The Issue of Financial Indistinctness of the US Federal Government

Budget, allocation of resources, and overspending are all viable issues that are plaguing the United State federal government. Amidst congressional debates and the government shutting down at an alarming rate, the government should be more transparent in showing its constituents how it spends their hard-earned money on taxes. To better understand how the American government has reached a high deficit of close to $1 trillion dollars, we must first examine some key factors and trends that outline how much money that the government spends. We will then examine how the federal budget is being used today.

Let’s take a step back to the Great Depression epoch right before World War 2. Around this time, an economist by the name of John Maynard Keynes published a book known as “The General Theory of Employment, Interest, and Money.” In this book, he proposed the idea of Keynesian economics, which supported the idea that the “government can directly influence the demand for goods and services by altering tax policies and public expenditures”. In other words, Keynes believed that it was the duty of the federal government to intervene and distribute its revenue for the purpose of promoting a healthy economic system. In return, the American consumer could disperse the money that was invested into them. Keynesian economics also proposed that money invested into job growth by the federal government would also culminate into high levels of employment as a result of “balancing out an equilibrium”. Needless to say, many of Keynes philosophies were a direct result of the penury usurped onto the working class American by the Great Depression caused by World War 1.

One of the most notable leaders who implemented the Keynesian economics philosophy was President Franklin Roosevelt, who served as president during World War 2. Roosevelt promoted Keynesian economics through the New Deal as a means of raising revenue through socialist programs. Some of the most notable socialist movements he promoted included the Social Security Act, the end of prohibition, and paying commodities to farmers that worked the wheat, dairy, tobacco, and corn industries. He also passed the Works Progress Act to create jobs in the wake of World War 2. What was once a country devasted by the Great Depression suddenly evolved into a booming economic machine. As a matter a fact, his efforts drove a sharp increase in the government deficit by nearly twentyfold, going from 2.6 million dollars in 1933 to 47 million dollars in 1945, as outlined in the Summary of Receipts, Outlays, and Surpluses or Deficits 1789-2024.

Now we fast forward past the New Deal Era into the 1960s. Following the assassination of President Kennedy, Johnson was crowned predecessor and took it upon himself to continue promoting Kennedy’s agenda involving reforming socialist policies. Johnson developed and promoted his idea of “The Great Society,” which birthed socialist programs to include Medicare (for older folks) and Medicaid (for underprivileged ones) under the Social Security Act. As a former teacher himself, President Johnson also invested more money into American Public Elementary and Secondary schools in low-income neighborhoods. At this point, the deficit under Johnson’s presidency fluctuated from 4.7 million in 1963 to a surplus of 3.2 million in 1969.

Following Johnson’s term, Richard Nixon rose to the presidential throne. President Nixon, though a member of the Republican Party and highly critical of Johnson’s Great Society, continued Johnson’s legacy and supported many welfare programs. Unlike Johnson, Nixon strongly abhorred the use of government programs as a means of supporting social workers and the poor because he believed government programs were a crutch. Nixon, however, desired support from the Democratic Party and marketed these social programs to assist the “deserving poor” as well as older Americans, people with disabilities, and children. Nixon then implemented a new Supplemental Security Income program as well as mandating Food Stamp Programs in each state. The surplus was no more, and the deficit rose back up to 6.1 million dollars.

Further down the presidential line came Ronald Reagan, who was sick of the government exhausting its budget on socialist programs. Unlike Nixon, Reagan could not easily be coaxed to support socialist programs and opted not to shift his ideals in favor of the Democratic support. Reagan believed that Keynesian politics, which promoted socialist programs, highly encouraged a deficit; in order to balance out unemployment, the state could expend more money on public services, which would eventually provide more money in return. Reagan highly opposed “…the middle-class entitlements. He also spared the defense department from the ax, and…major increases in defense expenditures…Between the beginning and the end of the Reagan presidency, the annual deficit almost tripled. So did the gross national debt—from $995 billion to $2.9 trillion”. Rather than focus on socialist programs, Reagan shifted his attention toward the Department of Defense. The way that the Reagan administration managed the federal budget is very common to what we see today.

This was a huge financial leap, an over expenditure of congressional funds that former President Eisenhower had anticipated many years prior. Eisenhower feared that the growth of the military industrial complex following the victorious aftermath of World War 2 was fueled solely by money. President Eisenhower was weary of the fact that the US federal government would use war as a means of revenue. As a matter of fact, it was President Eisenhower who coined the term of the military industrial complex. His belief was that the government recognized how ludicrous the military business was thus would exponentially invest in it because of the economic wake caused by the First World War. This meant that the manufacturing of ships, uniforms, bombs, airplanes, and so many other equipment items required by soldiers would be contracted out to companies. The same military industrial complex that helped the American economy bounce out of the Great Depression was also guilty of creating a monstrosity of a deficit.

Today, the US Department of Defense (DOD) is projected to spend $716 billion for the year 2019. This is an increase of $82 billion in just one year, and accounts for 17% of the federal’s $4 million budget. This is compared to some of the DOD expenditures the government has made in the past, where $351 billion dollars was spent in the year 1976. The $716 billion that the federal government is projected to consume on the DOD will be the largest expenditure since the 1970s, accounting for inflation.

While Congress and military officials argue that the budget allocated for the Department of Defense is not enough to cover the cost of cutting-edge technologies that combat China and Russia’s cyber warfare attacks as well as combat support in the Middle East, the proper allocation of Department of Defense funds remains questionable. According to Niall McCarty of Forbes Magazine, the money that the military originally squandered on the first Joint Strike Fighter, better known as the F-35s, totaled upwards of 22.1 million dollars in 2007, excluding the cost of the engine. As of 2017, this total has now been reduced to a price of 94.6 million, again, without the cost of the engine. With price tag as high as that, any American citizen could be led to believe that the F-35 is the most flawless aircraft that the military has seen. This, unfortunately, is not the case; the F-35 has been subject to investigation by flight engineers as it has been plagued by a plethora of maintenance issues to include the need for structural and electronic modifications to support hardware and software redesigns (following a Chinese cyber intrusion), helmet mounting issues, and unsafe ejection seat conditions, amongst other things. This can be attributed to the fact that the F-35 was “conceived as a way to replace the F-16 Falcon, F-15E Eagle, A-10 Warthog, F/A-18 Horney, and AV-8B Harrier…”. In other words, the DOD planned on meshing a gamut of weapons and high-tech functions including stealth capabilites, internal weapons bays, and vertical take-offs into one single plane as a means for cost reduction. This plan backfired; a RAND study now estimates that having created a single aircraft for 3 different military branches (Navy, Air Force, and Marine Corps) would have been more cost-efficient. Though the first model was released in the year 2000, the F-35’s efficiency has already disappointed engineers and maintainers alike, while also placing a dent in our nation’s federal budget at the young age of 19.

Other issues concerning the distribution of finances in the US military include purchasing items such as coffee cups and erectile dysfunction prescription medication. Concerning the coffee cups, red flags were raised after Senator Chuck Grassley investigated the Air Force for purchasing nearly $325,000 in just the last 3 years on coffee cups for flight crew members. With coffee cups costing almost $1,300 apiece, the flight crew’s defense was that the handle broke immediately after dropping the cups just once, with no handle replacements available for order as they were the manufacturing process was placed at a halt. In addition to coffee cups, data released from the Defense Health Agency demonstrates that the military has spent almost $294 million on erectile pills including Viagra, Cialis and Levitra since 2011. If the US military willingly expunges a surplus of money on items such as these, who knows what else the American taxpayer is reluctantly investing into. Transparency needs to be implored.

So what does our budget look like today? According the US government’s data lab, the budget is split as follows: 273.2 billion or 15.9% on Medicare, 271 billion or 15.8% on Social Security, 167.4 billion or 9.8% on Net Interest, 164.3 billion or 9.6% on Health, and less than 7% on Budget Functions such as Income Security, General Government spending, Veterans Benefits and Services, Education, Training, Employment, and Social Services amongst others. According to the graph on this site, 453 billion or 26.4% is also expended as an unreported Budget Function and only 18 billion or 1% is allocated towards National Defense. This comes to a surprise as other reports on “An American Budget,” located in a hidden corner of the US White House’s website, indicate that that the Department of Defense spent close to 716 billion for FY2018. Tallying the unreported money and the 1% allotted to National Defense shows a discontinuity between the government’s reporting. One would almost be led to believe it could be intentional. Nonetheless, today’s socialist programs hold strong. Eisenhower’s idea that the Military Industrial Complex is on the upswing happens to hold stronger.

And what could possibly be more concerning than uncoordinated government spending? A bailout, the aftermath of banks and conglomerates overspending. The estimated cost of the government bailing out the banks following the stock market crash of the 2007/2008 era is 16.8 billion dollars. The national deficit is projected to sit at 1 trillion by the end of fiscal year 2019, which occurs in October. Why is this important? Because the national deficit corelates with the interest that American citizens owe. This interest can present itself through anything from car loans, house loans, and student loans. In turn, Americans struggle to sustain financial stability as the “average income in 30 years will be $5,000 less per year if the national debt continues its current trajectory”. With interest rising and inflation depreciating the value of the dollar, the government will be compelled to find appropriate forms of budget reformation that include a mix of taxation and cutting of socialist program funding, such as those that Roosevelt, Johnson, and Nixon all created together. If our government consistently chooses the banks and the military industrial complex over its people, is it truly democratic?

When it comes to money, the US government sure knows how to spend it, so much that the amount expended has become ethically questionable. Be it through socialist programs like Medicare and Medicaid, supporting our Department of Defense, or providing clemency to the big banks, one bailout after the other, the ethics of our federal government needs to be transparent with its allocation of resources. It is our duty as taxpayers to hold our democratic government accountable and initiate referendums directed toward our Congressmen that demand more taxpayer involvement in America’s financial investments.

References 

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