Hagel’s choice

As spending on healthcare rises, the US will be forced to cut back on defence
David Brooks

Americans don't particularly like government, but they do want government to subsidise their healthcare. They believe that healthcare spending improves their lives more than any other public good. In a Quinnipiac poll, typical of many others, Americans opposed any cuts to Medicare by a margin of 70 per cent to 25 per cent.

In a democracy, voters get what they want, so the line tracing federal healthcare spending looks like the slope of a jet taking off from LaGuardia. Medicare spending is set to nearly double over the next decade. This is the crucial element driving all federal spending over the next few decades and pushing federal debt to about 250 per cent of GDP in 30 years. There are no conceivable tax increases that can keep up with this spending rise.

As a result, healthcare spending, which people really apprecia-te, is squeezing out all other spending, which they value far less. Spending on domestic programmes — for education, science, infrastructure and poverty relief — has already faced the squeeze and will take a huge hit in the years ahead. President Obama excoriated Paul Ryan for offering a budget that would cut spending on domestic programmes from its historical norm of 3 or 4 per cent of GDP all the way back to 1.8 per cent. But the Obama budget is the Ryan budget. According to the Office of Management and Budget, Obama will cut domestic discretionary spending back to 1.8 per cent of GDP in six years.

So far, defence budgets have not been squeezed by the Medicare vise. But that is about to change. Oswald Spengler didn't get much right, but he was certainly correct when he told European leaders that they could either be global military powers or pay for their welfare states, but they couldn't do both.

... contd.

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