Defense Spending Debate

Report Outline
Reagan's Defense Program
Defense Buildup Origins
Future Defense Concerns
Special Focus

Reagan's Defense Program

Unease Over Reagan's 1983 Budget Plan

Since early February, when the Reagan administration is sued a 1983 budget plan that anticipated a deficit of close to $100 billion, calls have been coming from all sides for a reexamination of defense expenditures. Top business and labor groups, political liberals and rock-ribbed conservatives, Northern Republicans and even defense-oriented Southern Democrats have joined in a chorus of criticism about the size of the defense budget and the way it is to be financed. President Reagan has insisted repeatedly that the proposed defense program cannot be changed. But because of the emphasis he put on balancing the budget as a presidential candidate, and because of the economy's shaky condition, he may have no choice but to accept some reductions in defense spending.

The administration proposes to increase defense outlays in fiscal 1983 by 10.5 percent, after taking inflation into account, and it wants to increase authorizations for multi-year programs even more, as part of its master plan to spend $1.6 trillion on the military over a five-year period. Since defense spending is the second-biggest category of expenditures in the budget and the only major category to be sharply increased, many believe it is the factor ultimately responsible for the swollen budget deficit. In theory, the deficit could be reduced either by raising taxes or by making additional cuts in direct benefits to individuals, the biggest budget category. But sizable tax hikes seem unlikely in an election year, and even conservatives tend to agree that it would be unfair to cut social benefits by much more.

On Feb. 9, the day after Reagan sent his budget message to Congress, The Wall Street Journal ran a column on its editorial page saying that the budget “flunks the test of fairness.” Similar assessments of the proposed budget have come from several noted economists, including Henry Kaufman of Salomon Brothers and Felix Rohatyn, the investment banker who currently heads New York City's Municipal Assistance Corporation (“Big Mac”). Kaufman told the House Budget Committee on March 16 that the deficit had to be reduced for the sake of business's financial situation, which he called more “fragile” than he had ever seen it. Rohatyn, in a speech to The Conference Board on March 17, said that the Reagan budget and related policies court “economic disaster” and invite a “hot summer” of urban violence.