contemplated a $220-billion increase in defense spending over the next six-years. As a result, there is a bipartisan "baseline" that goes some way toward underwriting the needed recapitalization. Even legislators who profess concern about the defense add-ons that you will need to propose are likely to support the "out-year" increases President Clinton had recommended, thus reducing the size of the total add-ons under contention and facilitating the forging of political support for their adoption.

If all else fails, the $1-trillion "rainy-day fund" that you have proposed to insulate our society and economy from the dangers of recession and other contingencies should be more than sufficient to rebuild the military within available federal-government resources.

You are to be commended for the leadership you have shown to date in setting the stage for achieving the fiscal and defense goals you articulated during the presidential campaign and during your first weeks in office. Those of us who look forward to helping you succeed in your efforts to rebuild our defense posture appreciate that your success in reducing taxes is a first and highly synergistic step toward that goal. Consequently, you can count on us in the national-security community to support you in both of these important endeavors."