Budget

U.S. Military Spending Overwhelms the Rest of the World

Bernie Horn — Tue, 09 Jun 2009 09:23:56 -0700

Yesterday, the Stockholm International Peace Research Institute (SIPRI) issued its annual report on global military spending. Worldwide, governments spent a record $1.46 trillion on their armed forces in 2008. The United States accounted for 42 percent of the global arms spending. When will we realize that’s simply too much?

Every year, SIPRI issues a Yearbook on armaments, disarmament and international security. Here’s the gist of the data on worldwide military spending:

Top 10 Military Spenders in 2008
(in billions of dollars)

1. United States — 607.0
2. China — 84.9
3. France — 65.7
4. United Kingdom — 65.3
5. Russia — 58.6
6. Germany — 46.8
7. Japan — 46.3
8. Italy — 40.6
9. Saudi Arabia — 38.2
10. India — 30.0

The U.S. spent 7 times more than the second-biggest spender, China. Incidentally, that doesn’t make China the second-strongest military—not by a long shot. SIPRI researcher Sam Perlo-Freeman explains that’s because “a lot of other countries have been at this game for a lot longer than China.”

Put another way, the U.S. spent more on its armed forces than the next 14 countries combined.

SIPRI points out that U.S. arms spending increased by 71 percent during the presidency of George W. Bush and as a result, global military spending is 45 percent greater than it was a decade ago. From 2007 to 2008, U.S. military spending increased by 10 percent which helped make global military spending 4 percent higher in 2008 than 2007.

Are all these guns really necessary? Do we need to spend so much more than other nations?

President Obama and his Secretary of Defense, Robert Gates, seem to think so. They proposed a marginal increase in the 2010 military budget and Congress approved. But incredibly, right-wingers attacked the Obama-Gates military increase as a budget cut. They argued that the Obama-Gates plan’s modest cuts in a few weapons programs was going to endanger America’s security.

For example, Republican Sen. James Inhofe, a member of the Senate Armed Services Committee, thundered:

President Obama is disarming America. Never before has a president so ravaged the military at a time of war.

Can we bring some sanity back to the debate over guns versus butter? The Congressional Progressive Caucus (CPC) thinks so. The Progressive Caucus proposed a substitute budget which would have spent $479 billion on defense in FY2010, a $69 billion cut from the President's legislation. This proposal is modest—it’s about a 13 percent reduction in spending.

And every bit of the CPC military budget cut is sensible:

• Savings from a safe, orderly disengagement from Iraq.
• Cuts in outdated and unneeded weapons systems, including ballistic missile defense (so-called Star Wars), reduce our nuclear arsenal, cut off the F/A 22 Raptor, the DDG 1000 Zumwalt Class Destroyer, the SSN-774 Virginia Class Submarines, the V-22 Osprey, the C-130J transport plane, the F-35 Joint Strike Fighter, space-based offensive weapons, and more.
• Implementation of the Government Accountability Office’s recommendations to reduce waste, fraud and abuse in Pentagon procedures.

A government budget is a statement of priorities. Sadly, the current military budget reflects poorly on our nation’s values. We should be investing in our people and our infrastructure. We should be using our limited tax revenues to pay for services that America desperately needs—like health care, energy, a clean environment, education, housing, and a secure retirement for all. We’re not going to be able to afford our commonsense progressive priorities until we get serious about cutting excessive military spending.

The writer is a Senior Fellow at Campaign for America’s Future and author of the book, “Framing the Future: How Progressive Values Can Win Elections and Influence People”.

Fight For Obama's Budget

OurFuture.org Staff — Wed, 29 Apr 2009 12:08:33 -0700

After the success of passing the American Recovery and Reinvestment Act, President Obama's next big priority was to pass the fiscal 2010 federal budget resolutions. Once again, the conservative opposition mounted a fierce campaign to embrace the failures of Herbert Hoover and the Bush presidency, and even supported an alternative budget which called for more Bush-style tax cuts for corporations and the wealthy as a way to get us out of the recession those same policies helped create. Once again, we called on the progressive community to fight for real solutions from Congress.

And once again progressives responded. As a result of our call to action, over 20,000 emails were sent to members of Congress urging them to support President Obama's crucial investments in America, and to reject wasteful tax cuts for those who don't need them. As with the American Recovery and Reinvestment Act, your pressure helped produce a truly progressive budget that puts us on a path toward health care for all, affordable and accessible education and a clean energy economy. This budget truly represents a blueprint for change.

The State of Opportunity

Alan Jenkins — Tue, 07 Apr 2009 11:49:58 -0700

As Obama’s first 100 days draw to a close, new research shows that addressing today’s economic crisis will require reinvesting in a bedrock American principle: Opportunity. The State of Opportunity, released last week by The Opportunity Agenda, measures our nation’s progress in ensuring that all Americans, and our nation as a whole, have a fair chance to achieve their full potential. The results are sobering.

Drawing on a large body of government data, the report charts opportunity on a range of indicators—economic security and mobility, equal access, democratic voice, the chance to start over after missteps or misfortune, and a coherent sense of community—across a variety of sectors—from employment to education to housing to criminal justice and beyond. Because the most recent year for which most government data is available is 2007, the report provides a unique picture of opportunity just before today’s crisis took hold.

It shows that Opportunity was both highly uneven and highly unequal for millions of Americans before the recession that began in December of 2007. Over 37 million Americans—12.5% of our nation’s population—were living in poverty in 2007, while the rates for Latinos and African Americans were a staggering 21.5% and 24.5%, respectively. Almost 11% of full-time workers were already living in poverty that year.

Significant gender and racial wage gaps existed in 2007, with women making just 78.2% of men’s median wages, and women with a college degree earning just 65.2% of the wages made by equally-educated men. Latinos earned just 72.6% of the white median wage, and African Americans earned 75.2%. Latina women earned just 58.7% of all men. Overall, the richest 20% of Americans earned almost half (47.3%) of all income in the country, and the richest 5% earned 20.1%.

More than 11% of US households suffered “food insecurity” in 2007, which meant that their eating patterns were disrupted because they lacked money and other resources for food. But almost 17% of American children suffered that fate. And in 2006 (the latest year for which figures are available), 7.8% of all Americans—and 8.4% of women—were already delaying medical care due to cost.

What these numbers mean, among other things, is that it will not be enough for the president and Congress to restore our economy to 2007 levels. Instead, to ensure our nation’s future prosperity, they must create greater and more equal opportunity than we have seen in many years.

The 2009 economic stimulus legislation, the American Recovery and Reinvestment Act, and the president’s proposed budget are steps in the right direction because they combine short-term job creation with longer-term investments in education and health care. But more transformative change is needed to set our country on the right course.

Along with data on pressing problems, the State of Opportunity includes specific recommendations for reinvesting in opportunity for all. They include targeting job training and financial literacy programs in low-income communities and communities of color; investing in community health clinics, effective public transportation, and affordable, mixed-income housing; and reinvigorating our nation’s equal opportunity infrastructure, including the Justice Department, the Equal Employment Opportunity Commission, and the US Civil Rights Commission.

Finally, the report recommends that an Opportunity Impact Statement be used to ensure that federally funded projects create greater and more equal opportunities through job creation, affordable housing, health care infrastructure, and economic development. That tool has become especially important in the context of the near-trillion-dollar stimulus package and the ongoing Troubled Assets Relief Program.

In short, the state of opportunity in our country calls for a fundamental reinvestment in values as well as systems.

The first hundred days have been promising ones for the values of opportunity, including the Ledbetter Equal Pay Act and a path toward universal health care, as well as a robust stimulus plan and greater accountability for TARP funds. But the next 100 days must include building the enforcement systems and political will necessary to fulfill those values for everyone in our country.

HOUSE PASSES BUDGET THAT REPRESENTS HISTORIC CHANGE

Toby Chaudhuri — Thu, 02 Apr 2009 17:27:21 -0700

WASHINGTON – Campaign for America’s Future co-director Roger Hickey said that the federal budget passed by President Obama’s allies in the U.S. House marks a major shift from the failed policies that got us into this economic mess.

STATEMENT OF ROGER HICKEY

Conservatives in Washington created the worst economic crisis in generations. They mortgaged the country – running up record deficits and record foreign debts – without making the investments vital to future prosperity. That bill has come due. The economic recovery package and this budget are needed to begin moving us in a dramatically different direction.

This budget represents transformational change. It puts people first, invests in our future and helps us get out of the hole we’re in.

People across the country are behind the president’s budget because it will move the country toward long-term economic recovery. It makes investments we need to recover – in health care reform, green jobs, climate protection, education and other vital programs for working families.

# # #

Debt, Deficits, and Deception

Bernie Horn — Sun, 29 Mar 2009 19:55:22 -0700

Here it comes—an avalanche of misleading and mistaken “facts” about President Obama’s budget.

Last week, the House and Senate Budget Committees approved versions of the fiscal 2010 budget resolution, working from an extraordinary proposal by Barack Obama. The House version is fairly close to what the President proposed, while the Senate bill is a bit different—but still 98 percent of what the President requested. This week, the budget will come to the floor of the House and Senate, including votes on a series of amendments to slash or weaken progressive programs.

Senator Judd Gregg laid out the conservative talking points against the Obama budget during the Republicans’ Saturday radio address:

What concerns many of us are [Obama’s] proposals in the budget he recently sent to the Congress that dramatically grow the size and cost of government, and move it to the left.

It is our opinion that this plan spends too much, taxes too much, and borrows too much….

In the next five years, President Obama’s budget will double the national debt; in the next ten years it will triple the national debt….

His budget assumes the deficit will average $1 trillion dollars every year for the next 10 years and will add well over $9 trillion dollars in new debts to our children’s backs.

He is proposing the largest tax increase in history, much of it aimed at taxing small business people…and a massive new national sales tax on your electric bill…

The mud of fabrication and misinformation is so deep, we’ll have to peel it off in layers.

Huge Hypocrisy

First and foremost, conservatives are being supremely hypocritical about deficits and debt because their deficits caused the current national debt. Ronald Reagan’s tax cuts for the rich and profligate military spending tripled the national debt. George W. Bush’s tax cuts for the rich and war spending doubled the national debt. In fact, nearly 80 percent of the current debt—about which conservatives now bitterly complain—was caused by the three most recent conservative presidents: Reagan, Bush Senior, and Bush Junior.

Adding insult to injury, Republican budgets have been notorious for containing gimmicks designed to hide the full extent of their irresponsibility—the most egregious was funding the Iraq war with special appropriations outside of the budget.

This year, President Obama changed all that. His budget described a comprehensive plan covering 10 years. It included contingency funds that may or may not have to be spent. It was, quite simply, the most honest budget ever proposed.

So if you hear someone attack the Obama budget because of the deficits it honestly lays out, first say, “Where were you and your deficit-hawk arguments when George W. Bush turned Bill Clinton’s $200 billion budget surplus into a $1 trillion budget deficit?”

Revenue Ruse

Now come the three big lies about revenues. Obama is not “proposing the largest tax increase in history.” He is proposing to restore a measure of tax fairness by letting George W. Bush’s tax cuts for the rich expire next year. He is proposing to return to the tax policies that were in place during America’s great economic expansion of the late 1990s. Under the Obama program, only the rich will see their taxes increase—those with incomes over $250,000 per year. For all the rest of us, our tax rates will decline. In fact, Obama’s plan will deliver the largest middle-class tax cut in history.

Similarly, Obama’s plan is not “aimed at taxing small-business people.” This talking point is based on a fictional definition of a small businessperson invented by the Bush Administration and explained in footnote 1 of this paper. Even using that definition, less than 9 percent of Americans with small-business income make more than $250,000 a year. Only 2 percent are in the top two tax brackets. So at least 91 percent, and more likely 98 percent, of them will see no tax increase at all.

And I’ll bet you’re wondering, what is this “massive new national sales tax on your electric bill”? There is none. This is right-wing framing for the “cap-and-trade” system that experts insist is the only practical way to get a handle on global warming. This system forces companies to pay for their pollution, thereby encouraging clean, green technologies.

So to review the conservative tax trickery, the truth is that Obama’s budget delivers a substantial tax cut to 95 percent of Americans. The only ones who will see their taxes increase are the wealthy—and the corporate polluters!

Debt Double-Talk

We are currently in the worst economic downturn since the Great Depression. Basic macroeconomics tells us that the time to cut deficits is during an economic boom. During a recession, the deficit must increase in order to save jobs and halt the downward slide.

Dean Baker explains:

In this context we are supposed to be up in arms over the deficit projections for 2013 or 2019? This is a bit like someone complaining about the lawn not being mowed at a time when the house is on fire, it’s just not the first priority. And the media all seem to go along with the charade…

The moral to this story is that the economy must take priority, not only because the state of the economy is what most directly determines people's well-being, but also because the state of the economy will be the most important determinant of the deficit.

The experience of the 1990s provides an example of exactly this sort of story. In January of 1994 the Congressional Budget Office projected that the deficit in 1999 would be $204 billion or 2.4 percent of GDP. This projection incorporated the impact of President Clinton’s tax increase and spending cuts.

It turned out that there was a surplus of $125 billion in 1999, or 1.4 percent of GDP. This shift from deficit to surplus of 3.8 percentage points of GDP (equivalent to $540 billion in 2009) was not caused by further spending cuts or tax increases; it was caused by the strong economic growth of the period.

If we spend to build the American economy, long-term deficits will go down. If we don’t spend, the recession will linger and deficits will skyrocket. It’s as simple as that.

And that brings us to the false argument that cutting the current budget is good for “our children.” If we don’t invest in our nation’s infrastructure, if we don’t restructure the pathetic economy handed down to us by George W. Bush and his conservative allies, if we don’t create a sustainable health care system, if we don’t take necessary steps to achieve energy independence and fight global warming—then we will be placing a terrible burden on our children. For them, and for us, we’ve got to change course, now.

Absurd Alternative

President Obama challenged his conservative opponents to put up their own budget proposal—or shut up.

After a great deal of hoopla, House Republicans called a press conference last Thursday to issue a 19-page document that they called an alternative budget. But the document contained no spending amounts or deficit projections. None. It’s a phony budget.

No doubt the GOP will offer one or more alternative budgets on the House and Senate floors later this week. No doubt they will be just like the alternative Republican stimulus packages in February—full of tax cuts for the rich and spending cuts for the rest of us.

The bottom line is: Conservatives caused this mess and now are running away from any responsibility for cleaning it up.

Contact Congress!

Your Senators and Representative will vote on the Budget Resolution within days. Please click here to go to a web page set up by the Campaign for America’s Future that makes it easy for you to contact your members of Congress. Tell them to stand up for Obama’s budget—and oppose all weakening amendments.

The writer is a Senior Fellow at Campaign for America’s Future and author of the recent book, "Framing the Future: How Progressive Values Can Win Elections and Influence People."

The Obama Budget: A Stick In The Eye For Banks

Eric Lotke — Thu, 26 Mar 2009 03:00:00 -0700

With all the fuss over Wall Street bailouts and AIG bonuses, one banking breakthrough is going unnoticed. Obama's proposed budget completely eliminates an unnecessary, obsolete bank subsidy: College student loans – where the subsidy goes to the bank, not the student. It’s a stick in the eye of the banking industry, and the banks aren’t taking it lightly.

Today we publish a new report that shows how the loss for the banks is a gain for the students. We present the newest data on how college costs continue to rise (5% last year, compared to 3% inflation) even as wages stagnate and savings tank. We talk about students priced out of college (1.7 to 3.2 million over ten years) and graduating with crippling levels of debt. We talk about the lost value of the Pell Grant (half the buying power of thirty years ago) and the Obama plan to restore its value.

We need to hear all of that – again and again. But the best part is about the banks. The report describes the history of bank involvement in student loans, and government management of the banks. It explains where Obama’s move comes from and how it puts us on the right side of history.

Uncle Sam gets it started

When the program began, students looked like poor financial risks. Young in age, with little credit history and few personal assets, students were not attractive candidates for private-sector lending – certainly not for the large sums needed to finance a college education.

In 1966, the federal government helped solve the problem by creating incentives for banks to lend. The Federal Family Education Loan Program (FFELP) guarantees lenders a higher interest rate than the base market rate, ensuring a healthy profit on monies loaned. On top of that, Uncle Sam guaranteed payment of principle and interest in case of default. For the banks, it was a win-win proposition: higher interest rates with no real risk. The Student Loan Marketing Association (Sallie Mae) was created to manage the money, and the program helped millions of Americans reach their college dreams.

Now the market is mature. Well-educated, high-earning college graduates have proven to be excellent credit risks. Student lending has grown into a highly profitable industry. Dozens of new banks and lending institutions have entered the field. Sallie Mae herself has spun off and privatized into SLM Corporation, whose stock can be bought and sold on the New York Stock Exchange.

Clintonian Reinvention

While “reinventing government” in the 1990s, President Bill Clinton reexamined whether subsidies were still needed to encourage banks to lend to students. Indeed, Clinton questioned whether the bank middleman was necessary at all. In 1993, the Department of Education created a Federal Direct Loan (FDL) program that loaned money to students at low rates available only to the U.S. Treasury. Such loans reduced payments for students and did not increase the government’s risk because the old system already used the government to guarantee defaults.

Students flocked to the new program. By 1997, direct loans had grown to 33% of student borrowing, nearly $11 billion.

Experience showed that direct lending works. The administrative costs are lower, the design is simpler and it eliminates subsidies to the private loan industry. The General Accounting Office found that the Direct Loan program cost the federal government $1.70 for every $100 of loans, compared to $9.20 per $100 of loans through the FFEL program, with bank intermediaries. In other words, taxpayers save $7.50 for every $100 loaned. Thus, the direct loan program wasn’t just better for students; it was better for taxpayers too. Clinton’s question of whether the government should administer the loans directly had been answered: Yes.

The Bush Hiatus

But President Bush didn’t like the direct lending program. His loyalty was to the banks. He staffed the Department of Education with bankers and bank sympathizers, including the former CEO of the lenders’ trade association, who had sued to limit the direct lending program. He didn’t eliminate the direct lending program, but it withered from malnutrition.

History Resumes

Now Barack Obama is starting where Clinton left off. He is eliminating the FFEL program that subsidizes banks to lend to students. He is relying entirely on the FDL program that lends money directly to students from the U.S. treasury. It has lower interest rates and no middleman. The 2010 budget projects a savings of $5 billion, and intends to redirect those funds towards students.

To estimate the benefit that such redirection could have for students, we estimated the impact on the Pell Grant program, the nation’s preeminent means of providing need-based financial assistance. In 2007, 5.4 million American students nationwide received a Pell grant.

Our new report estimates how many students in each state would benefit if the full $5 billion taken from the banks were redirected to the Pell Grant program. We estimate how the average Pell Grant would grow for each student ($121 nationally) and how many new students could enroll (260,000). In short, we show the direct benefit to Pell recipients if this budget passes. The key is to move the money from banks to students.

• National increase in Pell grant: $121
• National new Pell Grant recipients: 260,000.

Now a $121 increase in grant aid doesn't solve all the problems -- but it's much better than a stick in the eye. It also shows how our government can help when it takes our side. Read the report to learn the full benefit in every state.

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Congressional Budget Office

Susan Ozawa — Fri, 31 Oct 2008 12:52:50 -0700

Private Corporations Control Our Nation's War Endeavors

Alexander Sewell — Thu, 25 Sep 2008 21:00:00 -0700

Seventy percent of the intelligence budget now goes to contractors. Private corporate interests control our nation’s most sensitive information and help direct our most critical foreign policy decisions.

Panel’s Bipartisan View: F.D.A. Is Underfinanced

Alex Carter — Wed, 16 Apr 2008 12:02:23 -0700

The Food and Drug Administration needs far more money than the White House has proposed for next year, senators of both parties said Tuesday. “To us, it’s clear that they’re seriously underfunded,” Senator Herb Kohl, Democrat of Wisconsin, said after a hearing of the Appropriations subcommittee, headed by Mr. Kohl, that oversees the agency’s spending.