With attention freshly focused on deficit reduction, the public and policy makers must confront not only the size but the source of those deficits. Social Security and Medicare (even counting the general revenue contribution to Part B) not only pay for themselves but generate very substantial surpluses. In spite of the expected expansion of the Medicare-served population and increasing health-care costs, the excess of
collections over outlays for those programs will continue for several years.
The war on medical care costs will intensify, and a new front-against outlandish charges by some providers-probably will be opened. Almost surely, Medicare expenditures on the scale now projected will not materialize.
Defense and interest costs, not Social Security and Medicare, constitute the largest share of the budget and so require a hard look.
The Reagan administration represents in its ”1989 Budget of the United States Government, Fiscal Year 1989,” that defense expenditures would amount to 27 percent of the federal budget. That is untrue. The figure omits expenditures for military pensions and federal employee pensions and disability expenditures for Defense Department and defense-related activities. They appear in budget documents as Income Security, a term many would take to mean social programs.
Military retirement came to $32 billion in 1987 (the last year for which the documents present actual rather than estimated outlays) and will grow rapidly to a projected $39.1 billion in 1991. In addition, roughly half the government employee retirement and disability costs (totaling $44.3 billion in 1987) ought to be charged to defense because during most of the Reagan years more than half of such civilian employees worked in defense and defense-related federal government activities.
Also budgeted outside the national defense category are outlays by the Veterans Administration (costs of past military activity), NASA (mostly military) and defense outlays within the Executive Office of the President
(for activities like ”Foreign military sales trust fund” with 1987 outlays of $9.9 billion), all totaling $18.9 billion in 1987. Somewhere in the budget, the CIA`s funds lie squirreled away. Given the attempted camouflage of military pensions, we can be sure that they lurk within some civilian category.
As Social Security does not add to the deficit and ”general government” has been shrinking throughout the Reagan years, to 5 percent of expenditures according to the administration`s own pie charts, with another 11 percent going as grants to states and localities, the bulk of the federal deficit is chargeable to defense and defense-related activities. That means the major portion of interest cost of the debt, most of it accumulated during the Reagan years, is chargeable to the defense sector.
In total, defense and defense-related costs, not counting interest, constitute just about 50 percent of the non-Social Security part of the budget. With only half of the debt service cost included, defense and defense- related costs in 1987 came to 59.2 percent. Add the CIA, and more than $3 out of every $5 expended by the federal government, other than Social Security, goes to national security activities.
We do indeed need a credible defense. But leaner usually means fitter. Putting defense on a moderate diet would mean greater fiscal health and more funds to invest in activities like education and research and development to promote a competitive and growing economy on which everyone`s future depends. In the pursuit of deficit reduction, we ought to go where the deficits originate.
