Tuesday, January 29, 2013

Is the Military too Large? Defense Spending is NOT the Problem.

I have an associate who thinks that the budgetary problems with the Federal Government can be solved first and foremost by cutting defense expenditure.  I was curious about the actual numbers, so I looked the data up on the White House website.  Here is the quickie graph I created in Excel:

So, there are seven different categories represented on the chart (all represented as a percentage of GDP): 
1) Total Government Spending (including local governments)
2) Defense and International spending (foreign aid, etc.)
3) Net Interest paid on debt
4) Social Security and Medicare
5) Other (direct payments to individuals, mostly welfare benefits)
6) Other Federal spending (discretionary spending)
7) State and Local

Charting the trend lines for each of these categories reveals disturbing patterns, but certainly not with Defense spending. 

The trend line for Total Government spending (as a percentage of GDP) from 1948 to 2011 goes from about 24.5% of GDP to about 34% of GDP (very bad).

The trend for Defense spending goes from about 11% of GDP to less than 3% (we currently spend about 5%, but the trend is definitely down (very good).

The trend for Interest paid on our federal debt goes from about 2% to about 2.5% (neutral... good).

The trend for Social Security and Medicare goes from less than 1% to approximately 8% (very, very bad).

The trend for welfare and other direct payments goes from about 2.5% to approximately 6% (bad).

The trend line for other government spending (discretionary spending) is almost perfectly constant at about 2.5% (very good).

The trend line for State & Local government is from about 7.5% to over 12% (bad, but is more easily managed and controlled at local & state levels).

So, the conclusion I draw from this data is that our biggest problems (at the federal level) are Social Security, Medicare, welfare, and other entitlement spending.  Seems pretty straightforward.  Where it's really going to hit the fan is when Social Security and Medicare expenditures increase exponentially (over what they already have been) in the next 10-20 years.  

The one thing that is explicitly authorized in the Constitution is on a definite downward trend over the last 60+ years.  Defense spending is NOT the problem.

1 comment:

Malinda said...

Nice graph. Who is the "associate"?