What Drives Record Spending on Defense?

By the end of 2008, the United States will spend three-quarters of a trillion dollars on defense. Adjusted for inflation, the Pentagon's latest budget will be the highest since the end of World War II. Yet, over the past seven years, troops in Iraq and Afghanistan have faced equipment shortages and lack of proper armor.

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The Pentagon's budget has hit a new milestone. Adjusted for inflation, it's the highest in more than 60 years. By the end of this year, the United States will spend three quarters of a trillion dollars - that's trillion, on defense. The average American household now pays about $8,000 in taxes a year just for the Defense Department. So we asked NPR's Guy Raz to take a look at how some of that money is spent.

GUY RAZ: Say you bought $3,000 worth of Lockheed Martin stock on September 10, 2001. Lockheed is the biggest defense contractor in America. Now if you bought that stock, your three grand would be worth close to $10,000 today. It's not that Lockheed has a revolutionary business model, but the past few years have been very good for business. The company's biggest customer is the U.S. government, so Lockheed's success hinges on increases in defense spending, spending on things like its F-22 fighter jet.

(Soundbite jet engine)

RAZ: The F-22 is the most expensive fighter jet in history, more than $300 million a pop. It has no rival and yet…

Mr. WINSLOW WHEELER (Analyst, Center for Defense Information): It is finally after 25 years of expensive development reached what the Air Force calls full operational capability, meaning that it's ready to go to war. We've got two wars going on, and it has not flown a single sortie in either war.

RAZ: This is Winslow Wheeler, an analyst with the Center for Defense Information. He says the F-22 serves little purpose today. It was designed to fight the Soviets in air-to-air combat. And the F-22 program alone has cost tax payers $60 billion or about as much as the GDP of a country like Slovakia or Vietnam. But the F-22 is still very much alive. It's alive, says Christopher Hellman, an analyst at the Center for Arms Control, because of one thing, Congress.

Mr. CHRISTOPHER HELLMAN (Analyst, Center for Arms Control): Lockheed Martin very candidly will tell you on their Web site that they represent tens of thousands of employees in 45 of the 50 states. When you have that kind of political clout behind you, it's very easy to convince members of Congress that continuing a program like that is important to their constituencies.

RAZ: And Lockheed, like many other defense contractors, has managed to successfully equate its products with America's national security.

(Soundbite Lockheed Ad)

RAZ: This is one of the company's corporate ads. Lockheed, like all the major defense contractors, hands out campaign money to both Democrats and Republicans. President Bush is one of its biggest recipients, but so are two of the strongest opponents of the Iraq War in Congress: Democrats Jack Murtha, he's the chairman of the committee that doles out money to the Pentagon, and Ike Skelton, the congressman who oversees the military. Now, when Republicans control Congress, industry money trends their way. Now that Democrats control it, the trend has reversed.

Mr. HELLMAN: No one ever lost an election by voting for more spending for the Pentagon, but you can easily lose one by being perceived as soft on defense.

RAZ: Christopher Hellman notes that Lockheed's projects are just a part of what drives the defense budget. There's missile defense, new jet fighters, a new naval destroyer, Virginia class submarines, the list goes on. And budget analysts estimate that these big-ticket items now make up almost half of the Pentagon's regular budget. According to Miriam Pemberton, a researcher with the Institute for Policy Studies, many of these programs…

Ms. MIRIAM PEMBERTON (Researcher, Institute for Policy Studies): …have no real value for any, you know, counter-terrorism operations. You know, al-Qaida and the Taliban don't have any fighter jets and are never going get any. So, these big-ticket items drive the budget and become de facto our security priorities when they don't in fact enhance our security.

RAZ: And defense spending, she says, is no longer a controversial issue on Capitol Hill. But it wasn't always that way.

Unidentified Male: Members of the Congress, I have the distinguished honor of presenting to you the president of the United States.

RAZ: Just a few days after his inauguration in 1953, President Dwight Eisenhower, who was the first general to serve as president in the 20th century, stunned Congress by promoting deep cuts in defense spending.

President Dwight Eisenhower (Former President): To a mass military power without regard to our economic capacity, would be to defend ourselves against one kind of disaster by inviting another.

Mr. WHEELER: What Eisenhower said was true then, it's just that now it's 10 times more true.

RAZ: And as Winslow Wheeler points out, today, Congress usually adds more money to the Pentagon's budget requests. Wheeler was forced to step down from his job as a Republican staffer on the Senate budget committee in 2002 after he wrote an article blasting bloated defense spending. He explains that every year, members of Congress figure out which defense projects will benefit their own districts, and then they add it to the defense budget.

Mr. WHEELER: One of the misunderstandings about the pork system is that people think it's stuffed down the unwilling throat of the Defense Department. That is not the case in nine out of 10 cases. As a matter of fact, you won't get your pork project added to a defense appropriations bill unless someone in the Pentagon does approve the project.

RAZ: The United States now spends more on defense than every other country in the world combined, and the Pentagon's spending power alone makes it richer than Australia. And yet, over the past seven years, despite massive funding increases, troops in Iraq and Afghanistan have faced equipment shortages and lack of proper armor. Here's Christopher Hellman again.

Mr. HELLMAN: When we send our men and women off to war, we feel rightly that they be the best trained, best equipped, best supported military on the field. The irony, however, is that higher defense budgets don't necessarily mean that that will be the case.

Mr. WHEELER: We spend more today on defense than we have ever spent since the end of World War II, in inflation- adjusted dollars. Our military forces are today smaller than they've ever been since the end of World War II. We are quite literally getting less for more.

RAZ: Now, last year, researcher Miriam Pemberton took a hard look at the Pentagon's budget, and she wanted to answer a question.

Ms. PEMBERTON: It's important that we spend what we need to keep ourselves safe and secure, but the question is, you know, what kind of spending is going to do that best?

RAZ: So Pemberton crunched the numbers, and she found that the Pentagon could still fund troops, equipment, maintenance, even modernization, and on top of that put money into diplomacy, humanitarian aid, and other forms of preventative security and still easily cut the budget by 10 percent. And the value of that 10 percent alone? Well, it's still more than the combined annual wealth of Guatemala and Costa Rica.

Guy Raz, NPR News, Washington.

(Soundbite music)

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Final Bush Budget Eyes Defense Boost

Bush budget i i

hide captionPresident Bush unveiled his $3.1 trillion 2009 budget during a cabinet meeting at the White House on Monday. The president is shown here holding an electronic version.

Ron Sachs-Pool/Getty Images
Bush budget

President Bush unveiled his $3.1 trillion 2009 budget during a cabinet meeting at the White House on Monday. The president is shown here holding an electronic version.

Ron Sachs-Pool/Getty Images

President Bush on Monday released a $3.1 trillion budget plan for fiscal 2009 that, if approved, would raise military spending to inflation-adjusted levels not seen since World War II.

The blueprint — President Bush's last and most expensive to date — would also extend the tax cuts enacted in his first term. Increases for the military budget and big tax cuts have been hallmarks of Bush's presidency.

The plan includes $11.4 billion to run the State Department. Secretary of State Condoleezza Rice wants to hire close to 1,100 more people, a big jump for an agency with about 8,000 Foreign Service Officers.

The budget would nearly freeze the total amount of discretionary spending on domestic programs and significantly cut the growth of Medicare.

But even with the spending restraints, the five-year plan would generate near-record budget deficits over the next two years, due in part to the cost of a roughly $146 billion economic stimulus plan.

The budget proposal was immediately rebuffed by congressional Democrats, who said it is in stark contrast to the budget they will offer in the coming weeks.

House Speaker Nancy Pelosi (D-CA) promised that congressional Democrats will propose a budget that "takes America in a new direction" by strengthening the economy and creating jobs, helping Americans who struggle with the high costs of things such as health care, energy and groceries and restoring fiscal responsibility.

Here, a look at President Bush's proposals and the reaction to them on Capitol Hill and on the presidential campaign trail.


Defense and War

By Guy Raz

President's Budget: The administration seeks $515 billion for the Pentagon's day-to-day operations. That figure alone is more than the total combined military spending by every other country in the world. But it doesn't include supplemental requests to fund the wars in Iraq and Afghanistan.

Right now, the White House is asking Congress for $70 billion in supplemental war funding. Judging by past spending, that $70 billion will last about four months. Add up all projected defense-related spending for fiscal 2009 and $515 billion balloons to $750 billion — almost a third of all U.S. federal spending today. To put it another way, if the Pentagon were an independent country, it would be the 10th richest in the world.

Congressional Reaction: In recent years, lawmakers from both parties have approved the Pentagon's baseline budget and then bulked it up further. Congressional pet projects — known informally as "pork" —typically boost the Defense Department's funding by an additional $30 billion.

Last year, Congress demanded that the administration ask for all war-related funding projects upfront. But this year, the administration balked — perhaps realizing that a request for $750 billion in defense-related spending might attract too much attention. This way, the White House can ask for war funding in installments.

Campaign Trail: Broadly speaking, all the leading presidential front-runners support defense spending increases. Sen. Hillary Clinton (D-NY) and Former Gov. Mike Huckabee (R-AR) have been most vocal on the issue. But the candidates differ over supplemental war funding. Democrats are pushing for a rapid drawdown of U.S. troops in Iraq — a plan that could save nearly $100 billion by 2010. Republicans, including Sen. John McCain of Arizona, support the maintenance of a large U.S. military contingent in Iraq for the time being. But no matter which candidate is elected, most budget analysts expect overall defense spending to fall over the coming years as the military eventually begins to pare down its operations in Iraq.


Education

By Larry Abramson

President's Budget: President Bush is proposing to cut education spending by about $4 billion, although some well-known programs — such as No Child Left Behind and funding for high-poverty schools — would get modest increases.

Bush has a few other priorities. One is the latest incarnation of the administration's effort to create a federal voucher program. The so-called "Pell Grants for Kids" would provide $300 million to help low-income children in chronically failing schools attend private or religious schools. The program would be modeled on the D.C. Opportunity Scholarships, a limited federal program for students in the nation's capital.

President Bush also wants to restore funding for Reading First, a billion-dollar reading initiative that Congress cut to less than $400 million in fiscal 2008 after several investigations exposed conflicts of interest in how the funds were allocated.

Congressional Reaction: Congress is almost certain to throw cold water on several administration proposals. Lawmakers have repeatedly rejected attempts to expand vouchers in the past and can be expected to do so again. Many educators support Reading First, but Congress is still upset about charges that Bush administration insiders ran the program with little oversight, and lawmakers may be reluctant to give back all the money they took away last year.

Campaign Trail: These issues do not particularly resonate on the campaign trail, where the economy, the war, immigration and health care are more prominent.


The Economy, Deficits and Taxes

By John Ydstie

President's Budget: Despite dramatic cuts to Medicare and a near freeze on the total amount of discretionary spending on domestic programs, the budget would produce a deficit of $407 billion in 2009 — close to a record in dollar terms. Whether the slowing U.S. economy can produce the tax revenues necessary to meet even that deficit projection remains in question — especially since the budget is based on a relatively optimistic economic growth forecast of 2.7 percent this year and 3 percent next year. That's stronger growth than private forecasters are predicting.

Despite the big deficits in the short term, the White House says its spending plan would put the budget on a path to being balanced by 2012. But that projection doesn't take into account future war spending, or the cost of a long-term fix to the alternative minimum tax, which could cost more than $1 trillion. The president's budget does call for a temporary fix to the alternative minimum tax in 2009.

President Bush's final budget also calls for making his big tax cuts permanent. They're currently scheduled to expire in 2010.

Congressional Reaction: South Carolina Democrat John Spratt, chairman of the House Budget Committee, complained that the president's budget "leads to more deficits, more debt, more tax cuts and more cutbacks in critical services." Even some Republicans were critical. GOP Sen. Judd Gregg of New Hampshire said the Bush administration was using "smoke and mirrors."

Campaign Trail: Virtually all presidential candidates of both parties have criticized the deficit spending of President Bush's two terms. On his big tax cuts, they part company: Republicans want the tax cuts made permanent, while Democrats want to eliminate large portions of the Bush tax cuts for high-income Americans.


Environment and Energy

By Elizabeth Shogren

President's Budget: The budget for environment and energy issues looks much like previous budget requests from President Bush. As in recent years, projects designed to clean up waterways by improving sewage systems took a big hit. Those projects got $1.1 billion in 2007 and $689 million in 2008; the president requests only $555 million for 2009. The Bush administration says these are important programs but that states and localities should fund them.

Despite the president's more aggressive statements on fighting climate change, his budget request would reduce funding for energy efficiency and renewable energy — such as wind, solar, etc. The president gets much of that reduction by slashing funding — from $280 million to $60 million — for low-income households to "weatherize" their homes with new windows, better insulation and other efforts. As in his previous budgets, the president asks for funding to open the Arctic National Wildlife Refuge to drilling, but that initiative is dead on arrival in Congress. Bird lovers did have some good things to say about the president's budget: The Interior Department includes $9 million to study migratory birds and ease their plight by working with private land owners, companies and Mexico.

Congressional Reaction: The dominant environment and energy issue in Congress is climate change. Democrats and Republicans in both the House and Senate are drafting major bills to reduce greenhouse gas emissions through "cap and trade" systems. These bills would make billions of dollars available to stimulate development of cleaner energy sources.

Campaign Trail: Sens. Barack Obama (D-IL), Clinton and McCain all support nationwide "cap and trade" programs to reduce greenhouse gas emissions. Clinton also wants to tighten fuel economy standards even more than Congress did last year, so that an average vehicle will go 55 miles per gallon by 2030. McCain sees nuclear power as a big part of the solution. Former Gov. Mitt Romney (R-MA) opposes a mandatory cap and trade system to cut greenhouse gases, but he does support spending more on research and development of energy technology that will lessen America's dependence on foreign oil.


Homeland Security

By Pam Fessler

President's Budget: One of the few areas to grow in Bush's budget is homeland security. President Bush would increase spending on homeland security across the government by almost 11 percent. Much of the Homeland Security Department's funding increase would be used to tighten border security and enforce immigration laws. The budget would also provide almost $1.5 billion to improve screening of airline baggage, cargo and passengers. The plan also calls for almost $1 billion to upgrade the Coast Guard's fleet of aircraft and ships, a program that's encountered numerous problems and delays over the past two years.

Congressional Reaction: Lawmakers are likely to go along with many of the spending increases, since the funding boosts are largely the result of congressional complaints that the administration hasn't done enough to secure the nation's borders or clamp down on illegal immigration. However, lawmakers are unlikely to accept a proposed $1.5 billion cut in popular homeland security grants to state and local governments. Congress rejected a similar cut proposed last year. Also unpopular — and almost certain to be rejected again — is the administration's perennial request to pay for increased airport security with a 50-cent surcharge on airplane tickets.

Campaign Trail: Those running to replace President Bush — on both the Democratic and the Republican sides — have devoted little time to talking about their homeland security plans. However, all have called for a strong domestic defense and are unlikely to seek huge spending cuts.


Health Care Entitlements

By Julie Rovner

President's Budget: In what he calls "a hard look at entitlement growth," President Bush proposes to make dramatic cuts to both the Medicare and Medicaid health programs. Medicare would take by far the larger hit — $182.7 billion over the next five years — while Medicaid spending would be cut by $17.4 billion. Most of the Medicare cuts would come from scaling back reimbursements to health care providers — mostly hospitals and nursing homes. But nearly $6 billion would come from increasing costs to higher-income Medicare beneficiaries: individuals who earn more than $82,000 annually or couples who earn $164,000 a year.

Congressional Reaction: Congress almost never cuts Medicare payments to providers in an election year, and it seems unlikely this year will be an exception. One complication, however, is that Congress does have to pass a bill by the end of June if it wants to avert a 10 percent pay cut to doctors who treat Medicare patients. If lawmakers want to offset the cost of that additional money for doctor pay, they will have to look to private insurance plans that cover Medicare patients. Budget analysts say those plans are being overpaid by an average of 12 percent.

Campaign Trail: Expect entitlement reform in general and Medicare in particular to be a key issue in the general election campaign. Interestingly, however, McCain, as well as Clinton and Obama, have all proposed one idea that budget experts say could help bring down Medicare costs in the long run: more research devoted to comparing how well various medical treatments actually work and how cost-effective they are.


Immigration and Border Security

By Ari Shapiro

President's Budget: President Bush said "keeping America safe" was one of the key principles guiding the development of his fiscal 2009 budget. As such, border security is one of the few domestic areas where he has requested increased funding for the coming year.

The budget for immigration and border security enforcement will increase by 19 percent. It requests money for 2,200 new border patrol agents and 1,000 new detention beds for immigrants caught crossing the border illegally. It would also allocate about $775 million for fencing infrastructure and other technology to secure the border with Mexico.

Congressional Reaction: Lawmakers from both parties have generally supported increased immigration enforcement. Republicans in particular have urged more security along the southern border, while Democrats have tended to prefer a so-called "comprehensive approach" that combines border security with a path to citizenship for undocumented workers. An immigration bill supported by President Bush would have incorporated both elements, but the legislation failed in Congress last summer.

Campaign Trail: Both Democratic presidential candidates supported the Senate's comprehensive immigration plan. Clinton and Obama both say that if elected, they will offer an approach to immigration reform that combines enforcement with a path to citizenship. McCain broke with some of his more conservative colleagues to sponsor the comprehensive immigration overhaul bill in 2007. Romney, his chief rival, has opposed programs that would provide what Romney calls "amnesty" for illegal immigrants.

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