Will we have the resources to fight?

Gretchen Hamel Executive Director, Public Notice
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Memorial Day is an occasion to remember all of the brave men and women who gave their lives for our country. Indeed, America has a proud history of defending freedom the world over. Yet this weekend, Americans should also consider the future. Will we have the resources to fight the next time our country is called to duty?

Fighting a war requires more than just heroes, of which the United States has an abundance. It also requires money and resources. During war times, the government steps up spending and consumes more of the economy. Yet today, our government is expanding not in the cause of our nation’s defense, but just because the government is assuming responsibilities that were once left to the people. This growth of government means we will have less to invest in the military if we do confront a major future conflict.

Consider this history: In 1930, government spending accounted for just 3.4 percent of GDP. During that decade, when the country faced the Great Depression and President Franklin Roosevelt rapidly expanded the federal government, spending grew to account for 9.8 percent of the economy. It’s worth noting that during that decade the economy actually shrank: in 1930 GDP was $97.4 billion, while in 1940, GDP was just $96.8, having dipped all the way down to $57.6 billion in 1933.

Yet shortly thereafter, as America committed to entering and winning World War II, government spending exploded. The economy grew from less than one hundred billion in 1940 to $221.4 by 1945—that’s more than doubling in just five years—but government grew even more rapidly. Government went from consuming less than ten percent of the economy in 1940 to 43.6 percent in 1943, a level it stayed at until the war’s end in 1945.

After World War II, government appropriately contracted, though it never returned to its pre-war or pre-depression level. By 1950, government accounted for 15.6 percent of GDP. It slowly rose during the next decades. Since that time spending has hovered around 20 percent of GDP, rising slightly above that level during the 1980s in response to the Cold War, and falling below 20 percent for most of the last two decades.

Today, Washington is permanently expanding the government’s share of the economy. Government’s spending jumped to 24.7 in 2009 in reaction to the financial crisis and economic downturn. Yet that financial crisis can’t explain why the Congressional Budget Office estimates that in 2020, if the president’s current budget proposal becomes law, the federal government will still consume 24.1 percent of GDP.

These estimates are likely to understand the severity of the crisis we face. Consider that government spending per household doubled during the past 10 years, and is on course to double again in the next 10 years. As a result, each American family’s share of the debt will balloon from about $115,000 today to nearly $200,000 in ten years. By that point our national debt will exceed $20 trillion and interest payments to service our debt will be four times higher than they are today.

In 10 years, interest payments and entitlement programs alone will take up 90 percent of the federal government’s revenue. How will we pay for our military? What will be left to spend if disaster strikes and our country is again called to fight for freedom?

Americans have always risen to challenges in the past, and our brave men and women in the armed services stand out in their service to our country. Today, we need Americans to rise to a challenge again. This time it’s not war, but the threat that we are permanently weakening our country by allowing Washington politicians to grow government and accumulate such a massive debt. We need an army of citizen soldiers to honor the men and women who have defended the country in the past to stand up and send a message to our elected representatives: we need to preserve and protect this country from a mountain of debt by cutting government spending now.

Gretchen Hamel is the executive director of Public Notice, a independent, bipartisan, non-profit organization dedicated to providing facts and insights on the effect public policy has on Americans’ financial well being. For more information please visit www.thepublicnotice.org.