2014 Budget: Defense Spending

Details of the 2014 U.S. federal budget were released January 13th. The gargantuan 1,582 page bill is mundanely titled the “Consolidation Appropriations Act, 2014” (HR 3547).

It weighs in at a hefty $1.1 trillion dollars. There are three important things to know about this budget:

  1. It doesn’t include more than half of federal spending
  2. The budget is for “discretionary” spending only
  3. It is not the final budget

U.S. federal spending has two main parts. 1-Mandatory, 2-Discretionary. Federal expenditures are put into one or the other category.

Mandatory spending includes things like Social Security, Medicare, Medicaid, Prescription Drug Program (Medicare Part D) and the Children’s Health Insurance Program (CHIP).

Mandatory spending is… welll… mandatory. That money has to be spent by the government no matter how much it costs. Payroll taxes offset some of the cost of Social Security and Medicare. The others don’t have dedicated funding sources.

The lion’s share of 2014 spending, ≈$1.5 trillion, will be spent for mandatory (entitlement) programs.

In discretionary budgeted spending, though, the single largest expenditure listed is for defense. It is $486.9 billion. That is 10s of billions less than last year.

That amount, though, is not the end of the story. It’s the beginning. The story starts with answering the question, “How much was spent last year on defense?”

How Much Was Spent for National Defense in 2013?

No 2014 Defense Spending Difference Is Listed… Why?

The Fiscal Times created the above handy dandy table of 2014 budget “winners and losers”. It lists how much more (or less) is budgeted for 2014 compared to 2013 by category.

For example, it shows that the Department of Agriculture will get +350 million more in 2014 than budgeted in 2013. The Department of Homeland Security will get -350 million less than in 2013. Yup, that is a real spending cut!

The defense budget, though, has a glaring omission. It doesn’t show how much more or less is budgeted this year compared to last year. Seeking the answer to that question leads to a stunning reality…. the defense budget is a lot higher than you think!

The REAL Defense Budget for 2013

Defense Spending should include other discretionary, mandatory and “hidden expenses”

The Atlantic published this table in a story called, “The Real Defense Budget” back in 2012. It identified total estimated 2013 defense spending. It amounts to a whopping $468.8 billion more than its widely reported discretionary budget of $525.4 billion!!

The federal government needs whistle blowers and watchdogs to expose “creative” budgeting. Winslow Wheeler is the top defense department budget watchdog. He knows more about defense spending than anyone. The Atlantic reported numbers Wheeler dug up.

The budget being splashed all over the news services right now includes only the $468B discretionary defense budget, not the true total.

There are at least three additional major spending areas (two from mandatory) that should be included when talking about national defense:

  • Overseas contingency operations – OCA (mandatory – $88.5B)
  • “Other” defense spending (mandatory – $6.5B)
  • “Hidden” discretionary spending outside defense ($356.1B)

OCA is for fighting wars (Iraq, Afghanistan, Libya, terror) and for providing disaster and humanitarian assistance. “Other” mandatory spending, whatever that is, totaled $6.3 billion in 2012. That is more than many full fledged government agencies.

These are debatable, but here is other discretionary spending that Wheeler says should be considered part of defense spending in 2013:

  • DOE/nuclear ($19.4B)
  • “Defense-related activities” ($7.8B)
  • Retirement/health ($29.4B)
  • International Affairs ($69.8B)
  • Veteran’s Affairs ($137.7B)
  • Homeland Security ($46.3B)
  • Interest on the national debt ($63.7B)

Put it all together and defense gets well over half of all discretionary spending and a chunk of mandatory spending.

Conclusions

The 2014 budget just released is only the start. All the whining and complaining about what it does or doesn’t have in it has begun. It will be changed.

One thing certain is that neither party has any intention of making any serious spending reforms. More than likely the new budget has plenty of pork barrel spending and political paybacks hidden within its 1,582 page bulk.

Unlike the rest of the federal budget, the military has taken some real budgetary hits over the last several years. This year included.

Before you start crying big puppy-dog tears for the Pentagon, remember it has funding stashed all over the federal budget and spends more than the next 10 largest military budgets in the world… combined!

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About azleader

Learning to see life more clearly... one image at a time!

Posted on Jan 15, 2014, in Budget, economics, Economy, Government, Military, Military spending, news, Opinion, Politics, Thoughts. Bookmark the permalink. Leave a comment.

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