The budget deal has me partly breathing a sigh of relief, partly worrying that we are moving too much towards becoming an entitlement state at the expense of investments in science, education, infrastructure and national security.
Consider the possible defense cuts coming out of this deal. My assessment of the deal depends on how large they wind up being. Ten-year defense cuts of up to half a trillion dollars are probably doable. Some of that can be found by eliminating pure waste. Some can be found by steps like asking non-deployed military personnel and non-wounded veterans to pay health care insurance premiums more in line with what the rest of the country considers standard. Make no mistake about it, however: the bulk of it will have to be found by cutting real military capability and as a result accepting real additional risk to the country’s security. There are ways to make such cuts while minimizing the adverse consequences for the United States and its allies. But to argue that cuts of this magnitude can be made risk-free, as some purport, is not consistent with the realities of the situation.
However, cuts greater than 10 percent would be increasingly problematic. There are budget plans calling for larger cuts than this amount—that is, larger than half a trillion dollars over a decade—and they strike me as unsound. They would not be consistent with what should be treated as irreducible requirements in American defense policy–chiefly, winding down current wars responsibly, deterring Iran, hedging against a rising China, protecting global sea lanes, attacking terrorists and checking state sponsors of terror, and ensuring a strong all-volunteer military as well as a flexible and world-class defense scientific and industrial base.
And because even 10 percent reductions in the typical annual defense budget of the future would entail some risk to America’s global interests, they can only be justified on national security grounds if the nation’s economy is strengthened substantially in the process. In other words, it may make sense to accept greater near-term military risk in order to shore up the economic foundations of longer-term national power that are essential to the country’s future strength and security. Nations with hollow economies cannot be secure indefinitely, so it is legitimate to view the debt as a national security threat, and economic renewal as a national security imperative. This logic does support some level of defense spending reductions. However, this line of argument only works if projected deficits are reduced enough to make a notable difference in America’s economic prognosis. And that is only possible if broad-based deficit reduction occurs. In short, 10 percent defense cuts are only justifiable if they are accompanied by entitlement and tax reform that reduces spending and increases revenue through these other elements of the federal budget.
The possibility that this deal will ask the core defense budget—which constitutes only 15 percent of federal spending—to provide up to half of future deficit reduction is unwise and needs to be avoided in the months ahead.
Sentiment inside the Beltway has turned sharply against China. There are many issues where the two parties sound more or less the same. Trump and others in the administration seem heavily invested in a ‘get very tough with China’ stance. It’s possible that some Democrats might argue that a decoupling strategy borders on lunacy. But if Trump believes this will play well with his core constituencies as his reelection campaign moves into high gear, he will probably decide to stick with it, if the costs and the collateral damage seem manageable. But that’s a very big if, especially if the downsides of a protracted trade war for both American consumers and for American firms become increasingly apparent.