FY2021 DoD Budget

House Budget, March 10, 2021

The staff summary was, as usual, an apt description of the issues before the committee and the Nation. As we have said in all of our comments and was said in the committee staff paper, staying within the agreement in the Bipartisan Budget Act of 2019 is essential and can be used to ignore what has been received. 

The current budget submission is not serious. It is Mick Mulvaney’s last shot to spout partisan nonsense to raise money for the President’s reelection campaign or to show his bona fides for his own possible Senate run or a job running a conservative think tank. It is as dead as any budget from the mid 1980s. It is not only dead on arrival, it has already been embalmed. 

In the background of this budget is a desire to float tax cuts, both in the short term and as a campaign promise. Any such cuts would be madness given the likelihood of a recession in the near future caused, not by Covad-19, but by the latest round of speculation fueled by Federal Reserve rate cuts and the Tax and Job Cuts Act. As we stated earlier this month, the current effort to market Exchange Traded Funds containing toxic single-family rental bonds sell more widely is necessary before Wall Street gets caught holding the bag. Their attempt to do so is both against the national interest and politically tone deaf, given the current composition of the House. 

A recession should be met with more spending and higher taxes on the wealthy. Moving money from the Speculation Sector to the real economy always works. Cutting taxes never does, especially in absence of out of control spending. Bidding up the price of secondary market assets is inflation, not investment. Investment in plant and equipment is only done in anticipation of public and household spending. 

Detailed plans from the 2020 budget proposal are certainly a better source in drafting this year’s appropriation and authorization legislation. In that spirit, we will also repeat excerpts from our comments from last year, leaving out those portions having to do with regional government and tax reform (with regional consumption taxes requiring a constitutional amendment).  In Attachment One, we will reuse the summary table based on last year’s service department submissions, which likely has better data than the current President’s Budget. 

Last year, the National Priorities published a pie chart of discretionary spending which lumped the entire defense budget into a 57% slice. This is consistent with the remarks in the Staff Paper highlighting how Defense Spending in this year’s budget is crowding out spending in the civil government. Attachment Two repeats our exhibit from last year on how much the Defense Budget makes up of the total government.