Bolton, speaking at the Alexander Hamilton Society on Wednesday, said he expects significant cuts to discretionary spending, but not entitlements such as Medicare and Social Security. The comments came as the country’s deficit rose to $779 billion, its highest level in six years, fueled by revenue-sapping tax cuts.
“It is a fact that when your national debt gets to the level that ours is, that it constitutes an existential threat to the society,” Bolton said. “And that kind of threat ultimately has a national security consequence for it.”
While Congress will have the final say, Bolton also affirmed the White House Office of Management and Budget is planning 5 percent cuts across all government agencies for its fiscal 2020 budget proposal expected in February. That plan, which Trump disclosed at a Cabinet meeting on Oct. 17, has prompted “howls of outrage … from various parts of the government,” Bolton said.
Federal spending is divided into discretionary spending (which funds federal agencies), mandatory spending (which funds entitlement programs) and net interest (which is interest payments on debt held by the public).
Mandatory spending makes up more than 60 percent of total federal spending, and is expected to continue to rise, in part due to America’s aging population.
“The entitlements come in few years and that problem will have to be addressed, but right now you can have significant impact on both the deficit and national debt by cutting government spending on discretionary programs,” Bolton said.
Though national defense spending bounded to $700 billion in fiscal 2018 and $716 billion in fiscal 2019 under the Trump administration, Pentagon officials confirmed they have been ordered in recent days to prepare a $700 billion budget for fiscal 2020.
Pentagon officials say they will prepare a budget to reflect a $733 billion top line, in line with previous plans for fiscal 2020, and a $700 billion top line — to show the White House the trade offs.
Though midterm election results will determine what leverage he has, House Armed Services Committee Chairman Mac Thornberry, R-Texas, sent a terse statement last week expressing reluctance to reverse hard-won budget gains.
"We are not going backwards,” Thornberry said.
Bolton sought to downplay the impact of the proposed cut to the Defense Department, highlighting the internal savings available through “procurement reform and finding ways to reduce costs across a wide variety of areas.
“So while the budget may not be in an upward curve, the effect of spending the money will increase,” he said.
According to the U.S. Treasury, the deficit rose by $113 billion over the previous year as government spending outpaced revenues. Receipts were generally flat in FY18, while spending increased 3.2 percent as Congress gave more funds for military and domestic programs.
Revenues generally tumbled after December when Trump signed into law $1.5 trillion of tax cuts over the next decade. The tax cuts have caused economic growth to accelerate this year, with Federal Reserve officials anticipating gains of 3.1 percent. But the Trump administration initially promised that the tax cuts would pay for themselves through stronger growth — and there is no sign so far of that happening.
Joe Gould is the senior Pentagon reporter for Defense News, covering the intersection of national security policy, politics and the defense industry. He served previously as Congress reporter.