A U.S. Army infantryman waits atop an M2 Bradley fighting vehicle for the start of a live fire training exercise at Presidenski Range in Trzebian, Poland, March 26, 2018. (Spc. Dustin Biven/Army)
US President Donald Trump called for defense spending cuts during a Cabinet meeting on October 17th. In fact, he asked all cabinet members to institute budget cuts of at least 5% for their departments in 2019.
Speaking to the press prior to the Cabinet meeting, Trump spoke of his plan to ask every secretary to make a cut of 5% “if not more” in 2019. This is a result of data by the Treasury Department, which was released on October 15th that showed the US budget deficit rose to its highest level since 2012.
Trump added the Defense Department’s budget “will probably be $700 billion,” down from its current funding at $716 billion.
“Get rid of the fat. Get rid of the waste,” Trump was cited as having said during the meeting by the WSJ during. “It’ll have a huge impact.”
Reporters specifically asked him for Department of Defense funding and he said that they wouldn’t be exempt. He said that the Pentagon’s budget “will probably be $700 billion” for fiscal year 2020, nothing that “because now that we have our military taken care of, we have our law enforcement taken care of, we can do things that we really weren’t in a position to do when I first came.”
As reported by Defense News:
“The Pentagon’s budget for FY19 was $686.1 billion, with overall national security funding set at $716 billion. Additionally, a drop from $716 billion to $700 billion is only a 2.23 percent drop; a full 5 percent cut would put national security spending to $680, with the Pentagon’s total at $651.7 billion.”
A decrease of the Pentagon budget to $700 billion would, in fact, be a funding increase. Trump’s comments, however, indicated that he is referring to a drop from the larger $716 billion sum.
“It was at 520 a very short while ago. And the reason I brought it up to 700 and then 716 was to build new ships,” Trump said. “We’re building new, incredible submarines, the finest in the world, most powerful in the world, anywhere, ever. We’re doing things that we have never done on this scale. So that included a lot of rebuilding of our military. So despite that, I’m going to keep that at $700 billion defense. OK?”
Defense News requested a clarification on Trump’s comments from a member of the National Security member, but it was not returned.
Hot take from @SeamusDaniels on Trumps defense budget remarks earlier today. Quick summary: it's hard to know what the president meant. https://t.co/PSZaD2b4m3
— Todd Harrison (@ToddHarrisonDC) October 17, 2018
Trump’s comments come at a time when the Pentagon has been planning to invest in capabilities under the National Defense Strategy. Department of Defense officials have been clear about the need of a 2 to 3% growth above inflation to fund requirements, but while also being able to invest in manpower and new technologies. According to Defense News, there is a sense that Fiscal Year 2020 may only come with an inflation bump.
“This two-year plus-up, where we’ve seen some gains, if that isn’t sustained in 2020 or beyond, you’re going to lose whatever the goodness was that came from last year and this year,” Dakota Wood, an analyst with The Heritage Foundation, was cited by Defense News.
“FY19 is now the ceiling. It’s not the floor to build from,” Wood said. “What folks on the Hill and [the Office of Management and Budget] and others are looking at is the domestic political situation. … To argue for even more spending on defense is just politically not a real, viable prospect. Because you’re talking about a future danger.”
Trump also blamed Democrats, saying that they “forced him” to spend more than he wanted to on domestic programs in order to secure the increase in Defense Department funding.
“I had to do that in order to get the $700 and the $716 billion, those numbers have never been heard of before,” Trump said. “I had to give the Democrats, I call it ‘waste money,’ and things that I would have approved, but we had to do that in order to get the votes because we don’t have enough Republican votes to do this without them.”
The fact of the matter is, despite the 5% or currently lower decrease in funding, the FY2019 budget is the largest ever. The FY2020 budget promises to be somewhat lower, however that is yet to be seen since Trump is expected to present his budget proposal in early 2019.
Thus, the move to decrease the budget is a bit of a misdirection. The budget was over-all increased by an amount larger than 5% from the previous year and the 5% reduction leaves it at an amount that is still higher than previous budgets. However, it leaves voters in the incoming November 4th mid-term elections that defense spending was cut, among other “needless projects.”
Russia and China should display different weapons systems be they real or fake. We will spend an extra trillion $ trying to catch up. One day and see that we became the USSR 2.0 but it will be too late. We we deserve our fate.
USA will newer become USSR 2.0. Soviets were too moral and in general too good for US to become anywhere near as good. Soviets were helping and supporting their vassal states US is only exploiting their vassals…….
no it become something much worst
The End Times for the US Empire will rip apart all the money cartels I would think.
Dying Empires always create animosity at the top.
I was thinking exactly the same thing as I read the article :)
Almost a trillion dollar budget deficit for 2019, and trillion dollar plus deficits for the foreseeable future, in spite of a “booming” economy.
Always nice when you can print or type the money you need. The US dollar as a world currency is ending. Tell me again why we need a corrupt and immoral federal government and why We should continue to support the evil rich?
The printing has its costs, 3.25% for a 10 year Tbill for now, as more interest rate increases are ahead. The question is who will buy all these trillions of Tbills now that China is in a trade war with the Us? The rich benefitted from the printing of money to facilitate quantitative easings for the last 8 years, the stock market benefitted, the big banks et all.
Don’t worry they’ll make something up. They always do. Until……
The next question is who will supply the short term revolving credit needed to pay off the already circulating Tbills as they mature.
US paid out 400 billion just in finance charges last year, over $3000 for every full time worker in the country. And this didn’t touch the principal. Am not sure what I should be converting my FRNs to as a hedge, cases of Johnny Walker maybe? Even gold will have few takers domestically. Foreign currencies to be folded back into real-estate or Federal and State holdings or services all available at firesale prices.
And this without a war.
The FED can always step in and buy maturing T bills, with money they create from thin air. Of course all this money created from thin air has to make sense on the books, it would look bad if the FED buys all maturing debt. I do not know for sure if the FED would do that, or allow financial markets correct themselves on their own. The FED and ECB stated that they will not infuse liquidity if stock markets start tumbling.
IIRC the central bank in Japan has done just this, and the FED already has a couple trillion it could hold indefinitely. But you’re right – it has to make sense in some way for folks to still want Tbills knowing the govt cannot actually repay them and still won’t restrain its spending.
Ultimately the FED will have to buy it up to ensure the value of their notes, but they aren’t going to do that without forced auctioning of what remains of the Commons still held by the federal government – land, mineral rights, services – the great sell off is coming soon, and with the blessing of the entire federal government.
The Fed’s job is to provide financial stability, not gobble up assets held by the government and banks…or whoever else. The Fed is a firewall for execesses promulgated by banks, stock market or irresponsible government spending.
It is not really gobbling up, the US govt would simply be liquidating its holdings to make payments on its debt service in order to support more deficit spending. In good faith, the FED could then “retire” some of the Treasuries they currently hold directly and or purchase and retire some privately held Tbills.
I don’t know where this leaves the Social Security treasuries as they are non-tradeable. If the govt were to miss payments the value of the FRN would drop like a stone, the FED pretty much has to intervene at some point but after what other conditions come about first?
My speculation as to why there isn’t more urgency to reduce the debt – many ideologues would like nothing more than to see all govt holdings privatized, something the general population would never support unless it was pitched as the only means of preserving the dollar’s value (and folk’s retirement savings, real estate etc). An unpayable debt is as profitable to the right people as an unending/unwinnable war. And the current debt is already unpayable…
I am not really sure of the extent of government holdings and their perceived value to be used to pay some of the debt, trillion dollar deficits are projected to be the norm through 2028, and beyond that the deficits can be higher eating up a larger portion of the budget to service the interest payments. What is inherently weak is that the US economy and social programs need this infusion of cash to maintain a GDP growth, without a sound industrial and taxation base. The FED recycling Tbills, toxic investments and selling government assets is an internal matter, however, the Fed’s ability to print money is predicated on the fact that US dollar is the worlds reserve currency, always necessitating more dollars as global trade volume increases. With the advent of trade wars, and the de dollarization process enacted by Russia and China and other countries that are subject to sanctions (through local currencies swaps, barter or yuan or euro) the need for dollars on global markets will diminish, curtailing Fed’s ability to print money. And the current policy enacted by Trump to use the dollar as a weapon against the countries that do not agree with his diktats, is a short term emotional triumphal euphoria that will have severe consequences in th future, as more countries will not use the dollar anymore.
The US has a cycle of sucking up wealth from the world. First it offers cheap US dollars to countries, which the fools take. Once they have enough countries indebted, they raise interest rates and reduce the number of dollars available, until the borrower can no longer pay the interest. Then they crash the victims currency and force them to hand over ownership of their power stations oil wells etc.
I once read a speech by a Chinese general where he described in great detail how the US milks other countries and keeps them poor, it’s a 10 year cycle.
They are lending to themselves? Here’s how they do it, they give money to the Department of Education, then get the Department to invest some of their budget in Treasuries. That’s why the deficit is growing so quickly.
But they have many tricks up their sleeve. By raising interest rates, it has caused a stock market decline. So when people sell their stocks, they buy “safe” treasuries. Right now 10 year treasuries are back down to 3.11%.
However, it seems that direct buyers of treasuries, that is foreign governments and big banks etc, have stopped buying. Now the US is getting government departments to buy its own debt. A massive crash could occur any day.
Some lap dog governments are still buying Tbills, in an environment with increasing interest rates, buying bonds or Tbills is a loosing proposition since the value of the bonds goes down to make up for the higher interest yield. You have bought a $1000 bond coupon value paying 2.5% interest, months or years later as interest rates rise, let’s say 1% the trading value of the bond would trade around $990 or less, when dealing with 100 billion investment the losses are more significant.
What a bunch of BS. As if you can believe any number or statistic that comes out of my governments mouth. The military is just a kickback scheme for the rich. The honorable scam. Still waiting for affordable quality health care and living wages for a start.
Move to Israel, preferably to the OT. Health care is universal and with some housing subsidies you’ll live better than in the States.
To be blunt, Israel and the US by their actions wont be around much longer in their present state.
Of course – is all ‘exported public welfare’, all subsidized by the US taxpayer, $3 billion in annual cash, and far more in long term military hardware ‘aid’ packages. Israel is by far the largest recipient of US foreign aid since 1945.
And yet 6.5 TRILLION missing from the DofD, with an employee admitting to cooking up fraudulent numbers for YEARS. THIS IS THEFT, while our national security is compromised lack of innovation, waste abuse and fraud . Recent grounding of F-35 CRAP just one example
I would rather see the American DOD budget pilfered by the super rich than to actually create US weapons that are efficient :)
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