Also, as any borrower knows, if you’re not paying down the principal on a loan, you’re getting nowhere. Last year our government threw away 8 percent of its revenues on interest payments. The Congressional Budget Office writes that this could increase to 17 percent in 10 years, even if the economy is growing again and interest rates remain low. That’s almost a fifth of federal revenues squandered.
“As interest payments eat into the budget, something has to give,” Ferguson writes. “That something is nearly always defense expenditure.” We’re already seeing that, of course. Recently President Obama agonized over spending $30 billion to surge troops into Afghanistan -- but this is the same president who pressured Congress to pass an ineffective $787 billion stimulus bill earlier this year. Talk about misallocating resources.
In the decades ahead the Pentagon will be expected to do more with less. Its budget, which equals about 4 percent of GDP today, is slated to drop to 3.2 percent of GDP by 2015 and 2.6 percent of GDP by 2028, making it a much smaller piece of what we hope and assume will be a much larger pie.
It’s time to push back, with a new conservative Contract with America. At National Review, Ramesh Ponnuru suggests that congressional candidates should promise to repeal -- not chip away at, not slightly edit, but completely repeal, any health care measure that passes this year. That would be a start. Conservative candidates should also promise to lop $1 trillion off the federal budget in their first year, and should explain exactly which programs and departments they’ll slash.
If they win, they’ll have a strong mandate to make a dent in the deficit. If they lose, our country may be doomed anyway.