Blood and treasure: the U.S. debt and its implications for national defense and security

Abstract

Is the current budget and debt of the United States a concern to its national defense Does debt held by foreign nations, particularly China, give them soft power over the United States The current national deficit is more than $1.3 trillion dollars each year with the national public debt just over $16 trillion. Congress and the greater civilian population are calling for dramatic cuts to the Department of Defense in order to balance the budgetbut the issue is more complicated. Accounting for only 3.7 percent of the FY2012 budget, reducing the DoD will reduce capabilities within the military but only reduce the deficit by a mere $50 billion a yearless than five percent of the overall deficit. By law, the government must fund such entitlements as Social Security, Medicare, and Medicaid, totaling almost $2.2 trillion (and increasing) per year. The governments receipts amount to $2.5 trillion per year, leaving only $300 billion for discretionary spending. This sum is inadequate to the demands upon it. For example, Department of Defense (DoD) alone currently has an annual base budget of just more than $700 billion. In other words, the national budget cannot balance without changes in law that would reduce outlays for entitlements. Entitlements account for 10 percent of the current federal budgetand are expected to engulf the entire federal budget within the next 40 years. Only if Congress changes the laws in regards to entitlementsand not simply the DoD budgetwill the federal deficit ever extinguish. But with the DoD taking the brunt of budget cut rhetoric, the fate of the defense lies with the current national debt. This study will examine the aspects of the U.S. national debt and how that debt influences the power of the military, the relationship with the rising Chinese, and the nations ability to protect itself financially.