April 15, 1998

MEMORANDUM TO: OPINION LEADERS

FROM: GARY SCHMITT

SUBJECT: Defense and the Budget Surplus

Last Friday's lead story in the Washington Post announced that the Federal Reserve now estimates a $50 billion surplus in the federal budget. All manner of interest groups are agitating to spend the surplus on a host of more-or-less worthy projects. But why not spend some of it on the one area of clear federal responsibility whose funding has declined over the past thirteen years — America's defenses?

After all, the surplus exists because, since 1992, defense spending has declined as a percentage of the Gross Domestic Product from 4.9% to 3.1%, while federal tax revenues have increased from 17.8% to 20.1%. Deficit reduction, domestic discretionary spending and entitlements have all benefitted at the expense of the U.S. military. Now that there is a surplus, it is time to begin repairing the damage done to America’s armed forces.

At today's planned level of defense spending, the Pentagon cannot afford both to maintain its current forces and handle current responsibilities, and to modernize them for the future. Like most bureaucracies faced with such a choice, the Defense Department has "solved" its dilemma by trimming in both areas — leaving the U.S. military short on men, training, parts, and readiness, and falling further behind in procuring the new weapons and systems necessary to re-capitalize the armed services.

Last Fall, House Speaker Newt Gingrich told the House budget committee that he was in favor of increased spending for defense: "We have lived off the Reagan buildup as long as we can." In a recent National Review article, he added that he supported "both using surplus funds in the budget and renegotiating the [budget] agreement" to increase funds for the military. Now both the chairman of the Senate Armed Services Committee, Sen. Strom Thurmond (R-SC), and the chairman of the House National Security Committee, Rep. Floyd Spence (R-SC), have agreed that the military needs more money — in effect, echoing former Chairman of the Joint Chiefs John Shalikashvili's 1996 statement that defense spending was far below what was needed to modernize America's defense forces.

Balancing the budget was a worthy goal, though, it should not have been accomplished on the backs of the American military. Now Congress ought at least to use part of the surplus to begin reversing the decline in American military power.