The U.S. National Debt - How Single Year Budgeting And Funding Cycles Lead To Unmanageable Government

 

By Ken Larson

Having dealt with the funding process in the government contracting industry (both large and small business) for over 40 years, I can discuss with some credibility a major weakness in the huge machine we call the US  Federal  Government -- the one year budget cycle. 
  
A huge reason for much of the largess in the National Debt is the fiscal year funding agony in which the US Government is entrenched. Shutdowns, delays and spoon feeding funds to areas as vital as the environment, national defense and healthcare must cease.  

_________________________________________________________________
About mid-summer every agency begins to get paranoid about whether or not they have spent all their money, worried about having to return some and be cut back the next year. They flood the market with sources sought notifications and open solicitations to get the money committed. Many of these projects are meaningless.

Then during the last fiscal month (September) proposals are stacked up all over the place and everything is bottle-necked. If you are a small business trying to get the paperwork processed and be under contract before the new fiscal year starts you are facing a major challenge.

Surely the one year cycle has become a ludicrous exercise we can no longer afford and our government is choking on it. It is a political monstrosity that occurs too frequently to be managed effectively.

Government must lay out a formal baseline over multiple years (I suggest at least 2 fiscal years - ideally 4 - tied to a presidential election)  - then fund in accordance with it and hold some principals in the agencies funded accountable by controlling their spending incrementally - not in an annual panic mode.

Naturally exigencies can occur, such as COVID and unanticipated world events like the Russian invasion of Ukraine.   A management reserve can be set aside if events mandate scope changes in the baseline due to unforeseen circumstances. Congress could approve such baseline changes as they arise.

There is a management technique for the above that DOD, NASA and the major agencies require by regulation in large government contracts.    It is called "Earned Value Management" and it came about as a result of some of the biggest White Elephant overruns in Defense Department History. Earned Value Management Systems

We have one of the biggest White Elephants ever in front of us (a National Debt exceeding $38 Trillion) National Debt Clock. We must get this mess under control, manage our finances and our debt or it will manage us into default.

Numbers Tell The Story – Is Our Government Looking In The Right Places For Cost Cutting?

 

PLEASE CLICK IMAGE TO ENLARGE

The above stupefying statistics are contained in a July 8 report Report (PDF) from Brown University’s Costs of War project and the Quincy Institute for Responsible Statecraft.

“FROM ‘THE BUNKER’ AT THE PROJECT FOR GOVERNMENT OVERSIGHT” By Mark Thompson

“Can the U.S. have a reasoned national debate on a new defense strategy that is not distorted by the influence of the wealthy weapons sector?

The question answers itself: So long as the U.S. promotes Pentagon policies that aim to do everything everywhere, it will continue to be a self-licking ice cream cone that can’t be sated.“

_________________________________________________________________

“The Bunker was never much for math as a student. But once he started covering the Pentagon during the Stone Age (technically, 1979), he figured out he’d better lube up his slide rule if he were to have any chance of keeping track of bangs for bucks. Armed next with calculators, and then with computers, charting U.S. military spending alongside long-ago defense-budget pros like Bill Kaufmann was always fascinating, and sometimes frustrating: How could this nation be spending so much on its military and getting so little in return?

Some things never change:

From 2020 to 2024, private corporations pocketed $2.4 trillion of the U.S. military’s $4.4 trillion discretionary budget — about 54%. That’s up from their 41% share during the 1990s. That represents a 32% hike.

Over that same time span, the Pentagon’s Top 5 contractors got twice as much money as the entire U.S. government spent on diplomacy and international assistance.

National-security spending — not including inflation — has nearly doubled since 2000, rising from $531 billion to just over $1 trillion.

The number of defense-industry lobbyists pleading for bigger Pentagon budgets grew from 730 in 2020 to 950 in 2024, an increase of 30% (the nation’s population rose by 3% over that same period).

These stupefying statistics are contained in a July 8 report (PDF) from Brown University’s Costs of War project and the Quincy Institute for Responsible Statecraft. “The current [U.S.] cover-the-globe strategy, which stresses a quest for military dominance and the ability to intervene anywhere on the globe in short order — has not served the U.S. well in this century,” authors William D. Hartung and Stephen N. Semler write (PDF). “The question is whether the U.S. can have a reasoned national debate on a new defense strategy that is not distorted by the influence of the wealthy weapons sector.”

The question answers itself: So long as the U.S. promotes Potemkin Pentagon policies that aim to do everything everywhere, it will continue to be a self-licking ice cream cone that can’t be sated.”

BUT IT’S STILL NOT ENOUGH

The Pentagon rolls out its annual wish lists

No matter how much money the U.S. spends on national security — it’s slated to clear that once-impossible-but-now-inevitable trillion-dollar hurdle in 2026 — it’s never enough. That’s why the Pentagon’s latest flock of what it calls “unfunded priorities lists” landed as predictably as the swallows of Capistrano on Capitol Hill last week.

Widely-known as “wish lists” everywhere except inside the Pentagon and congressional offices — where the good-grift charade continues — the rosters have something for everyone. Except taxpayers. Originally voluntary, and rarely used, they became just another legally-required line item in the Pentagon budget after then-Defense Secretary Robert Gates tried to kill them.

The Pentagon’s wish lists for 2026 include nearly $50 billion in requests from the services and military commands responsible for various slices of the globe. According to Breaking Defense, the not-public-but-always-leaked lists include:

— $16 billion for the Air Force and its subordinate Space Force, including $4 billion for more missiles.

—$7.4 billionfor the Navy, including $2.2 billion for more munitions and the factories needed to produce them, as well as $1.4 billion for a next-generation fighter even as uncertainty grows about its future.

— $4.3 billion for the Army, largely for more bullets of all kinds.

— $2.4 billion for the National Guard, much of it dedicated to more F-35 and F-15 fighters.

Nearly $12 billion more for the U.S. Indo-Pacific Command, including $4.4 billion for drones.

Lawmakers, seeing themselves as the true civilian stewards of the U.S. military — except when it comes to declaring war, of course — have simply mandated that the services produce such lists. They represent an end-run around the Defense Department’s civilian leadership, and bollix up whatever Pentagon efforts there are to build a balanced force. It’s a crude way to demonstrate their porcine-overlord status, and their fealty to home-state defense contractors.

The Bunker - The Numbers Tell The Story

ABOUT THE AUTHOR:

Mark Thompson has been covering U.S. national security for four decades, including from 1994 to 2016 as senior correspondent and deputy Washington bureau chief at TIME Magazine.Mark worked at TIME from 1994 to 2016. Before that, he covered military affairs for the late Knight-Ridder Newspapers (including the Detroit Free Press, the Miami Herald, the Philadelphia Inquirer, and the San Jose Mercury-News) for eight years.Prior to Knight-Ridder, Mark reported from Washington for the Fort Worth Star-Telegram for seven years. During that time, he and his paper were awarded the 1985 Pulitzer Prize for Public Service for a series of articles on an uncorrected design flaw aboard Fort Worth-built Bell helicopters that had killed nearly 250 U.S. servicemen.

"THE DEBT BOMB" More Spending on Interest Than On National Defense

 

CLICK IMAGE TO ENLARGE

" THE PROJECT ON GOVERNMENT OVERSIGHT - THE BUNKER" By Mark Thompson

"Spending like a drunken sailor threatens national security. For the first time in U.S. history: the nation spent more money buying nothing ($950 billion in interest) than it did on its military ($826 billion)."

__________________________________________________________________________________________________

"There it was October 8, buried discreetly on page 5 (PDF) of yet another eye-glazer from the Congressional Budget Office. In 2023, the nation spent $776 billion on its military — which buys something — and $710 billion in net interest on the public debt — which buys nothing. But in fiscal 2024, which ended September 30, those numbers flipped.

The Bunker has been decrying waste, fraud, and abuse in the U.S. military for nearly a half-century. But everyone’s three favorite whipping boys when it comes to Pentagon spending pale alongside the nearly trillion dollars we spent on interest last year. That’s money we paid to borrowers, so we didn’t have to make the tough decisions required to live within our means.

We have simply opted to kick this annual binge-spending, now approaching $36 trillion, down a generation or two so our kids and grandkids can foot the bill. When The Bunker arrived in D.C. to cover the Pentagon in 1979, the national debt was $805 billion. That’s just over 2% of what it is today. OK, Boomers. Good job! According to CBO, interest paid on the national debt grew by a stunning 34% ($240 billion) from 2023 to 2024 (PDF). Those are numbers that would make an F-35 blush.

Congress approves all government spending, but more than half of the annual budget goes to mandatory programs like Social Security and Medicare locked (for now) into law. The rest — so-called discretionary spending, appropriated annually — is basically split between the Pentagon and everything else the federal government does (education, transportation, justice, the environment, etc.). But as that mandatory spending — and interest on the national debt — grows, there’s less left over for the Pentagon and all that other stuff. Both categories need deep cuts to avert financial disaster.

Neither presidential candidate is riding to the rescue. Vice President Harris’s economic proposals could add as much as $8 trillion to the national debt over the coming decade, according to an October 7 assessment by the non-partisan Committee for a Responsible Federal Budget. Former President Trump’s fiscal blueprints, the group projected, could add $15 trillion.

Such profligacy eventually will do more harm to U.S. national security than any foreign foe ever could." 

POGO - The Bunker: Debt Bomb

Pulitzer Prize-winner Mark Thompson has been covering the Pentagon for more than 45 years.

COVID-19′s Fiscal Impact Might Ironically Strengthen National Defense

Image: Aberdenvfw.org

"DEFENSE NEWS ” By Lt. Col. Daniel L. Davis (ret.)

“Ending unnecessary forever wars, we could save more than $100 billion a year without cutting anything else in the defense budget.

We could redirect much more focus and resources on training and professional education, which would enable the armed forces to better deter — and if necessary defeat — major opponents. “

___________________________________________________________________________

“With an already massive national debt of $27 trillion, the combination of government spending and the loss of tax revenue is going to place serious pressure on future budgets for years to come.

As Congress and the White House cope with the economic fallout of the coronavirus pandemic by passing multitrillion-dollar stimulus packages, many are already grappling with the thorny problem of how we’ll eventually pay for the spike in spending. While no one ever wants to be a bill-payer, the defense industry is predictably first out of the blocks seeking immunity from any future cuts by trotting out its favorite weapon: fear.

Don’t be fooled by this tried-and-true tactic: The claim that any cuts to the defense budget will imperil defense is gravely mistaken. Without changes in the foreign policy we enact — and a rational reform of how we spend our defense dollars — our national security will continue to decay.

First, the cold, hard economic reality: The damage done to our economy by the necessary measures federal and state governments have enacted to safeguard American lives has been breathtaking in its scope and severity. Some estimates suggest gross domestic product will contract this year by as much as 40 percent, and unemployment could balloon to 30 percent. To help stem the tide, Congress has already passed a $2 trillion stimulus package, with more yet to come.

Bills will eventually have to be paid, and no area of the budget will be free from scrutiny — including defense.

Though the Department of Defense should be funded to whatever level is required to ensure the ability of our armed forces to deter and, if necessary defeat any adversary that may seek to deprive our citizens of life or liberty, not all aspects of the status quo are helping keep us safe.

Retired Army Lt. Gen. Thomas Spoehr recently co-wrote an article arguing that regardless of the financial strain imposed by the coronavirus stimulus bills, defense spending should be exempted. The reason, he says, is that the military today remains in a yearslong “free-fall” which “can’t be fixed in a year or even four.”

The last thing America’s leaders should do when responding to the financial constraints imposed by the coronavirus, he concludes, is to “weaken the military.” His implications that military readiness has been in free fall because of inadequate spending and that any reduction in defense spending weakens the military are beliefs held by many — and are inaccurate for several key reasons. Clinging to forever wars might be the biggest.

The DoD has to spend hundreds of billions annually to fight, maintain and prepare for subsequent deployments fighting the forever wars we’ve been waging for the better part of two decades.

Congress has allocated more than $2 trillion in direct outlays since 9/11 to fight so-called emergency requirements of overseas contingency operations, or OCO, and we have incurred an additional $4 trillion in associated and long-term costs. For fiscal 2020 alone, we will spend upward of an additional $137 billion on these OCO wars.

What is critical to understand, however, is that the perpetual continuation of these wars not only fails to improve our security — these fights negatively impact our ability to focus on and prepare for fighting adversaries that could one day pose an existential threat to us. The implications of this reality are considerable — and potential remedies can be of great help to our country.

“With prudent and necessary reforms in how we manage research and development, procurement, and acquisition, and in shedding unnecessary or outdated expenditures, tens of billions of additional savings could be realized.”

Perhaps more importantly we could redirect much more focus and resources on training and professional education, which would enable the armed forces to better deter — and if necessary defeat — major opponents. Those two major changes alone would end the weakening of our military and materially contribute to strengthening its key capabilities — while lessening pressure on the federal budget.

The financial pressures this coronavirus is already placing on our nation’s finances is real, and its effects will be felt for years. We will have to make hard decisions in the days ahead on where we spend our limited resources. If we are wise, we can reduce how much we spend on defense while simultaneously increasing our military power.”

https://www.defensenews.com/opinion/commentary/2020/04/22/covid-19s-fiscal-impact-might-ironically-strengthen-national-defense/

ABOUT THE AUTHOR:

Lt. Col. Danel L. Davis (Ret)

Retired U.S. Army Lt. Col. Daniel L. Davis is a senior fellow for Defense Priorities. He retired from the Army in 2015 after 21 years in service that included four combat deployments.

Cameo Presentation - Rose Colored Glasses Satire by Tony Rose

With the present day emphasis on the National Debt and Health Care, it seemed only fitting to publish a cameo of the apparently ageless satire by Tony Rose below:

"Economists Coin New Term for Study of Deficit Spending"

"Micro-Electronic Medication of Your Years"

(Please click on image or title banner above to enlarge)

PLEASE CLICK IMAGE OT TITLE BANNER ABOVE TO ENLARGE

HAVE YOU EVER WONDERED WHY THE US HAS A $31 TRILLION NATIONAL DEBT?

DEPARTMENT OF HOMELAND SECURITY ORGANIZATION CHART
PLEASE CLICK ON IMAGE TO ENLARGE

"WE THE PEOPLE" AND A FINANCIAL BAROMETER OF THE FUTURE

The link below is the official US Government spending web site, updated to reflect the current 2010 annual trend:

USA Spending



Here is a quote from the following link on the national debt:

The Financial Position of the United States

"Foreigners own more than $15.6 trillion of US financial assets, or 107% of GDP. Americans own $11.5 trillion of foreign assets, approximately 78.9% of US GDP.

Foreign holdings of US assets are concentrated in debt. Americans own more foreign equity and foreign direct investment than foreigners own in the United States, but foreigners hold nearly four times as much US debt as Americans hold in foreign debt.

15.2% of all US debt is owed to foreigners. Of the $7.9 trillion Americans owe to foreigners, $3.9 trillion is owed by the federal government. 48% of US treasury securities are held by foreigners.Foreigners hold $1.28 trillion in agency- and government sponsored enterprise-backed securities, and another $2.33 trillion in US corporate bonds.

Foreigners hold 24% of domestic corporate debt and 17% of domestic corporate equity."

You may also be interested in the following link:

http://www.stratfor.com/analysis/20100830_china_rumors_central_bank_chiefs_defection?utm_source=GWeekly&utm_medium=email&utm_campaign=100830&utm_content=GIRimage&elq=9f381a1f851341cfa81049351b5b498d

It reads in part:


"Rumors have been circulating in China that People’s Bank of China (PBC) Gov. Zhou Xiaochuan may have left the country. The rumors appear to have started following reports on Aug. 28 which cited Ming Pao, a Hong Kong-based news agency, saying that because of an approximately $430 billion loss on U.S. Treasury bonds, the Chinese government may punish some individuals within PBC, including Zhou. Although Ming Pao on Aug. 30 published a report on its website indicating that the prior report was fabricated by a mainland news site that had attributed the false information to Ming Pao, rumors of Zhou’s defection have spread around China intensively, and Zhou’s name has been blocked from Internet search engines in China."

Keep an eye on where "We the Peoples" money is being spent and how much cumulative national debt We the People are carrying to gauge the future of the great democratic experience in the United States.

TWO COLLAPSING TOWERS - WALL STREET AND THE MILITARY INDUSTRIAL COMPLEX

While we observe Wall Street go through an implosion and our lawmakers mortgage the future of America with the associated bailout, let us keep an eye on another adjacent and related tower with a weak foundation, teetering dangerously in the wind. The Military Industrial Complex (MIC) is also subject to bad decision-making by misinformed and manipulated government officials.

HISTORY

Congress has just funded the MIC at only slightly less than the 700B now necessary to bail out the US Financial catastrophe. The MIC is monumentally dangerous and has led our country into a continuing series of costly, fraudulent wars since Korea. Eisenhower forecasted the danger in his departing speech:

http://www.youtube.com/watch?v=8y06NSBBRtY

The most recent MIC adventure is being fought in the memory of 3,000 dead civilians attacked by a terrorist the US created by not leaving the Middle East after the first Gulf War. That excursion has killed thousands of our finest youth and maimed the lives of countless others. The average American will pay for this ruin in decades to come through taxes supporting hospital care, social services and veteran's homes.

HOW DO I KNOW?

I am a 2 tour Vietnam Veteran who recently retired after 36 misguided years working in the defense industrial complex on many of the weapons systems being used by our forces as we speak. Given a clearly defined mission and the best armaments and systems in the world, I believed that another Vietnam could be avoided for the American Soldier.

I was wrong.

I live in a Veteran's home, having recently undergone treatment through the VA for PTSD and Depression, long overdue some 40 years after the Tet Offensive that cap stoned my military 2nd tour in Southeast Asia with a lifetime of illness:

http://rosecoveredglasses.blogspot.com/2006/11/odyssey-of-armaments.html

Politicians make no difference. I saw this on a daily basis from inside the MIC.

The chart at this posting illustrates the historical % of our national debt to our GDP. That % is on a precipitous rise with the current US warfare mentality and imminent Wall Street bailout:

PLEASE CLICK ON IMAGES OR DOWNLOAD TO ENLARGE

Other countries will not tolerate our on-going presence, decreasing value on world market and shortsighted vision, based exclusively on stockholder profits. The Wall Street financial tower has fallen. The MIC will be next.

ABOUT THE MILITARY INDUSTRIAL COMPLEX

It is corrupt and driven by corporate influence:

http://www.playboy.com/magazine/features/lockheed/index.html

http://www.vanityfair.com/politics/features/2007/03/spyagency200703

http://www.vanityfair.com/politics/features/2007/11/halliburton200711

It is broken and riddled with incompetence:

http://rosecoveredglasses.blogspot.com/2008/04/us-federal-government-procurement.html

http://rosecoveredglasses.blogspot.com/2007/01/what-american-public-must-know-about.html

THE COLLAPSE

The MIC, like Wall Street, will go bust and then be re-scaled, fixed and re-designed to run efficiently and prudently, just like any other big machine that runs poorly or becomes obsolete or dangerous. The situation will right itself through yet another trauma.

A government ENRON is on the horizon, with an associated house cleaning. The next president will come and go along with his appointees and politicos. They will try to fix the financial mess and become pawns of corporate America in widening our military influence attempting to mend corporate bank accounts. But the MIC tower will implode as well - the next big event in government you will watch is the collapse of that establishment.

HOPE

Non-profit visionaries and small business know the course that must be taken and they are taking it:

http://techinsider.nextgov.com/2008/04/einstein.php

These "Action People" are not in our government. They are more practical than that. They are the communicators, the true venture capitalists setting up worldwide non-profit foundations (Gates and Buffet for example). They are like the Bill Moyers, perpetually exposing waste fraud and abuse and then going one step further to fix it from the inside. They are the young inspirational members of the small business base in this country that will be tasked with picking up the pieces and re-inventing the future so our government can follow along.

As a volunteer counselor, handling 30 cases a week through SCORE I see every form of unique small business inventiveness imaginable - efficiently created, using technology to the max and not seeking financing to the hilt - only the opportunity to succeed:

http://www.smalltofeds.blogspot.com/

http://www.score.org/


The US GDP is still the largest in the world.

Our high technology cannot be matched.

We have enough weapons systems and science to beat all our competitors and solve our problems.

We need to come home.