Budget Deal Includes $59 Billion Pentagon Slush Fund

Story Transcript

SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to the Real News Network. I’m Sharmini Peries coming to you from Baltimore.

On Friday the Senate voted 64-35 to approve a budget proposal that funds the government for two years and raises the debt ceiling, preventing a default on the nation’s debt, removing the threat of budget default, which allows the Treasury Department the capacity to borrow up until September of 2017, which means that the government will be able to avoid the drama that has plagued Washington for nearly all of President Obama’s term in office. There will be a new president by 2017. We should not that the deal calls for an increase in discretionary spending caps of $80 billion over the next two years, but it will be evenly split between defense and non-defense spending.

To put all of this in perspective I’m joined by Lindsay Koshgarian. Lindsay is the research director of National Priorities Project. She’s joining us from Northampton. Thank you so much for joining us today.

LINDSAY KOSHGARIAN: Thank you for having me.

PERIES: So Lindsay, let’s get down to business here. What’s the good news in this budget measure?

KOSHGARIAN: Well, the good news, the big good news, is that we’ve avoided as you mentioned a national default on our debt. The deadline for when we were expected, the U.S. Treasury, to start to run out of money, not have enough money to pay our government’s bills, was November 3. So we’re coming in just under the line, and it wasn’t clear that Congress was going to be able to make that deal. And the consequences of that were just extremely high. Defaulting on our debt would have meant the government couldn’t pay its bills. It might mean we would go without essential government services. It might mean the U.S. might lose rank in its credit rating. And it could really just have disastrous consequences for our economy. So it’s a very good thing that that did not happen.

PERIES: So then what worries you about this budget?

KOSHGARIAN: Well, a couple of things. One is that while this budget does raise domestic spending, it does so by an amount where even in the year 2017 domestic spending will be lower as a part of our economy than it’s been since 2010. So even though we need, desperately need, investment in things like infrastructure and job creation and education, and Americans want all of those things, this budget still really skimps on those areas of investment. And we’re going to need to look in the years ahead at starting to raise investment in those things. We can’t skimp forever.

The other real problem with this budget is that it continues to rely on a budget gimmick that’s a Pentagon slush fund. This is a $60 billion fund that the Pentagon has received for years now. And it started as a war fund, to fund the Iraq and Afghanistan wars. But we’ve reached a point now where America’s most pressing conflict, the conflict with ISIS, is only costing about $5 billion a year. And yet we still had this $60 billion fund. And to put that in a little bit of perspective, that’s about the same amount of money as the U.S. spent on all federal student aid for college students.

PERIES: Wow, that’s, that’s huge. And what is this budget doing for education and resourcing the troops that are coming back home, and so on?

KOSHGARIAN: Well, it remains to be seen. We know that this budget does increase domestic spending this year. And as you mentioned it splits the increase evenly between defense and non-defense spending, although that’s not counting that $60 billion fund. But over the coming weeks between now and December 11, the task before Congress is that they need to actually work out the details of this budget. So we have just a few short weeks left where we’ll start to find out whether Congress will allocate more money to education or more to other things, or where some of that increased spending might go. As a general rule, education is only about 3 percent of our entire federal budget. So it’s quite a small part.

PERIES: And how does that compare with other countries that, a country like Canada, for example?

KOSHGARIAN: I don’t have the numbers for Canada at my fingertips, but I can tell you that the United States spends far and away more than any other country on defense. We account, depending on the year, for somewhere between 30 and 40 percent of the world’s military spending. That’s bigger than any other country, bigger than China, bigger than Russia by several times. So we are investing far more heavily in the military than any of our, than any other country on earth.

PERIES: And this budget has raised some concern in terms of Medicare, in terms of social insurance. Both programs that our seniors depend on. How will it affect them?

KOSHGARIAN: Well, this budget deal does do a couple of good things for those programs. One, it averts what could have been a deep cut in Social Security disability benefits. The disability trust fund that’s part of the Social Security program was expected to run out of funds next year. This budget reallocates some funding to that program so that people who receive disability benefits will continue to receive those benefits. So that’s a good thing. The other thing that it does for Medicare is it averts a potential premium increase that would have gone into affect. And this budget reverses that.

So those are some good developments. But we definitely can expect going forward to continue to hear things about Social Security and Medicare and those programs . And it’s important for people to know that the Social Security program, for instance, is currently expected to be solvent until the year 2033. So we have some time to work out whatever the program changes are that need to be made. And it’s just not true that that program is in urgent need of repair.

PERIES: And finally, Lindsay, I understand the borrowing allowance or capacity, as a result of this budget approval–how does the government expect to raise other revenue that they need for implementation of this budget?

KOSHGARIAN: Yes, that remains a huge sticking point. This does allow the government to continue to borrow money. It’s important to note that the debt limit itself doesn’t actually let the government spend money. It just lets the Treasury pay the bills when Congress has already appropriated funds. But Congress is responsible for setting both spending policy and tax policy. And tax policy remains a huge sticking point. Most Americans want to see corporations and wealthy Americans pay more in taxes. There’s general agreement about that. But unfortunately there’s not agreement about that in Congress.

PERIES: All right, Lindsay. Thank you so much for joining us today, and we hope to have you back soon, as I think this issue in terms of it getting settled isn’t going to go away.

KOSHGARIAN: Thanks for having me.

PERIES: Thank you for joining us on the Real News Network.

End

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