Government Spending Addendum: Military Spending and the Discretionary vs Mandatory Budgets

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2 MIN READ - The Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff shouts kudos to CO regular Lisa Dennis Lee for a comment reminding him about one more defense spending statistic.

As mentioned in a previous column on government military spending, one of the more common fallacies/deceits you’ll hear from the political Left is “Half your tax dollars go to war,” proven with pie charts of federal discretionary spending (example attached, left).

The Economics Correspondent knows firsthand. Being a resident of San Francisco he's seen activist flyers with the same slogans and charts taped to his apartment building's front door.

The key word here of course is “discretionary,” which the same sophists never define.

Because the federal discretionary budget is only one third of the overall federal budget, the other two-thirds being the ***mandatory budget*** which is dominated by Social Security, unemployment, Medicare, and Medicaid (attached chart, right).

The mandatory budget is consistently twice the size of the discretionary budget, although in 2022 it was even larger (73% versus 27%) due to higher Covid-related medical spending. 

And according to the White House's budget website the 73/27 ratio isn't scheduled to subside anytime soon, but we'll be generous and assume discretionary spending remains one-third.

So if defense is one-half of the discretionary budget, and we know the discretionary budget is only one-third of the overall federal budget, then grade school math tells us...

Military spending = one-half of one-third = one-sixth of the federal budget: right in line with the 17.6% that we already calculated in previous articles.

(Actually defense was only 12.2% of federal spending in 2022, but it creeps higher once veterans affairs and Department of Energy nuclear-arsenal related costs are added)

Yep, that’s pretty misleading to tell folks half of all federal spending is military when at most it’s only one-sixth, but most of these people aren’t in the honesty business and many of their readers/followers don't shop for honesty anyway.

BTW even if you don't do fractions you still have to know something is amiss when the FY22 discretionary budget you're being fed was $1.5 trillion yet the federal government ran a $1.4 trillion deficit. Did the IRS only collect $100 billion in taxes last year? No, it collected $4.9 trillion... fifty times more.

So maybe the government actually spent a few trillion dollars more somewhere that are missing from that misleading chart on the left.

Finally, a commonsense impression.

The Economics Correspondent has always found it strange that military spending is considered “discretionary” while micromanaging Americans’ retirements and healthcare into insolvency is classified “mandatory.”

Most people with a dictionary would think if any function of government is “mandatory” it’s protecting its citizens from violence, both domestic and from abroad.

But in the world of Newspeak keeping people safe is considered a “discretionary” function of the state while Social Security and unemployment spending has been classified as “mandatory” going back to 1935. 

And healthcare has been classified as "mandatory" since the passage of Medicare and Medicaid in the 1960’s.