SASC’s top Democrat: ‘Where will we get that money?’
WASHINGTON — The White House-backed tax plan is projected to increase the deficit by $1.4 trillion over the next decade, but Senate defense hawks are saying they’re not worried that steeper deficits will squeeze future military spending.
If they are wrong, and tax reform creates higher deficits with less headroom for defense spending, it could raise hurdles for the Trump administration’s ambitious plans for a military buildup to 355 ships, 1,200 Air Force fighter jets and thousands more Marines. Defense Secretary Jim Mattis has said in Capitol Hill testimony that those plans require sustained defense spending growth through 2023.
In a Senate floor speech Wednesday, the Senate Armed Services Committee’s top Democrat, Sen. Jack Reed, slammed the GOP as selling out the military to give a tax cut to the rich. Reed plans to offer a measure to retain the estate tax, which has historically been used to fund wars.
“We are committed — and we have done so on the Armed Services Committee — to increase the size of our military forces. Every additional 10,000 service members costs roughly $1.8 billion per year,” the lawmaker from Rhode Island said. “Where will we get that money when we’re going $1.5 trillion in debt to provide tax cuts for the wealthiest Americans?”
Reed, in the chorus of Democrats vocally opposing the bill, said the tax cuts overlook ongoing military operations in Iraq, Syria and Afghanistan, which will cost tens of billions of dollars over the coming years.
“Anyone who is voting for this bill is essentially saying: ‘You know, I’ll talk a good story about supporting national security, but when it comes down to the money, it’s going to go to the wealthiest Americans,’ ” Reed said.
On Capitol Hill this week, Republicans are working at breakneck speed to push an overhaul of the tax code by year’s end. A tax plan already passed in the House in a mostly party-line vote, and Senate leadership is working to unite around a bill as well.
With their slim majority in the Senate, Republicans cannot lose more than two votes, and several of them are on the fence — including Senate Armed Services Committee Chairman John McCain, R-Ariz. McCain was quoted in The New York Times this week as saying “a lot of things” concern him about the bill.
Last month, McCain dismissed the idea that tax cuts are at odds with future defense increases, suggesting readiness issues as well as recent deaths associated with them supersede the concerns of deficit hawks.
“They’re different issues,” McCain told reporters. “We have a military where we’re losing men and women’s lives because we haven’t funded their training and equipment. That has nothing to do with tax cuts. It has everything to do with the lives with the men and women in uniform — that we are responsible for their needless deaths.”
Three former defense secretaries who served under President Barack Obama — Leon Panetta, Chuck Hagel and Ash Carter — warned in a letter to lawmakers this month that the tax plan will squeeze military funding “for training, maintenance, force structure, flight missions, procurement and other key programs.”
The Aerospace Industries Association has welcomed tax cut plans but called on Congress to make them as revenue-neutral as possible. As deficits rise, AIA warned, lawmakers have leaned toward cuts to discretionary spending.
“The tax cuts and the higher deficits they bring will cast a long shadow over defense spending for the foreseeable future,” said Todd Harrison, a top defense budget analyst at the Center for Strategic and International Studies. “It does not mean increases can’t happen, but it will make additional defense spending more painful for Congress to swallow in the coming years.
“Anything that increases the deficit in the future will inevitably add downward pressure on discretionary spending in the future, and defense is roughly half of the discretionary budget.”
As Senate Republicans draft and redraft their tax plans, they are grappling with how to address projections that would add mountains to the national deficit.
President Donald Trump and some Republicans have made rosy predictions the cuts will pay for themselves by spurring economic growth that in turn boosts federal tax revenues.
Some key analyses disagree. Thirty-seven of 38 experts surveyed by the University of Chicago’s Initiative on Global Markets agreed the GOP tax bill in Congress would cause U.S. debt to increase “substantially” faster than the economy. (The 38th expert told The Washington Post she misread the question.)
Some Republican defense hawks said they believe the tax cuts will pay for themselves through the growth they create.
Sen. Jim Inhofe, R-Okla., and the chairman of the SASC’s Readiness and Management Support Subcommittee, said the tax cut would generate “huge amounts money, over and above the static predictions they’ll have.”
SASC member Lindsey Graham, R-S.C., acknowledged the Republican tax reform bill will cost revenue in the short term but also expects the plan will bring an economic boost.
Still, Graham supports the idea of backstop built into the bill that would roll back the tax cuts unless economic growth targets are met.
Most Senate Democrats are fighting the GOP tax overhaul and have not embraced its optimistic projections — including Illinois Sen. Dick Durbin, the Senate’s No. 2 Democrat and chairman of the Senate Appropriations Defense Subcommittee.
“Those who are thinking this through … if you are going to create a deficit situation for the next 10 years, the opportunity to increase defense spending is going to be decreased dramatically,” Durbin said.
Durbin chided Republican deficit hawks for mostly holding their fire against their own party’s plan.
“They tend to be muted when we have a Republican president or a Republican tax cut, whatever it may be,” Durbin said. “So many of these Republicans will pose for holy pictures when it comes to debt and deficit, but only when there’s a Democratic president.”
Joe Gould is senior Pentagon reporter for Defense News, covering the intersection of national security policy, politics and the defense industry.