infrastructure investment, new technology, education, and strengthened rule of law. Advocates argue that low-income support programs are not only appropriately compassionate but maintain health and help develop productive skills. When much of the federal government was shut down by a funding crisis in the mid-1990s, many Americans felt inconvenienced or even seriously hurt by the absence of routine services they previously took for granted—such as the processing of passports, and open and staffed national parks.

On the defense side, differences of opinion as to the budgetary implications of true security are often intense. We do not know when hostilities may emerge or what future threats will materialize. At the most aggregate level, defense spending is much like purchasing insurance; there is always uncertainty as to how much is enough (perhaps more so than in other parts of the budget), especially given the costs. This uncertainty is exacerbated because some defense spending—such as that for major new weapons systems—is often supported (at times against the best advice of military and civilian experts) because it serves a domestic constituency whose jobs depend on it.2

But the issues also run to a deeper level of detail. Programs that would provide defense against a national adversary in a conventional kind of conflict may or may not prove useful in an asymmetric war against terrorism. Specific policies, such as the war in Iraq, fuel intense arguments over spending priorities. Questions regarding the allocation of a given level of spending among new hardware, maintenance and supplies, troop levels, and human resources can be controversial. In this chapter, we present a wide range of alternative levels of defense spending, reflecting not only conflicting views about the best use of defense resources, but also fundamental differences regarding the role of the United States in preserving world peace.

Defense and other domestic spending is not projected to grow as a share of GDP under the study baseline. Indeed, it is projected to fall significantly as a percentage of GDP over the next decade before stabilizing at a level more than 2 percentage points lower than in 2008. Nevertheless, it can be argued that further spending reductions (relative to the baseline) are appropriate. To the extent that fiscal sustainability is addressed through spending reductions, finding all of the needed savings in health care and Social Security will be difficult and, in any event, may take some considerable time to achieve. Savings in defense and other domestic programs may therefore be necessary. Putting all spending programs on the table is also consistent with the notion of “shared sacrifice,” which may be an important political element in fashioning a responsible fiscal program for the future. Some may also assert that the growth in the large entitlement programs reflects such urgent needs that cutting other areas of the budget, along with raising taxes, is necessary to accommodate it.

The counterargument is that cutbacks in defense and other domestic



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