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"Skinny Budget" Short on Savings

by Nan Swift / /

On Thursday the White House released their “skinny budget” for Fiscal Year 2018, the blueprint for a later, more detailed budget request. The White House also sent their long-promised defense supplemental request, for $30 billion in additional Fiscal Year 2017 spending to the Hill this week. It’s clear that new Office of Management and Budget (OMB) Director and fiscal hawk, former Representative Mick Mulvaney, made a commendable effort to ensure that at least a majority of the massive increases in new defense spending the budget and supplemental call for are paid for. Unfortunately, both requests ignore opportunities for waste reduction and fail to address our long-term fiscal challenges.

The FY18 budget calls for a $54 billion increase in defense spending, a 10 percent increase over the $549 billion Budget Control Act (BCA) cap. The budget would also provide $65 billion in Overseas Contingency Operations (OCO) funding. The base budget plus-up is offset by significant reductions in non-defense discretionary spending that target many programs that ought to be outside the purview of the federal government, such as the National Endowment for the Arts, the Corporation for Public Broadcasting, and the Overseas Private Investment Corporation (OPIC) - a corporate welfare agency. Other broad cuts to many federal agencies reflect this week’s Executive Order calling for sweeping reorganization, that should ultimately - and laudably - reduce the scope of federal government.

Still, taxpayers would be better served if such savings were redirected to much-needed deficit reduction. It’s far from clear that the Pentagon needs - or even would know how to use - the injection of funds proposed by the White House. Both the Pentagon and Congress have extremely poor track-records when it comes to wasteful defense spending, as NTU has consistently documented.

Rather than prudently fund strategic priorities, taxpayer funds are plowed into costly programs with questionable utility, like the long troubled F-35 and Littoral Combat Ship. In this regard, Congress shares more than a little of the blame for the Pentagon’s waste woes by providing insufficient oversight, treating defense dollars like a jobs program for their districts, preventing the Pentagon from pursuing potential cost-savings through the closure of excess properties, and continuing protectionist policies.

Before the Pentagon gets a major funding boost, taxpayers should be given some certainty that their dollars won’t be wasted. One of the biggest roadblocks standing in the way of fiscal responsibility is the fact that the Department of Defense, the largest federal agency in terms of discretionary dollars, is the only one that hasn’t yet passed an audit, as required by law. The fact that the Pentagon can’t conclusively account for taxpayer dollars poses a serious fiscal and security threat.

Equally troubling, outside the FY18 timeframe, it’s unclear that the Administration’s budget will paint a rosier economic picture for taxpayers. Again, OMB and the White House deserve credit for ensuring that most of their new spending is paid for by commensurate cuts (with the notable exception of $7 billion in the supplemental, an important reason to oppose this type of typically unfunded “emergency” spending). But, the budget falls short in addressing the biggest drivers of our debt: entitlement spending.

The Pentagon provides a good illustration of the problem at hand: personnel costs, including health care and retirement benefits, constitute nearly one-third of the DOD budget - and that figure is growing! Without reform, these costs could continue to eat away at funding for our national security needs. Similarly, by failing to address the rising costs of entitlements, future budgets could be squeezed even further - which could spell less funding for both defense AND non-defense discretionary programs.

The Administration has espoused big goals in terms of defense and economic growth, both of which could be imperiled without urgent action to rein in our growing debt. If we choose to fund an outsized Pentagon without tackling entitlements, taxpayers can expect higher taxes, more debt, or worse - both.

 

You can find a deeper dive into how this budget holds up against candidate Trump’s electoral promises from National Taxpayers Union Foundation here.