Wars and Health Care Reform Should Both Be Paid For

Posted October 26, 2009 at 5:44pm

The Washington Post ran a budget-related editorial on Saturday (“A critical question—) that attempted to explain why it insists that health care reform not increase the deficit even though it doesn’t believe that spending for activities in Iraq and Afghanistan have to be offset. The Post’s arguments weren’t just unconvincing, they also don’t make any sense.

[IMGCAP(1)]Military activities deemed necessary for the security of the United States shouldn’t be avoided because of the federal budget. The U.S. can’t go to war only when there’s a surplus or when we think the higher deficit caused by the increased military spending won’t have negative impact on the economy. To paraphrase former Defense Secretary Donald Rumsfeld, you go to war with the economy you have rather than the one you would like.

But the fact that you go to war doesn’t mean that you can do what the Post recommends: Ignore the economic effect the additional federal spending and borrowing will have. To the contrary, it absolutely and unequivocally is the responsibility of policymakers to deal with the economic impact of what has to be done regardless of whether it’s deploying troops overseas, dealing with a Katrina-like natural disaster at home or putting health care reform in place.

That means that the budget impact of the military and other activities in Iraq and Afghanistan should always be considered. They occurred when a deficit had already replaced the surpluses that existed in fiscal years 1998 to 2001, the Bush administration’s policies were projected to increase the red ink even further, and concern about the national debt was growing. Given those fiscal worries, offsetting the cost of the war so that the already bad budget situation would not get worse would have been completely appropriate and justified and would not have changed what the Pentagon was doing.

The Post tried to say in its editorial that activities in Iraq and Afghanistan are being paid for because the amount that will be spent each of the next few years will be decreasing. The editorial said that the fact that this spending will fall from $180 billion in 2008 to a projected $130 billion in 2010 shows that the higher Iraq and Afghanistan-caused deficit is being offset.

Excuse me?

Since when does spending $130 billion more enable you to pay for something you previously purchased? I can’t pay for the $150 video game I bought last year by buying another this year for $130. That’s not saving $20; that’s spending $130 more. To offset the $150 I have to reduce spending that I otherwise would have done this year on venti lattes or earn additional income writing freelance columns for outlets other than Roll Call.

Ironically, the Post editorial had it precisely backward. Rather than pay for what has already been spent in Iraq and Afghanistan, the projected future lower Pentagon spending can be used as an offset for what could be spent on something new, such as health care reform.

The Post then tried a different and equally ridiculous argument to justify its position: Spending on Iraq and Afghanistan doesn’t have to be offset because wars “eventually come to an end— while entitlement programs such as health care continue.

First, whether it happens because of an annual appropriation or an ongoing entitlement, it’s all federal spending. Regardless of the legal mechanism by which they are provided, military and health care spending have the same impact on the budget and national debt. If it’s economically justified, an offset for one is as important as an offset for the other.

Second, for many reasons the Post is completely wrong about Iraq and Afghanistan being one-time, never-to-be-repeated spending.

The most obvious is that the military and other activities in these two countries have already been happening for multiple years and so can hardly be considered one-time events. This is especially true of peacekeeping and nation-building activities that occur after the shooting war ends.

In addition, if history is any indication, Iraq and Afghanistan are not likely to be the last times the United States commits troops somewhere. World War II was quickly followed by Korea, which was followed by Vietnam, etc.

Even if there are no more wars, the federal budget-related costs of Iraq and Afghanistan will continue long after the U.S. troops in those countries come home. This will include replacing weapons, spare parts and other equipment, and increased veterans benefits. And unlike what has happened after previous wars, troop levels are not expected to fall this time when the war ends, so the Pentagon’s compensation costs are likely to be permanently higher. In fact, the typical federal budget experience is that overall military spending seldom falls to its pre-war levels so at least part of the war-related increase tends to be permanent.

But the most obvious thing the Post missed is that the additional borrowing the government has done to pay for the higher deficits caused by the Iraq and Afghanistan spending won’t disappear when the war is over. To the contrary, federal interest payments will be higher for decades as a result.

In other words, and completely contrary to the Post’s assertions, just because the funds for Iraq and Afghanistan were annually appropriated doesn’t mean the spending isn’t as ongoing as any entitlement. It also doesn’t mean that offsetting their impact on the deficit isn’t just as important as paying for health care reform.

Stan Collender is a partner at Qorvis Communications and author of “The Guide to the Federal Budget.— His blog is Capital Gains and Games.