FCNL Budget Analysis: It's How You Slice the Pie
3/9/2007
Why does FCNL's budget analysis differ from analyses by some other national
groups - and why do they differ from each other?
Among the handful of groups that monitor either the whole budget, or the
parts of the budget devoted to military spending, the figures and
percentages vary. The differences have to do with which specific programs
each group includes in a "slice" and how finely they cut each slice.
First - what pie? FCNL's analysis looks at the federal funds budget. This is
the overall budget, including discretionary, entitlement, and mandatory
spending, supported by general revenues, including income taxes and estate
and gift taxes. Because the FCNL analysis aims to illustrate how our income
dollars are spent, it does not include trust funds, such as Social Security
and Medicare, which have their own dedicated revenues.
Here's how that makes a difference: When president's proposal says that only
21% of the budget goes to the military, it includes Social Security and
Medicare in his definition of the budget. Because this analysis starts with
a bigger pie (called the "unified budget"), the military appears as a
relatively smaller slice, and social spending looks larger.
Conversely, some national organizations look only at "discretionary
spending" - the part of federal spending that Congress handles through
appropriations bills. In this case, they're starting with a smaller budget
pie than FCNL, so military spending appears to be a bigger slice.
But Congress has control over entitlement or "mandatory" spending as well as
discretionary spending. Changes can be (and often are) made in the budgets
for entitlement programs - they're just made through a different
congressional process. Whether discretionary or entitlement spending, the
money still comes out of your income tax dollars.
Second - what's included in the slice? When FCNL talks about military
spending, we talk about two slices - current military spending and spending
due to past wars and military activity. The first slice, current military
spending, is what most other analyses report on and what is most
understandable on Capitol Hill. On the Hill, decisions before Congress
generally focus on current military spending rather than the
already-accumulated responsibilities for past military spending. At the same
time, we recognize that the obligations of past wars are indeed a component
of military spending and should be taken into account when Congress
considers new or additional military commitments.
The Office of Management and Budget (OMB) looks only at current military
spending; some organizations add current and past military spending together
and present just one figure.
What's in the current military slice? FCNL's analysis of current military
spending includes the following:
. all spending for the Department of Defense (DOD).
. the "050 function," a categorizing number that OMB uses to identify
defense-related spending, regardless of the agency that spends the funds.
This category includes funding in many "independent agencies" as well some
parts of the Department of Homeland Security, parts of the Coast Guard, and
other bits and pieces sprinkled through the budget.
. responsibility for the Defense Department retirees as a military expense,
although it is not listed as such by OMB.
. portions of the foreign aid budget that are, in fact, military programs.
These include the foreign military assistance accounts and international
military training.
In the past, we included portions of the National Aeronautics and Space
Administration (NASA) budget. We no longer include that money because NASA
changed its arrangements with the Defense Department so that any work done
for the DOD by NASA is paid for out of the DOD's budget.
Most analyses of current military spending are similar. Differences arise in
how much is included from agencies that include some defense-related
functions. See "how finely do you slice it?" below.
What's in the "past military" slice? This slice includes primarily the
Veterans' Administration and a portion of the interest paid on the federal
debt.
This slice is where some of the big differences between FCNL's analysis and
those of other groups arise. FCNL calculates the portion of the debt due to
military spending by accumulating, year to year, the portion of each year's
budget that went to military spending. We don't assume that the deficit
would not have existed if military spending had been lower - we simply add
up how much was added to the debt each year and allocate the percentage that
was spent on the military that year. FCNL's current calculations show about
47% of the debt is due to past military spending.
How finely do you slice it? Some pies include some guesswork or assumptions
about future congressional behavior. Some of these guesses may be fairly
well rooted in recent experience and may be quite valid. FCNL has chosen to
report only what the president proposes for the upcoming fiscal year and
what was actually spent (outlays) in the past fiscal year.
We also examine closely agencies with a "mixed" mission and include only
specific military-related activities in our military numbers. For example,
eighty-five percent of the budget of the Department of Homeland Security is
allocated to immigration and border activities, the Federal Emergency
Management Agency (FEMA), and the non-military activities of the Coast Guard
(boat safety, rescues, etc.). While some of these activities are
police-related, we do not categorize them as military activities.
