During the Vietnam War, the phrase “guns versus butter” described the clash between military spending and domestic needs. Today, one way to think about the budget choices Congress faces is an aircraft carrier versus a year of hospice care for a million terminally-ill Medicare recipients.
A House-Senate conference committee begins work in earnest next week to design a budget for the current fiscal year and beyond. The committee faces a Dec. 13 deadline. The goal is to reduce the ever-growing burden of debt -- especially as Baby Boomers leave the workforce and start collecting Medicare and Social Security benefits.
In addition to the inevitable struggle over tax reform and -- for some people at least -- tax increases, the panel of 29 senators and House members will grapple with balancing spending priorities.
The price tag for that new aircraft carrier is $13 billion and rising. The cost of a year of hospice care for terminally ill Medicare recipients is about $16 billion.
In each case the costs are growing. “Gerald R. Ford,” the lead ship in the new generation of aircraft carriers is coming in well over budget. The ship will be christened in two weeks at Newport News Shipbuilding in Virginia.
Its cost of construction has grown by more than 20 percent since Congress authorized it in 2008, according to a report last month by the Government Accountability Office.
Meanwhile, the demographics of the outsized Baby Boom generation are inevitably pushing Medicare costs higher and making Medicare a bigger and bigger piece of the federal spending pie.
The Congressional Budget Office estimates that over the next ten years, defense spending -- not including military retirement benefits and veterans’ benefits -- will increase by 25 percent to $724 billion while Medicare outlays increase by 86 percent to more than $1 trillion.
Building Navy ships and providing medical care for older people on Medicare are also both long-term budget commitments.
A worker who retires this year at age 65 becomes eligible for Medicare and has an average life expectancy of about 20 more years.
Every year the Navy submits to Congress its 30-year shipbuilding plan. The Defense Department’s shipbuilding plan calls for 266 ships to be built between now and 2043 at a cost of $580 billion.
Of course federal budgeting isn’t as simple as buying one item and not another, of trading a ship or a fleet of drones for a given number of days of hospital or hospice care. The job of the conference committee as it meets next week isn’t to decide whether or not to build another aircraft carrier, but to set the top-line targets for broad categories of spending.
But an aircraft carrier vs. a year of hospice care for people on Medicare does illustrate what Senate Budget Committee chairman Sen. Patty Murray, House Budget Committee chairman Paul Ryan and their colleagues will need to contend with.
Ryan and President Barack Obama have both said they want to do something to control Medicare’s cost growth. The Medicare cost cutting ideas Obama put on the table in his Fiscal Year 2014 budget proposal – some of which would require higher-income people to pay more for their benefits -- add up to about $268 billion in savings over ten years, about a three percent reduction in Medicare’s cumulative costs over that period.
Meanwhile there’s a widespread feeling among many congressional Republicans and among some Democrats that the Budget Control Act or sequester cuts in defense spending must be undone.
“We cannot keep asking the military to perform dangerous mission after mission with multiple rounds of defense cuts, including sequestration, hanging over their heads,” House Armed Services Committee chairman McKeon told Secretary State John Kerry, Defense Secretary Chuck Hagel and Joint Chiefs of Staff Chairman Gen. Martin Dempsey last month as they testified about the prospect of Obama ordering air strikes on Syria.
Both Murray’s budget plan which the Senate approved and Ryan’s plan which the House passed, would restore at least part of the defense sequester cuts, according to Loren Adler at the Committee for a Responsible Federal Budget. Ryan’s plan would increase defense discretionary spending by $535 billion over ten years, while the Murray budget plan would increase it by $285 billion.
Dov Zakheim, who served as the Defense Department comptroller under President George W. Bush and who has written a book analyzing how the Bush administration botched its post-2001 Afghanistan reconstruction efforts, said Wednesday.
“The people who support restoring funding to the military argue that it’s not really a matter of trading off at all. Trade other things, but don’t trade that.” Zakheim said, “I think that’s going to be the going-in position (as the conference committee meets), that defense is not trade bait. It is simply above and beyond everything else that gets discussed.”
High in cost and spectacular in their capabilities, aircraft carriers are an unmistakable symbol of the projection of U.S. power around the world. But Zakheim said the primary focus of any military cost cutting which results from the conference committee will not likely be the Navy. “Particularly if one doesn’t want to fight Iraq and Afghanistan wars, the Navy so going to be front and center of whatever (conflicts) we do fight,” said Zakheim.
If Americans are not eager to send troops overseas to fight another war like the ones on Iraq of Afghanistan, the focus for cuts is more likely the Army.
First published October 27 2013, 9:24 AM