Medicare, Social Security, and Pentagon Insolvency

By Edward Herman, www.ZMag.org

July 2009

The media and pundits are once again worried that the trust funds for Medicare and Social Security might run out of money and fall into a state of insolvency (see Robert Pear, "Recession Adds to Fiscal Peril of U.S. Benefits," NYT, May 13, 2009). There have been regular little crises of fear that these funds face a financial debacle and billionaire former investment banker Pete Peterson has made a late-life work of, and plugged lots of dollars into, a campaign to inject fear and create the moral environment for cutbacks in, and possible privatization of, Social Security. In fact, while Medicare does present serious problems, mainly because of the absence of single payer and cost controls in the medical system, Social Security won't face even minor funding problems for decades. The periodic hysteria reflects establishment hostility to a well-working government system that services ordinary people.

The Pentagon has regular gigantic overruns in its payments for weapons systems and fraud and waste are endemic. But the Pentagon is never threatened with "insolvency." Its overruns and waste are simply passed on to taxpayers. The supine media, while occasionally chiding the Pentagon for, say, "running almost $300 billion over estimates and averaging 22 months behind delivery" never talk about any crisis in the funding of overkill, military boondoggles, and waste (editorial, "Military-Industrial Redux," NYT, May 22, 2009). In a 2005 ZNet blog, writer David Peterson imagined a situation where the Pentagon was funded by worker taxes and implicitly by a taxpayer-based trust fund, which it threatened to exceed drastically, putting the Pentagon on the road to bankruptcy. Thus, "Unfortunately, the ratio of workers-paying-taxes to wars-being-waged is falling steadily. By the year 2018, it is projected that the Department's future expenditures will begin to exceed its revenues. What this means is that by 2018, the Department will go into the red—spending more on waging wars than it receives in taxes. After that, the shortfalls will grow larger until 2042, when the whole Department of Defense will go bankrupt. By the time today's workers in their mid-20s begin to retire, we expect to be fighting wars on as many as six different continents. If we do not fix the Department's funding mechanism, it will not be able to pay for the wars we promise to wage on behalf of our children and our grandchildren" ("Social Contracts, American-Style," ZNet, March 13, 2005).

Laughable, isn't it? We know that in the real world the taxpayer funds the Pentagon on an open-ended basis without any trust funds or limits beyond what logrolling can produce. After all, it is protecting our "national security," using the phrase with its usual infinite elasticity to cover anything the Pentagon, its contractors, their lobbyists, and the congressional servants of the military-industrial complex want. We live in what Ralph Lapp called a "weapons culture," which is at quite a distance from a democratic or humane culture.

President Obama has had to adapt to these structural biases. Despite the economic crisis, he isn't proposing to end the Iraq and Afghan-Pakistan wars and he isn't cutting the military budget, for which he proposes a $30 billion increase in the next fiscal year. To do otherwise would be to vindicate the charge that the Democrats are weak on national security, a chronic charge that the Democrats must constantly deny and disprove in the weapons culture. It was interesting to read how Defense Secretary Gates has been debating which weapons programs might have to be sacrificed or cut back to keep the military budget within small growth limits (e.g., Christopher Drew and Elisabeth Bumiller, "Military Budget Reflects a Shift in U.S. Strategy," NYT, April 6, 2009). This is Pentagon business, not the business of elected officials and leaders, who might debate and veto funds for foreclosure victims or other civil society programs, but in a long tradition the military budget is out of bounds.

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