What America could do with European levels of military spending
By JEFF STEIN | The Washington Post | Published: July 13, 2018
President Donald Trump excoriated the country's European allies over their defense budgets on Wednesday, demanding they increase their military spending to levels closer to the United States.
But if the United States instead tried lowering its defense spending to mirror Europe's, Trump could safely fund several of his key priorities — including the White House's infrastructure plan, a border wall with Mexico, and a 15 percent corporate tax rate - and still have additional money left over.
In 2018, the United States spent $623 billion on national defense, which translates into about 3.5 percent of its gross domestic product, according to a report recently published by the North Atlantic Treaty Organization. (Estimates vary depending on what counts as "military spending," and some experts put the number for the United States closer to 3 percent.)
Trump has demanded NATO members ramp up their military spending levels to at least 2 percent of GDP, in line with the goal set by the organization itself. (Many European countries spend less than 2 percent on NATO, part of why Trump is demanding they pay more.) Cutting U.S. military spending from 3.5 percent of GDP to 2 percent would shave off about $300 billion from federal spending, or about $3 trillion over the next 10 years.
Depending on which expert you ask, the chronic social ills the United States could go a long way toward addressing with an extra $3 trillion per decade include: homelessness; child poverty; college tuition costs; the national student debt burden; a lack of affordable child care; and long-term health care for the elderly. It could also accomplish several key goals of the president, or go a long way to help balancing U.S. books.
Some analysts were skeptical of the idea, arguing it would be difficult for the United States to so dramatically reduce its military spending without doing serious damage to global security and firing thousands of U.S. servicemembers.
"There's the question of how you would even cut defense levels that much," said Brian Riedl, a budget expert at the conservative-leaning Manhattan Institute. "It's not just a matter of buying fewer bombs: the United States spends $100,000 per troop on compensation - such as salaries, housing, health care - which also contributes to our defense budget exceeding that of countries like China."
Others disagreed. "I think it's very doable in terms of still defending the country, though you would need a strategy to do it," said William Hartung, director of the Arms and Security Project at the Center for International Policy. "This thought experiment is not unreasonable."
The United States has spent more than 3.5 percent of its GDP on the military for at least the last seven years, according to NATO statistics. Our analysis assumes military spending remains at least constant at that level, as it is a top priority for Congress and Trump, who have shown a willingness to bolster the military. The Congressional Budget Office already projects military-to-GDP falling when making its long-term estimates of U.S. debt. Using the CBO's projections as a comparison would reduce overall savings to closer to $2 trillion.
1. Universal preschool, debt-free college and student debt jubilee.
A bill introduced by Rep. Jared Polis, D-Colo., would wipe out "all student loan debt" in the country, relieving 43 million student loan borrowers from their debt burdens. Polis says it would cost about $1.4 trillion, which roughly aligns with Federal Reserve data about the U.S. student debt burden. (Researchers at the Levy Economics Institute of Bard College have argued eliminating student debt would help spur economic growth, though others have argued the biggest gains of such a plan would go to those already well off.)
If the Polis bill were enacted, the country would have $1.6 trillion left over. With that extra cash, Congress could still enact a 2016 campaign proposal from Sen. Bernie Sanders, I-Vt., to eliminate tuition at all public colleges and universities, which would cost $807 billion a decade, according to the Tax Policy Center, a nonpartisan think tank.
But there's still money from all that cut military spending. Perhaps you could spend $66 billion to pass President Barack Obama's plan to create universal pre-kindergarten for all American children. Or fund the proposal by Senate Minority Leader Chuck Schumer, D-N.Y., and House Minority Leader Nancy Pelosi, D-Calif., to put $50 billion for teacher raises and another $50 billion for school resources, to offset education cuts in the 29 states where funding has fallen below their levels about a decade ago.
2. Key Trump and GOP agenda items. During his campaign and at the start of the debate over the Republican tax law, Trump said he wanted to see the U.S. corporate tax rate fall from 35 percent to 15 percent. In the final GOP legislation, the rate ultimately fell from 35 percent to 21 percent.
But with much lower levels of military spending, Trump could push the corporate rate where he initially wanted it without expanding the deficit. A one percentage point cut in the corporate rate translates into about $100 billion in lost federal revenue, according to the Congressional Budget Office. Reducing it by six points would cost about $600 billion.
Republicans in Congress could also extend the individual tax cuts in their law, which are set to expire within the decade, at a cost of about $830 billion, according to the Tax Policy Center. (The Tax Foundation, a right-leaning think tank, puts the number at about $640 billion.) That would prevent tax hikes for millions of Americans, giving an additional $47 billion in tax relief to those earning less than $81,000, according to an analysis by the Institute on Taxation and Economic Policy, a left-leaning think tank.
But Trump could still easily find the money for other key priorities. A report produced by Senate Democrats found that building a wall along the Mexican border would cost $70 billion, while the Department of Homeland Security put the number at $22 billion.
The White House infrastructure plan, meanwhile, has stalled amid questions of how to pay for it. But the Trump plan would only probably cost the federal government around an additional $200 billion, still leaving us well short of our budget. (Repairing all U.S. highways alone would cost about $60 billion, according to Michael Linden, a scholar at the Roosevelt Institute, a left-leaning think-tank.)
Add up those costs to four big Trump and GOP priorities — a 15 percent corporate rate ($600 billion); the White House infrastructure plan ($200 billion); a permanent extension of the GOP tax law (about $830 billion); and the wall at the Mexican border ($70 billion) — and you have not cracked $2 trillion in new costs.
3. Dramatic reductions in childhood poverty and homelessness. With an extra $3 trillion a year, some anti-poverty experts say the United States could take steps toward ending child poverty, homelessness, and creating a low-cost universal child care program.
Sens. Michael Bennet, D-Colo., and Sherrod Brown, D-Ohio, have proposed a dramatic expansion of the Child Tax Credit, to help some of the 5.7 million American families living in poverty. Columbia researchers have found doing so would cut American childhood poverty approximately in half, by giving poor parents significantly more money. A similar proposal was estimated to cost about $108 billion a year, or about $1 trillion over 10 years, according to Vox. (Some economists say doing so would save the government money in the long-term, in part by improving the families' long-term health.)
"Even at a trillion dollars, we could put the biggest dent in child poverty the country ever has," said H. Luke Shaefer, a poverty researcher at the University of Michigan. "It would be a great investment and an exciting step forward."
Peter Gowan and Ryan Cooper have also released a paper for the People's Policy Project, a lefty think tank, estimating the United States could build 10 million new housing units for about $1.85 trillion. Doing so would dramatically expand the housing supply for poor and working-class Americans, while aiming to create a valuable housing asset owned by the public. The plan would come close to doubling the United States' overall stock of affordable housing, which would bring the nation more in line with countries like Finland and Sweden that have much lower homelessness rates.
Other approaches could include passing a $60 billion plan to offer low-cost and affordable child care to all Americans, or pass a plan that would significantly reduce hunger in the United States by $23 billion, according to Rebecca Vallas, a poverty expert at the Center for American Progress, a left-leaning think tank.
"It is a giant, giant amount of money," said Linden, of the Roosevelt Institute. "We could do so much for working and low-income families."
4. Deficit reduction. Cutting the U.S. military budget could also be redirected to paying down the growing federal deficit, according to budget experts.
The annual federal deficit is at about $833 billion, so a nearly $300 billion cut to military spending would cut that by about 35 percent. The federal deficit is projected to rise to $1 trillion by 2020, according to the CBO.
The potential long-term savings are harder to predict. With an additional $300 billion annually, Congress could close more than half of the shortfall facing Social Security — one of entitlements whose growth has most alarmed some on the right and center of American politics, according to Riedl, of the Manhattan Institute.
Doing so could also offset more than 20 percent of the coming shortfall facing Medicare, the nation's health program for seniors, Riedl said. Given how quickly the cost of Social Security and Medicare is growing, Riedl said, the extra $300 billion would not erase their eventual funding shortfall. "In terms of long-term budget projections, there's not much of a windfall," Riedl said. "But it would be an important start."
5. Insurance for millions of Americans. The United States faces a crisis in providing health care for seniors, and a growing number of families are unable to afford the escalating costs in elder care.
With a $1.5 trillion investment, the United States could put "pick up the tab for every nursing home patient in America," ensuring that they are not forced out of care, according to Harold Pollack, a health policy expert at the University of Chicago.
"Millions of Americans live in reasonable fear that they will lose everything and die broke or lack access to needed long-term services and supports if they become seriously ill or disabled," Pollack said. "Even half of these savings could basically protect seniors from this primeval worry."
Congress could pass other measures to improve U.S. health care. The budgets for Veterans Affairs and the National Institutes of Health, which oversees the nation's medical research, could be doubled for $120 billion over 10 years, said Linden, of the Roosevelt Institute.
The government could also instead choose to cover every American without health care. It costs about $6,690 to insure someone, meaning an additional $300 billion a year could insure upward of 45 million Americans — more than the approximately 29 million Americans who lack insurance, according to Larry Levitt, a health policy expert at the Kaiser Family Foundation. (The entire country spends about $3 trillion, in both private and public money, on health care.)
"If you had $1 trillion to spend on health care, you could completely eliminate the uninsured [population] in the U.S., and still have plenty of money left over," Levitt said.
Estimates of the cost of a single-payer health-care system, a plan to enroll every American in a government insurance program, vary widely, with one estimate putting the figure at $5.5 trillion over 10 years. The Brookings Institution has put the number at $1.4 trillion annually, or at more than $10 trillion for the decade.
"It would probably not be enough to give us single-payer. Health care is just so huge," Pollack said. "But, wow, this could help along the way."