ObamaCare Vs. Defense

Feb. 1, 2010

On the morning of Jan. 19, the American national debt stood at $12,276,477,277,649.25, according to the US Treasury. Call it $12 trillion, close to a year’s worth of national economic output. Every US citizen—man, woman, and child—owed an average of $39,900 to the nation’s creditors.

By the time you read this, the figure will be higher, since the debt grows by $4 billion per day. In fact, US indebtedness, which was $5.7 trillion in 2000, is expected to hit a towering $21 trillion in this decade.

This can’t go on, yet it is against this grim background that Washington has been pushing to forge a massive new social welfare program that would make the fiscal mess worse. We manifestly can’t afford it, and all signs are it would pose a special threat to America’s military power.

We are speaking, of course, about “ObamaCare,” the new health entitlement sought by President Obama and this Congress. For our money, the danger does not lie in any specific provision. The danger would stem from the program’s huge future cost.

What is its cost? The truth is, no one really knows, because its publicly stated assumptions are so gimmicky. After the shocking Jan. 19 election of Republican Scott Brown in the Massachusetts Senate race, the White House began floating a scaled-down approach to try to salvage something of the original plan. Yet to be seen is whether that “something” would include all or most of its high-cost provisions.

Even fervent supporters, however, owned to a 10-year cost of $1 trillion, supposedly “paid for” with some $500 billion in new taxes (real) and more than $500 billion in offsetting Medicare cuts (fantasy).

That $1 trillion was surely a low-ball estimate. Government programs always overshoot predicted cost, as witness the examples of Medicare and Medicaid. According to the Wall Street Journal, Congress in 1965 pegged Medicare costs at $12 billion in 1990. Actual amount that year: $90 billion.

In the case of ObamaCare, future overruns are built in. No one disputes that, as time went on, its massive subsidies would become more and more widely available, driving costs much higher, even as planned budget “offsets” somehow always failed to materialize.

Harvard professor Martin Feldstein, a former chairman of the White House Council of Economic Advisors, predicted the actual 10-year net cost would approach $2 trillion. We believe him.

So, what does this have to do with defense? The answer is, lots.

Future Presidents and Congresses, confronted with an unplanned-for cost gusher, would have limited options. They would be forced to run larger deficits (adding to debt and interest payments), raise taxes, cut discretionary spending, or—more likely—go with some combination of these.

With respect to defense outlays, it is easy to see two depressive effects, one direct and one indirect.

• Direct. Spending on entitlements and debt service would crowd out other spending, particularly defense.

We have a precedent. In the 1990s, Washington deluded itself it could control a deficit, keep taxes low, and protect social programs by reaping a “peace dividend.” It was a strategy that touched all of the capital’s political erogenous zones, but it put the armed forces in a deep modernization hole. The next time would be worse.

• Indirect. A large and professional military is expensive. A strong US economy, and the tax revenues it generates, underwrites this force. The problem is that, if Americans are saddled with huge new ObamaCare taxes and debt service payments, the economy won’t grow enough.

For a case study, one need look no further than Western Europe, home of the modern welfare state. It is an arena of heavy spending on health care, pensions, and welfare payments—and stagnant economies. In all but a very few nations, military forces are small, weak, and poorly financed.

Either of these courses would put this nation face-to-face with disarmament by entitlement. Europeans could at least take shelter in US power. What is our fallback plan

“This is how empires decline,” observes Harvard history professor Niall Ferguson. “It begins with a debt explosion. It ends with an inexorable reduction in the resources available for the Army, Navy, and Air Force.”

That defense will be squeezed is not in doubt. In recent remarks at the Naval War College in Newport, R.I., the Chairman of the Joint Chiefs of Staff, Adm. Michael G. Mullen, warned, “Money is [not] going to keep rolling in. … It’s just not going to happen.”

We might be more welcoming of the ObamaCare project were the federal balance sheet otherwise in reasonably good shape, but you be the judge:

Last year, the annual budget deficit came in at more than $1.4 trillion—about 10 percent of GDP, says the Congressional Budget Office. The US hasn’t seen a deficit that large for more than 60 years.

Part of the problem, clearly, stems from the deep recession. It has not only prompted several expensive stimulus efforts but also resulted in reduced tax receipts. Still, CBO sees no end to the borrowing and spending binge.

Indeed, the government is in poor shape to cope with a crisis caused by existing entitlements, much less take on an enormous new one. The US already is staring at $37 trillion in unfunded Medicare liabilities.

Sooner or later, the deficit-spending joyride must end. Social Security, Medicare, and Medicaid have been in place for decades, and they are not going away. ObamaCare, however, is a different story. Abandoning it would be a good starting point for the effort to control future deficits.

In a recent survey, the Pew Research Center found that a large plurality of Americans, 49 percent, think the US should “mind its own business internationally” and leave other countries to fend for themselves militarily.

It would be hard to find a more shortsighted approach to US security. However, unless Washington changes what is now an irresponsible course on ObamaCare, Americans will in a decade or two lack the military strength to pursue any other option.