Just contemplate some of the numbers. The total federal debt is nearly $13 trillion, $8.6 trillion of which is held by the public, with the rest held by government entities. (These are conservative estimates, since many government obligations are not counted.) GDP is something over $14 trillion. That ratio of debt to GDP isn’t pretty. “The CBO estimates that at the end of 2020 publicly held debt will be a staggering $20.3 trillion—90 percent of GDP—with total debt being notably higher than that,” Horwitz writes.

As for the budget deficit, the Congressional Budget Office projects it to exceed a trillion dollars this year and next, bringing it into the neighborhood of 10 percent of GDP. This comes on top of a 2009 deficit of $1.88 trillion—the government spent a buck-ninety for every dollar it collected. The deficit is projected to fall in the years following 2011, before resuming its growth in 2015 and beyond. By 2018 it will be back over $1 trillion, assuming these estimates are not wildly optimistic. Remember, ObamaCare has not kicked in yet.

According to the CBO, the Obama administration will create $9.75 trillion in deficits over the next decade.

Compare this with Greece: Its accumulated debt is 113 percent of GDP, and its budget deficit last year was 12.7 percent of GDP. Greece needed to sell bonds to obtain the money to pay debts come due, but lenders were too nervous to lend the money at rates the Greek government can handle. So Greece needed a bailout in the form of cheaper loans from the European Union and International Monetary Fund (a.k.a. American taxpayers), conditioned on budget austerity (spending cuts and tax increases), which in turn incited violent street demonstrations by government employees, who have benefited from high deficit spending for years.

The Need for Cuts

If we want to avoid the Greek experience, which could spread to other EU countries in the future, the U.S. fiscal house will have to be put in order. Contrary to what the policy elite is thinking, this does not mean raising taxes, which would impede economic activity and make conditions worse.

So if the deficit is to be eliminated it will have to be through dramatic budget cutting. In the current fiscal year the federal government is planning to spend $3.55 trillion. Among the largest categories of spending are Social Security (19.63 percent); unemployment/welfare/other “mandatory” spending (16.13 percent); Medicare (12.79 percent); Medicaid and the State Children’s Health Insurance Program (8.19 percent); and interest on the national debt (4.63 percent).

Of course I’ve left out a category, but deficit hawks often ignore it: the Department of Defense. It comes in at 18.74 percent of the budget, or $663.7 billion. (More about this number below.) For some context, the 2009 Pentagon budget was almost as much as the rest of the world’s military spending combined.

For fiscal 2011 President Obama has asked Congress to appropriate $719 billion for the Pentagon, a 4.5 percent increase over the current year. But as Robert Higgs points out, “few appreciate that the total amount of all defense-related spending greatly exceeds the amount budgeted for the Department of Defense.”

Writing about the 2009 Defense Department budget of $636.5 billion, Higgs states: “Lodged elsewhere in the budget, however, other lines identify funding that serves defense purposes just as surely as—sometimes even more surely than—the money allocated to the Department of Defense. On occasion, commentators take note of some of these additional defense-related budget items, such as the Department of Energy’s nuclear-weapons program, but many such items, including some extremely large ones, remain generally unrecognized.”

Those other items include the departments of Homeland Security and Veterans Affairs, and programs within the Energy, Justice, and State departments. Higgs also calculated the share of the interest on the debt attributable to past Pentagon spending: “Adding this interest component to the previous all-agency total, the grand total comes to $1,027.8 billion, which is 61.5 percent greater than the Pentagon’s outlays alone.”

The grand total will be well above a trillion dollars in the current fiscal year also.

Guns and Gravy

“Owing to the financial debacle and the ongoing recession,” Higgs sums up, “millions are out of work, millions are losing their homes, and private earnings remain well below their previous peak, but in the military-industrial complex, the gravy train speeds along the track faster and faster.”

It’s no mystery why so much is spent on the military. The U.S. government maintains close to a thousand military bases around the world and is engaging in two foreign occupations, not to mention less formal campaigns in Pakistan and elsewhere, including covert operations that never make the papers. Intervention has gone on at least since World War II. This costs money. The Iraq and Afghan occupations consume over $12 billion a month. USA Today reported recently that the Pentagon had spent $620 billion on the Iraq invasion and occupation and more than $190 billion on the operation in Afghanistan, America’s longest military adventure ever. Other estimates last summer were higher, as much as $300 billion for Afghanistan, according to U.S. News and World Report. Last summer, more spending was approved in Congress. It’s safe to say the combined price tag is over $1 trillion.

The fiscal question is whether, in the face of the huge national debt and multiyear trillion-dollar budget deficits, we can afford a “defense” establishment more befitting an empire than a republic. That’s not the only question, however. We must also ask if a society that claims to value free enterprise can long endure the economic disfigurement that inevitably accompanies a large military-industrial complex, as President Eisenhower warned of as he left office.

Small-government men from Richard Cobden to William Graham Sumner to Robert Taft would have said no, as does their political heir, Ron Paul, today. As for whether slashing military spending would deny us needed protection, one could as well ask whether we are safe today with policies that risk “blowback,” bankruptcy, and monetary disarray.

One cannot help but conclude that James Madison had it right:

“Of all the enemies to public liberty war is, perhaps, the most to be dreaded, because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few. . . . No nation could preserve its freedom in the midst of continual warfare.”

Don’t put it past Congress to tack a public option onto the defense spending bill. Or at least use earmarks in the bill as bargaining chips.

FEE Timely Classic:
“Legal Plunder Mislabeled ‘Defense’” by Sheldon Richman

It’s tempting to think the military budget is different from the rest of the government’s budget. Politics surely would not intrude on such an important matter. But we know better. The Pentagon is as much a part of the bureaucracy as any other department. We may hate to accept it, but weapons systems, military aircraft, and naval ships have been built solely because they created or maintained jobs in an important congressman’s district. If de Borchgrave is right, this is more popular than ever.

Classical liberals have long warned of this practice. Milton Friedman criticized it in his book from the 1980s The Tyranny of the Status Quo. Liberals further back have sounded the same tocsin. For example, John Bright, the great peace-and-free-trade activist and member of Par­liament, in 1858 condemned the British government’s “excessive love for the ‘balance of power’ [as] neither more nor less than a gigantic system of out-door relief for the aristocracy of Great Britain.”

A similar point was made in the twentieth century by the liberal journalist John T. Flynn in his 1944 book As We Go Marching, the classic study of the rise of fascism in Italy and Nazism in Germany. Long before Mussolini, Flynn wrote, Italian governments had increased expendi­tures, taxation, and debt through programs intended to please constituencies and keep the economy going. Even before Keynes published his General Theory in 1936, politicians feared that without big government spending, depression and destabilizing unemployment would be the rule. So they spent, taxed, and borrowed.

“But this policy does run into resistance—and resist­ance in very influential quarters,” Flynn wrote. “The large taxpayer is against it. He acquiesces reluctantly. And as the debt grows and he looks with growing fear on its future proportions he begins to exert his full influ­ence against it. In different countries the basis of resist­ance takes different forms, but it comes chiefly from the conservative groups. Hence it becomes increasingly dif­ficult to go on spending in the presence of persisting deficits and rising debt. Some form of spending must be found that will command the support of the conserva­tive groups. Political leaders, embarrassed by their subsi­dies to the poor, soon learned that one of the easiest ways to spend money is on military establishments and armaments, because it commands the support of the groups most opposed to spending….

“Thus it was because the government could get pub­lic agreement for loans for this purpose and because such loans were essential to the policy of spending which kept the floundering economic system going that the militaristic policy remained so vital and vigorous an institution in Italy—and in every other continental country….

“I must not leave this whole subject of spending and the means employed to spend, including militarism, with­out observing that there is nothing new in it. It is as old as civilized government. And what is more, the protago­nists of it have understood precisely what they are doing.”

We have learned from the Public Choice school of political economy that benefits from government spend­ing are concentrated on relatively small self-conscious interest groups, while the costs are spread thinly among the mass of taxpayers. Hence the beneficiaries have far more incentive to work the halls of government than do the preoccupied taxpayers. No wonder interest groups have the advantage. When the label “national security” is affixed to a spending bill, so much the better for the rel­evant group, and so much the worse for the taxpayers, who are in no position to verify the claim.

What’s the moral here? That anything called defense is bogus? Of course not. The moral is that given the coercive and expansive nature of the political process, the appropriate attitude of the taxpayer is skepticism, or as Jeffersonput it, “jealousy,” rather than confidence.

* * *

Any advocate of separating school and state is imme­diately hit with the challenge: “But what about the poor?” Up until now we could draw on theory and his­tory for an answer. But now we have contemporary examples from the poorest countries of the developing world. James Tooley reports on his path-breaking research.

Ludwig von Mises was arguably the greatest econo­mist and advocate of free markets in the twentieth cen­tury. In this first of two articles, Richard Ebeling details Mises’s contributions to sound economic thinking and the cause of liberty.

Elections in Germany and Japan could herald an end to their experiments with the Third Way. Norman Barry looks behind the headlines.

During his long career F. A. Hayek wrote volumes not just on economics, but on broader social philosophy as well. After a rare chance to examine Hayek’s private notes, Steven Horwitz discusses the great thinker’s worldview.

The standard bill of indictment against the free mar­ket has a curious feature: all the alleged offenses have their roots in government intervention. Joseph Stromberg has the particulars.

FEE is celebrating its 60th anniversary this year. Whom better to turn to for an early history than Henry Hazlitt. He provides this month’s Timely Classic.

The Freeman‘s columnists have hit on another set of fascinating topics. Richard Ebeling revisits Keynes’s Gen­eral Theory. Lawrence Reed recounts his favorite free­dom-oriented movies. Thomas Szasz explores psychiatry’s concepts of mental illness and brain disor­der, and their relationship to freedom. Robert Higgs examines U.S. economic policy before Japan’s attack on Pearl Harbor. Charles Baird looks at a dispute between organized labor and the National Organization for Women. And David Henderson, reading a case for med­ical rationing, responds, “It Just Ain’t So!”

Books coming under review this issue scrutinize Russian conservatism, the miracle of electronic transac­tions, the “new new left,” and economic sense.

—Sheldon Richman(srichman@fee.org)

“Neither the administration nor Congress treats the war [on terrorism] as a reason to accelerate the rebuilding and reform of the U.S. armed forces,” complain Gary Schmitt and Tom Donnelly of the Project for the New American Century. The editors of National Review argue: “even after last year’s reminder, we are still short-changing defense.”

Charles Revie of the Veterans Voting Block worries about “our neglected military” and warns against allowing “our military to deteriorate.” Without more defense spending we might lose “control of the most dangerous world situation we have faced in many years,” argues historian Fred Kagan.

One wonders what world such people think they live in. America’s great Cold War antagonist, the Soviet Union, is gone, along with its gaggle of eastern European allies. Russia has now joined with NATO in a cooperative relationship that could not have been dreamed of a decade ago.

Inter-superpower competition has disappeared from the Third World, as America has become the only game in town. Vietnam is talking about leasing Camh Ranh Bay to the United States.

South Korea far outranges the North, possessing an economy 40 times as strong and a population twice as big. Japan is the world’s second-ranking economic power, capable of playing a key role in constraining potential Chinese adventurism. India is expanding its role on the world stage as both a significant military power and friend of America.

Potential adversaries of America are pitiful and few–Cuba, Iraq, North Korea. Only the threat of terrorism is significant and dangerous, but it is highly diffuse and not amenable to solution through manifold army divisions, navy carrier groups, and abundant air wings. Indeed, emphasizing traditional military assets risks diverting attention from the reformed forces and less meddlesome foreign policy necessary to respond.

The fundamental issue is foreign policy, not military outlays. For defense spending is the price of one’s foreign policy.

Consider the scenario spun by attorney Adam Mersereau in National Review Online to justify “restoring the American military to its former glory after the crippling cutbacks that occurred under President Clinton”: if we deploy troops onto Iraqi soil for the purposes of destroying its military, ousting its government, and installing a new one, almost anything can happen. The Arab and/or Muslim worlds could unite against us. Saudi Arabia and Egypt could express their indignation by blocking the Suez or other vital shipping lanes. Iran, Syria, and others could take to the battlefield in support of their Muslim brethren. The Palestinians could ignite another hot war with Israel. Arafat could be martyred. China might avail itself of America’s distraction by invading Taiwan, and North Korea could make a similar move on South Korea.

Mersereau’s nightmare suggests a good reason for not attacking Iraq. Anyway, virtually nothing in his scenario addresses the defense of the United States. And America’s friends don’t need American aid.

Iraq is a nasty actor, but is not the only thuggish state that violates human rights and might like to develop weapons of mass destruction; in any case, it can be deterred, as it has for the last decade, without war. Even if Egypt, Iran, Saudi Arabia, and Syria turned hostile, they could not stand against the United States. Israel possesses overwhelming military strength. South Korea vastly overmatches the North on virtually every measure of national power. Taiwan is strong, and China lacks the capability to cross the Taiwan Strait.

Thus Mersereau’s lurid fantasy doesn’t even justify maintaining America’s existing force structure, let alone adding to it. Indeed, few of Washington’s current deployments are devoted to genuine defense.

The 100,000 soldiers in Europe, and especially the more than 11,000 on station in the Balkans, are wasted on nonexistent dangers and peripheral interests. Europe faces no threat and, with an economy and population greater than America’s, is well able to arm for the future. Settling multiple Balkans civil wars is irrelevant to American security.

Japan’s Security

Japan similarly faces no imminent security threat and can adopt a more vigorous defense policy. Regional squeamishness is no excuse for Asia’s most vibrant power not to do more to protect itself and its neighbors.

Deploying 37,000 soldiers in South Korea is a waste. Seoul is eminently capable of deterring the decaying regime in the North. It should not be Washington’s job to offer a permanent defense subsidy to the South, especially given how the world has changed since 1950.

The closest to a traditional military threat is China. Yet Beijing remains poor and its military remains weak. China is a potential peer competitor in the future, but not soon. Anyway, it is likely to threaten American predominance in East Asia, not vital security interests closer to home. The countries that should respond are the East Asians.

Other countries that fear Beijing should do more on their own behalf. If the disputed Spratly Islands matter to the Philippines, Manila needs to create a military to assert its interests, rather than expect Americans to ride to the rescue.

No country since Rome has possessed America’s dominance. The United States plus its allies and friends account for about 80 percent of all military spending. Washington spends as much as the next eight countries combined, six of which are allies. Friendly countries like Israel and Taiwan each spend as much as America’s few true enemies combined.

Yet fearmongers want Washington to do even more. One wonders if advocates of a bigger military will be satisfied as long as anyone outside the American coalition spends anything on defense.

But with the collapse of the primary threat, hegemonic communism, and rise of the allied response, through populous and prosperous Asian and European friends, America need no longer intervene everywhere to protect everyone.

The United States should maintain the world’s strongest military, but not one disproportionately large–especially when September 11 revealed that the most serious threats against America are unconventional, requiring a very different response from the Cold War policy.

The lesson of September 11 is not that Washington should mindlessly lavish money on the military, but that it should adjust its foreign policy to more accurately reflect American security interests. Once it does so, it can cut military outlays, spending money more wisely and effectively.

Doug Bandow, a nationally syndicated columnist, is a senior fellow at the Cato Institute and the author and editor of several books.