The Current Debt Fret

What a difference two years makes.   Two years ago, the Federal deficit never popped up as a topic of interest in press or policy.   Today, both the popular press and voter polls report on the Federal debt as the cause of angst for average Americans. 

First, a few Federal deficit facts:  When George W. Bush took office, the debt was ~$5 trillion — when he left office, it was ~$10.5 trillion.  According to the U.S. Department of the Treasury, the Federal deficit currently sits at $13.4 trillion according to the Monthly Treasury Statement.

The single largest category of Federal spending is the annual military budget at $700 billion, as stated in “Defense Officials Anticipate Drop In Military Spending.” This is important to point out, since there seems to be some allusions in press coverage that the Federal deficit is largely due to the Stimulus bill and health care reform legislation.  In fact, most of the current deficit and most future spending is related to our military entanglements across the world.  Since 2004 until the present, the U.S. spends more on military spending per year than the rest of the world combined (World Wide Military Expenditures). 

And, while Dr. Robert M. Gates, the Secretary of Defense, has been warning the Defense industries to be prepared for reductions in spending, as stated in the NPR story. I was bemused to hear (later in the same interview) that this warning is only that annual increases will narrow, not that there will be an actual cut in the military  budget.

Why should we be concerned about the discussion of the Federal deficit?   Of course, there is always the angst about being a debtor nation, possible increases in personal and business taxes, and American competitiveness – certainly key economic worries.   But, our debts to Gross Domestic Product (GDP) numbers are comparable (a shade higher) to other nations.  

To me, the bigger issue is one of priorities.  In the future, what are we  making strategic resource decisions?   To paraphrase a recent Thomas Friedman’s article, “OP-Ed Columnist: What’s Our Sputnik?,” we need to be investing in those specific area that will produce a strong and competitive country in the future.  I think that there is overall agreement that those areas include education of our populace, advancing scientific understanding, and developing new technologies (biomedical, clean energy, environmental controls, communications, and such).  I think there is also agreement about the need to invest in human and physical infrastructure – health promotion and rational health security, train and road systems, energy capacity, telecommunications, etc.  

The question is whether our current national politics (and national mood) will  allow military spending to crowd out our more strategic investments.   I’m not opposed to military spending as part of our investment strategy – certainly national security is a key element in national prosperity.  But I do think the current levels of military spending are unsustainable and they cannot be maintained at the expense of our future prosperity.