Iraq is an expensive operation in more ways than one. President Bush’s $448 billion Defense budget for FY2005 included no funding for the war, but the administration was expected to demand an additional $50 billion for operations in Iraq in January. However, due to renewed violence, the administration decided not to wait and asked Republican congressional leaders last week to add $25 billion to next year’s budget to help pay for the military operations.
Approving this new money will cause a debate in Congress, but the debate will revolve around the issue of whether it is the role of the United States to bring democracy to Iraq. This is a legitimate debate, but it should not completely overshadow other important topics–including how the war should be financed. To test the GOP’s newly proclaimed commitment to fiscal responsibility, the president and Congress should establish priorities and recognize the limits to our nation’s resources. In other words, if President Bush wants more money for Iraq, he should find significant savings elsewhere in the budget.
President Bush’s previous budgets have increased spending dramatically, with higher outlays for both defense and domestic programs. Total outlays have increased by 29 percent, up $500 billion, during the last four years. Republicans are arguing that much of the recent increase in spending stems from higher defense and homeland-security spending. Yet, the budget numbers show that while defense spending increased by 46 percent since Bush became President, nondefense spending without homeland security increased by 32.4 percent. In other words, no serious trade-offs are being made in the budget.
There are several ways to finance additional war spending. First, defense spending can easily be reallocated. President Bush inherited defense budgets that were arguably inadequate for the threats facing the nation. He sought–and won–substantial increases in defense spending from Congress. Providing for the defense of the nation is a legitimate responsibility of the federal government, but this does not mean that every Pentagon program should be continued. The administration could use Iraq as a long-overdue reason to cut waste in the Pentagon.
As in any branch of government, cost increases and schedule overruns are common in the Department of Defense. The General Accounting Office reports that DoD “has serious financial management problems” and wastes billions. DoD also needs to dispose of millions of square feet of excess building and obsolete military facilities. And according to Donald Rumsfeld, about 25 percent of military bases should be closed due to the decrease in the number of active duty U.S military personnel even in this time of war. Yet, it is doubtful that Congress will end up following through in an election year.
Each year, Congress adds thousands of pork barrel earmarks to defense appropriation bills. That should end. These low priority items are not requested by the administration and go to narrow regional interests at the expense of federal taxpayers–$5.4 billion in FY2002 and $6.7 billion in FY2003. In the April 2003 $78.5 billion War Supplemental Appropriations Act alone, 29 projects unrelated to the war that cost taxpayers more than $348 million were added at the last minute. None of the supplemental money was offset elsewhere in the budget. Worse, DoD also spends millions on corporate-welfare subsidies each year-at least $4.5 billion in FY2004.
While some of the Iraq war can be financed by adjusting the military budget, the lion’s share should come from domestic programs. Most nondefense spending is counterproductive and oversteps the proper sphere of federal-government responsibilities. And controlling domestic spending would be in line with the actions of previous administrations, ranging from Democrats like Franklin Roosevelt and Republicans like Ronald Reagan. When Reagan pursued his defense buildup, for instance, he increased real defense discretionary outlays by 26 percent while cutting nondefense discretionary outlays by 10 percent.
Congress should terminate farm programs such as the Foreign Agricultural Service, the Rural Housing Service, the Agricultural Marketing Service, and the Rural Business Cooperative Service saving at least $24 billion each year. Many programs of the Department of Transportation should be privatized, such as Amtrak, which will cost $900 million in FY2004, and the $6 billion budgeted for Air Traffic Control; many others should be terminated. The $80 billion in corporate welfare in the FY2004 budget should be cut along with the $23 billion in pork-barrel earmarks that found their way in this year Omnibus bill.
Even if there was no war to finance, these programs should be reduced. It would be difficult to identify a single domestic program that has solved a problem. Most nondefense outlays are income transfers from general taxpayers to special interests. They weaken the economy by misallocating resources and undermining incentives for productive behavior.
Protecting America doesn’t just mean fighting the war on terror. It also means controlling the size of government so that America does not become a stagnant welfare state like France or Germany.
–Veronique de Rugy is a visiting scholar at the American Enterprise Institute.