Oakland, Calif.Despite his many shortcomings, former President Jimmy Carter had one good idea that, in view of President Bush’s recent $3.1 trillion federal budget proposal, deserves a fresh look: zero-based budgeting.
Properly understood, zero-based budgeting for the government means that agencies would start the budget cycle with no money. The year’s budget is then created not by adding to the current budget “baseline,” to reflect the rate of inflation and new programs or mandates legislated by Congress, but by looking at the agency’s mission and goals, the obstacles that stand in the way of accomplishing those goals, and what it would takeprograms, personnel, equipment, and dollarsto overcome those obstacles.
Consider the proposed $515.4 billion fiscal 2009 Pentagon budget. To listen to Pentagon officials, the half-a-trillion-dollar Pentagon budgetwhich doesn’t include the nuclear-weapons program (located in the Department of Energy) or the supplemental funding for the wars in Afghanistan and Iraqis not only reasonable, but lean. They arrive at this conclusion by expressing the budget as a percentage of America’s gross domestic product (GDP).
The public is then informed that in terms of GDP Washington is spending far less today on the military (“just” 4 percent of GDP) than during either the Korean War (13 to 14 percent) or the Vietnam War (7 to 9 percent). For real dramatic contrast, we’re reminded that military spending during the peak years of World War II was in the 37 to 38 percent range.
Defense Secretary Robert Gates and Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, are experienced at this game. As Mr. Mullen puts it, “I really do believe this 4 percent floor is ... really important, given the world we’re living in, given the threats that we see out there, the risks that are, in fact, global, not just in the Middle East.”
Pentagon spokesman Geoff Morrell sings the same song. “The secretary believes that whenever we transition away from war supplementals, the Congress should dedicate 4 percent of our GDP to funding national security. That is what he believes to be a reasonable price to stay free and protect our interests around the world.”
But where does this 4 percent figure come from? Wouldn’t it make much more sense to assess the actual threats the country faces, determine the optimal means of meeting or deterring these threats with a sufficient degree of confidence, and then add up the costs of obtaining the stipulated means? Whether the total cost amounts to 1 percent of GDP or 20 percent is entirely beside the point, which is to protect the American people from potential attackers.
Once an adequate defense program has been designed and its components priced, the military leadership can present the total bill to Congress and defend it by showing why each of its elements is necessary to achieve national security.
Whether the US economy contracts during the coming months, as expectedor expands, as we might hopeshould have no bearing on the Pentagon’s budget. The Pentagon should get what it needs to deal with genuine foreign threats, not some arbitrary percentage of GDP.
The use of an irrelevant budgeting benchmark helps to explain why the US military has so many golf courses and more than 700 military bases worldwide, most of which are unnecessary to defend this country.
The Washington budgetmaking game is an exercise in rhetorical trickery. Pegging the defense budgetor any department or agency budgetto some arbitrary percentage of GDP is little more than smoke and mirrors. Instead of discussing specific threats and requirements, as zero-based budgeting would dictate, we end up discussing a nonsensical question: whether 4.0 percent of GDP is the optimal amount for the Pentagon, or whether 3.9 or 4.1 percent might be better.
As US taxpayers watch this drama unfold in the coming months, the question they should ask themselves is this:
Why can’t the Defense Department today defend the country for less money than was needed to defend it during the cold war, when we faced a formidable enemy with large, modern armed forces, and thousands of accurate, nuclear-armed intercontinental ballistic missiles?
Robert Higgs is Senior Fellow in Political Economy at The Independent Institute and Editor at Large of the Institutes quarterly journal The Independent Review. He received his Ph.D. in economics from Johns Hopkins University, and he has taught at the University of Washington, Lafayette College, Seattle University, and the University of Economics, Prague. He has been a visiting scholar at Oxford University and Stanford University, and a fellow for the Hoover Institution and the National Science Foundation. He is the author of many books, including Depression, War, and Cold War.
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