Air University Review, March-April 1978

The most visible aspect of the entire federal budgetary process is the submission of the President's budget to Congress each year in January. For fiscal year 1979, the President submitted a total federal budget request of approximately $500 billion; approximately $115 billion or 23 percent of this total is designated as the budget of the Department of Defense (DOD). Reducing the budget is always a strong objective of both the White House and Congress. During the past decade, the objectives of reducing federal spending by reducing DOD's budget have become almost synonymous. Why, one may question, is it DOD's budget that is under such intense annual political scrutiny on Capitol Hill?

Undoubtedly, general attitudes and opinions of the American taxpayer concerning the military have an influence on the annual congressional debates about the federal budget. However, public opinion on reducing the total federal budget and DOD's portion in particular may be obscured by an important intervening variable that I believe to be of utmost significance.

I suggest that the federal budget can be effectively reduced only in certain areas because many of our federal expenditures are of such an uncontrollable or sunk-cost nature that congressional reduction of the budget becomes an extremely arduous task.¹ To elaborate further, one must understand what is meant by "controllability" and "uncontrollability" of federal expenditures.

Not all spending, whether at the federal, state, or local levels, is under the absolute and unchallenged control of the executive and legislative branches of government. Many public sector programs are "built-in" or sunk costs when a particular budget is prepared in the executive branch and subsequently debated and voted on by the legislative branch. These programs generate "uncontrollable" expenditures, which are appropriated with relatively little debate or discussion. They can best be considered as recurring expenditures once the initial commitment to the program is established. Good examples of uncontrollable programs are the transfer payments for Social Security and Medicare and the many public assistance programs throughout the federal structure. The Department of the Treasury has a very large annual appropriation considered uncontrollable because it pays interest on the national debt.

In examining the budget of the Department of Defense, one observes that the only uncontrollable item within that budgetary process is pension funding for retired military personnel. These payments are of a recurring and uncontrollable nature. In the last six years the administrations' requests for pension funding for retired military personnel has differed from the final congressional appropriation only once, and even then it was by one-half of one percent. Thus, DOD's budget for the Annual Defense Appropriation Act is predominantly controllable, and such appropriations as military personnel (i.e., pay raises, benefits, etc.), operations and maintenance, procurement and research and development are subject to debate, criticism, and, sometimes, reduction by Congress.

An itemization of defense spending and social (non-DOD) spending requests indicates significant differences in the percentages of uncontrollable requests in the total federal budget. (See Table I.) Some astonishing percentage differences exist between defense and social spending requests. Pension payments for retired military personnel comprise DOD's entire uncontrollable request. On the other band, in the social spending area Social Security payments, Medicare, public assistance programs, interest funding for the national debt, etc., constitute a huge uncontrollable portion totaling over 80 percent of such social spending requests in FY 1974.

Such data clearly indicate why DOD’s budget always comes under intense scrutiny and debate each year. In an era of budget conservatism the extremely high controllability of the administration's DOD request is conducive to reduction by Congress. From the late ¹950s through the mid-1960s, Congress either appropriated to DOD more than the administration request or very close to that figure. however, beginning in FY 1968 and continuing through FY 1976, Congress has appropriated much less to DOD than the President originally requested. For FY 1976, Congress cut these requests for DOD by 734 percent. Yet congressional social spending appropriations were 13 percent greater than the President had requested.

Moreover, the public attitude toward national security is another variable that greatly affects the size of DOD's budget. When public opinion is unfavorable, DOD's budget is quite vulnerable to reduction because of its controllable nature. Social spending requests, though, are much less subject to criticism and reduction in that they are protected by the growing percentage of uncontrollable budget requests. The end result is an uncertain climate for DOD's annual budget.

There seem to be no easy solutions as to what DOD might do to alleviate this inherent problem. The very nature of defense expenditures subjects them to a high degree of controllability by Congress. The controversy over the B-1 bomber was an excellent example as well as the Navy's Trident missile submarine program and the Army's Patriot, Stinger, and Roland missile requests for FY 1978. An acute awareness on the part of the members of Congress and the armed forces, and especially the public, of this important variable would aid in understanding the annual relationship of the defense budget to the total federal government request.

Notes

1. Economist Murray Wiedenbaum has discussed this area extensively in "On the Effectiveness of Congressional Control of the Public Purse, National Tax Journal, December 1965, pp. 370-74 and "Institutional Obstacles to Reallocating Government Expenditures," in Robert H. Haverman and Julius Margolis, editors, Public Expenditures and Policy Analysis (Chicago: Markham Publishing Company, 1970), pp. 232-45. Also, an excellent study of this subject was prepared by John R. Gist in "Mandatory Expenditures and the Defense Sector: Theory of Budgetary Incrementalism," Sage Professional Papers in American Politics, vol. 2, Series 04-020 (Beverly Hills and London: Sage Publications, 1974), pp. 6-11.

2. Congressional Quarterly Weekly Reports; Facts & Figures on Government Finance, 18^th Biennial Edition (New York: Tax Foundation, Inc., p. 88; see also Gist, pp. 6-11.

First Lieutenant Andrew J. Sherbo, Jr. (M.P.A., University of Georgia) is Deputy Accounting and Finance Officer, 435^th Tactical Airlift Wing (MAC), Rhein-Main Air Base, Germany. Previous work experience includes three years as a budget analyst in the State Comptroller’s Office, Iowa. He obtained his commission through AFROTC I 1973 at Drake University. Previous publications include articles in the National Tax Journal and the Air Force Comptroller magazine.

Disclaimer

The conclusions and opinions expressed in this document are those of the author cultivated in the freedom of expression, academic environment of Air University. They do not reflect the official position of the U.S. Government, Department of Defense, the United States Air Force or the Air University.

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