Tag Archives: exchanges

United States Budget Ideas

I have a budget for myself that I maintain in Excel. I keep track of how much I bring in and all my expenditures. If I overspend, I see immediately the impact it has on the rest of my budget. I also pay down my debt and track that as well.

In the recent 2011 State of the Union address, President Obama said “But now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in. That is not sustainable. Every day, families sacrifice to live within their means. They deserve a government that does the same.”

So if I can make a budget and make sacrifices to live within my means, and the government has to do the same, why shouldn’t I share my ideas with the government?

The biggest drains on our economy are defense/homeland security spending, and entitlement programs like Social Security, Medicare and Medicaid.

Let’s start with defense spending. Even though we have troops spread all over the world, and we all talk about Iraq and Afghanistan, I’m going to start closer to home with Cuba.

First, let’s look at Guantanamo Bay. Obama had promised to close the prison there, but just this January, he signed the 2011 Defense Authorization bill into law. http://federalnewsradio.com/?sid=2226350&nid=35 In it, it restricts the transfer for Guantanamo prisoners to the United States or to foreign countries. The Pentagon spends $116 million a year running the prison camp, which I believe now holds 176 prisoners. It costs about $650,000 a year per prisoner. Compared to the $27,251 it costs to house prisoners in stateside federal prisons, this is ridiculous. http://www.mcclatchydc.com/2010/09/13/100518/cost-of-housing-prisoners-at-guantanamo.html I know there are political ramifications, and NIMBY issues, but seriously, tough decisions need to be made.

But really, $116 million/year is just a drop in the bucket compared to the $671 billion defense budget that Obama proposed in his 2011 budget, which is a 5% cut.

So let’s be more creative with Cuba. Let’s lift the embargo. We’ve had an embargo with Cuba for about 50 years. Did you know that the US spends about $27 million per year broadcasting radio and TV to Cuba that Cuba effectively blocks? The non-partisan Cuba Policy Foundation estimates that the embargo costs the US economy $3.6 billion per year in economic output. http://www.dollarsandsense.org/archives/2009/0309pepper.html

And the blockade keeps us from reaping benefits with our neighbor. By 1992, U.S. businesses had lost over $30 billion in trade over the previous thirty years, according to researchers from Johns Hopkins. The US Chamber of Commerce estimates that the embargo costs the US economy $1.2 billion per year in lost sales and exports, while the Cuban government estimates that the embargo only costs the island itself $685 million annually. http://en.wikipedia.org/wiki/United_States_embargo_against_Cuba

So we spend $3.6 billion for the embargo, and lose the opportunity for our economy to make $1.2 billion.

These are HUGE numbers, but they are still small compared to that huge defense budget.

The Pentagon has tried for five years to cancel an alternate engine for the Lockheed Martin Corp F-35 Joint Strike Fighter that is being developed by General Electric and Britain’s Rolls-Royce, but lawmakers have refused to kill the program. Robert Hale, the Pentagon’s chief financial officer, said, “We consider it an unnecessary and extravagant expense, particularly during this period of fiscal contraction.” He estimated it would cost taxpayers “nearly $3 billion in a time of economic distress.” http://www.csmonitor.com/USA/Military/2011/0214/Why-Pentagon-budget-cuts-might-not-be-as-impressive-as-they-sound

So ending the Cuba embargo, and stopping the development of the alternative engine for the F-35 would cut $6 billion from the US budget. The drops in the bucket are getting bigger.

Our military budget is larger than all other military budgets in the world combined, and 6 times as large as the next largest: China. I think it’s great that we have the best military in the world, but by what extent do we need it to be the best? These are tough times, and we need to make tough decisions.

Another money saving idea… Why have we not combined the military exchange services? I searched the internet and could not find any recent studies on this proposal, though it’s mentioned in passing on occassion. Currently, there’s the Army and Air Force Exchange Service, the Naval Exchange Service, and the Marines Exchange Service. I did find a DoD document that analyzed the exchange systems in 1990. “The review group determined that the current exchange systems are financially sound… However, with three separate exchange systems accomplishing the same basic mission, often within the same geographical area, there are duplications and redundancies in both the overhead and operating costs.”

I found another document that looks at the cost and benefits of retail activities on military bases. In 1995, the operating costs of all three exchange services were about $3.5 billion. Their income was about $2.5 billion. The government subsidy (cost minus income) was over $1 billion. Clearly, that operation could use some modern evaluation to streamline their opportunities. What kind of retail business loses $1 billion every year? And those are 1995 prices. Imagine what they are now…

I’m not saying I have all the answers. I’m not even saying I have any answers. I’m sure people can shoot holes in all my ideas. But we need to be creative as we consider solutions.

I haven’t even started on Social Security reform, but there’s plenty of information on Wikipedia. http://en.wikipedia.org/wiki/Social_Security_debate_(United_States) There are both conservative and liberal proposals there with the pros and cons of each. The important things is that we do ANYTHING. Inaction is the only wrong course, and that’s just what we’ve been doing.

Medicare reform is another action that must be taken. ($78 trillion in unfunded liability!!) There are plenty of proposals for that too. Here’s a website that compares all kinds of healthcare reform proposals: http://www.kff.org/healthreform/sidebyside.cfm

I encourage you to do your own research, and then contact your government representatives. Maybe you have creative ideas! Feel free to share them in the comments!