Saturday, December 21, 2019

Trump Brags About Record Defense Spending

Niv Elis covers the latest in the Trump fiscal fiasco:
President Trump on Friday signed two spending packages totaling $1.4 trillion, averting a government shutdown at midnight. The bills included all 12 annual appropriations bills for the 2020 fiscal year that started Oct. 1. They also included a slew of tax cuts, extending expiring and expired tax breaks and eliminating other taxes that amount to an additional $426 billion in lost revenue, bringing the total cost of the bill to more than $1.8 trillion.
Reagan used to complain about “tax&tax and spend&spend” so he replaced it with spend&spend and borrow&borrow. Trump is doing the same but there’s more:
Trump’s signature brings to a close a fraught year for spending. At the same time last year, his refusal to sign a stopgap measure over funding his proposed border wall led to a 35-day shutdown, the longest in the nation’s history. The Democratic majority in the House, which was seated in the midst of the shutdown, left Trump with little to show for the shutdown by way of wall funding. After finally striking a deal to reopen the government in February, Trump proceeded to declare a state of emergency along the Southern border to allow him to reprogram other funds. Not long after, Trump released his annual budget proposal that would have hyper-charged military spending while dramatically cutting domestic spending, slashing more than 20 percent of funds from the EPA, State Department, and Transportation Department, and abolishing funding for popular programs such as the National Endowment for the Arts, the Corporation for Public Broadcasting and the Special Olympics. Congress summarily dismissed the request and ultimately agreed to a deal that would increase spending on both defense and non-defense significantly for both 2020 and 2021. Congressional leaders would need two stopgap measures spanning nearly three months to work out spending allocations, find compromises on controversial issues such as the wall and agree on additional legislation to include in the package.
Trump tried to follow the rightwing playbook by paying for the tax cuts for the rich and increases in defense spending by screwing the rest of the Federal budget. Thankfully this failed. But of course that did not keep Trump off the twitter:
I will be signing our 738 Billion Dollar Defense Spending Bill today. It will include 12 weeks Paid Parental Leave, gives our troops a raise, importantly creates the SPACE FORCE, SOUTHERN BORDER WALL FUNDING, repeals “Cadillac Tax” on Health Plans, raises smoking age to 21! BIG!
Trump went onto to say that the U.S. has never spent more on defense but of course he is talking about nominal dollars and not inflation adjusted figures. Thankfully we have the BEA and Table 1.1.6. Real Gross Domestic Product, Chained Dollars. In 2012$, defense spending was $861.3 billion in 2010. By 2016 it had fallen to $708.3 billion. Now it had risen to $737.5 billion by 2018 and will likely be over $770 billion this year. But we will nowhere close to $862 billion in 2020 – nor should we be. Of course that did not stop Trump from lying to the troops!

13 comments:

rosserjb@jmu.edu said...

Probably more important than the nonminal/real distinction is the percent of GDP. As it is, the current level of defensse spending is something in the 3-4 percent range of GDP. It has been far higher than that previously, indeed for extended periods of time during the Cold War, not to mention the far percentages during WW II.

Not that I am keen on returning to such levels.

2slugbaits said...

I thought one of the arguments for an independent SPACE FORCE was that it would save money relative to putting it under one of the existing services. So why does DoD need more money for it? And the SOUTHERN BORDER WALL will hurt enlistments, so that should reduce personnel costs. And then there's the repeal of the Cadillac tax, which, true to form, will hurt Trump's downscale voters because it will increase the cost of healthcare.

Anonymous said...

This is so much nonsense.

Defense spending is now the highest it has ever been and no soldier or ordinary person will think differently by looking at real spending in the BEA accounts. Defense spending in the 3rd quarter was $841.6 billion annualized, and spending will be increasing now. The vast nominal number should impress any person.

rosserjb@jmu.edu said...

Well, since sometime during WW II the US has been by far the largest spender on military. Just how far ahead we have been at any time has varied, but nobody has been close to us since we took that lead.

pgl said...

This Anonymous is impressed by a BIG NOMINAL number? OK! But think about it this way - Trump has so messed up our relationships with our allies and so embolden nations like Russia we would need to be spending far more on our military just to police the screwed up world Trump's incompetence has left us. This may be the height of economic history since the dawn of time!

Anonymous said...

"Trump has so messed up our relationships with our allies and so embolden nations like Russia we would need to be spending far more on our military just to police the screwed up world Trump's incompetence has left us."

Then the point I missed is that we need to be spending more on the military because after all these years of necessary world policing we have not been spending enough to have properly done the job if say the French are now annoyed with us. Seriously, I do not understand.

As for emboldening nations like Russia, please explain what this means.

Anonymous said...

"This may be the height of economic history since the dawn of time!"

Please explain.

Anonymous said...

President Trump is frightening to me, deeply frightening, but because of policy after policy that is now being differently administered, because of the many judges he has nominated and who are quickly being confirmed, and so on. I may have been too dismissive, but boasting about nominal military spending seems of little account and the last thing I think we need is even more military spending because real spending is not the highest ever.

Trump makes up stuff all the time and boasts all the time, and I find the military spending boast disturbing because we are spending so much rather than too little.

Anonymous said...

Thanks for the post, which I learned from, even though I complained.

2slugbaits said...

Anonymous,
Defense spending in the 3rd quarter was $841.6 billion annualized

I'm not trying to justify bloated defense budgets, but you really can't annualize the 3rd quarter BEA numbers because those are also the 4th quarter fiscal numbers. There is almost always a big uptick in the last quarter of the fiscal year. Also, the BEA numbers actually reflect Treasury outlays against DoD accounts, which is not quite the same thing as "spending" in the ordinary sense of the term. When we buy something with a credit card we normally think of the spending happening when we actually make the purchase at the store (what DoD calls an "obligation"). What BEA actually records is when we would pay the credit car bill.

pgl said...

2slug - I thought about using the 2019 quarterly data from BEA but decided not to for reasons you articulate. Besides the Q4 reporting will come out soon.

Anonymous said...

"I'm not trying to justify bloated defense budgets, but you really can't annualize the 3rd quarter BEA numbers..."

Please, this is just what the BEA does and I am reporting the data. They use the same format each quarter and have for decades. The lesson here is that defense spending will surely be above $841.6 billion i the coming 12 months, just as the administration and congress wish.

Anonymous said...

PGL:

"Trump has so messed up our relationships with our allies and so embolden nations like Russia we would need to be spending far more on our military just to police the screwed up world Trump's incompetence has left us."

A serious strange statement; right from the Republican Cold war playbook.