Biden Offers a Budget Fantasy
His outline for fiscal 2025 supposes a world that doesn’t exist
Opinion - The Editorial Board - March 11, 2024
Most U.S. presidential budgets are exercises in fiscal deception, but even by that standard President Biden’s Monday proposal for fiscal year 2025 sets a record for unreality. It proposes defense spending as if the world is at peace, entitlement spending that isn’t sustainable, and tax increases that would hurt the economy if they passed, which they won’t. Congratulations, Team White House.
Start with the proposal for national defense, which would increase a mere 1% to $895 billion next fiscal year. That number includes various and sundry Energy Department programs related to national security. The Pentagon gets only $850 billion, which is a real cut in military muscle after inflation.
The $895 billion was part of the debt-limit deal with former Speaker Kevin McCarthy, and we warned the number for 2025 was inadequate. We’ll elaborate on the defense-budget details later in the week, but suffice to say the budget doesn’t come close to matching Mr. Biden’s rhetoric in last week’s State of the Union about the global threats to democracy. He talks like it’s 1941, but his defense budget suggests it’s 1991 at the end of the Cold War.
Mr. Biden would spend only 3.1% of GDP on defense in 2025, falling through the rest of the 10-year budget window to 2.4% of the economy in 2034. This makes it appear that overall outlays are lower than they would be if defense stayed constant, but at the cost of reduced security in a world that is certain to grow more dangerous. The only people delighted to see these numbers are the Democratic left in Washington and the rulers in Beijing.
Meanwhile, the overall spending numbers fly in the face of fiscal reality. Mr. Biden proposes spending of $7.3 trillion in 2025, which is an increase of $1.1 trillion in two years. For those scoring at home, that’s 18%.
As a share of the economy, Mr. Biden wants spending to reach 24.8%, or a quarter of national wealth. The 1974-2023 average was only 21% and, as Mr. Biden told the country last week, the Covid crisis is over. But instead of letting outlays fall as a share of GDP, as they always have after a recession or crisis, the President wants the government to stay at a new and higher spending plateau.
As for revenue, Mr. Biden is counting on more and more. Tax receipts will hit 18.7% of the economy in 2025, and they’ll keep rising every year for the next decade—to 20.3%. The 1974-2023 average was 17.3%. Mr. Biden is proposing about $4.9 trillion in net tax increases—mostly on business and those making more than $400,000 a year, which is his definition of rich.
But notice the tax sleight of hand with that $400,000 level. That's the number below which he said no one would pay more in taxes during his first campaign in 2020. He’s using the same number now, despite four years of inflation running as high as 9%. That $400,000 spin zone isn’t indexed for inflation, so it means that each year more of the middle class climbs into his tax-increase maw.
The White House claims the budget would reduce the deficit by some $3.3 trillion over the next decade, but that’s only if his tax increases pass and don’t hurt the economy. Mr. Biden’s spending boom means that the annual deficit barely falls at all in 2025—to $1.78 trillion from an estimated $1.86 trillion in 2024. That would be 6.1% of GDP, despite the growing economy that Mr. Biden keeps boasting about. Mr. Biden keeps racking up unprecedented non-crisis or non-recession deficits, and his budget doesn’t foresee a deficit below 4% of GDP until 2034.
Mr. Biden’s deficits mean that debt as a share of the economy also keeps rising. He foresees debt held by the public rising to 102.2% in 2025, though it was only 79% as recently as 2019. Covid spending by Donald Trump and Mr. Biden caused the debt to explode to levels not seen since the end of World War II.
But unlike after that war, Mr. Biden is making no attempt to control the debt. Public debt in his budget keeps growing and growing—to 106% of GDP in 2030. Interest on that debt will surpass defense spending this year when it hits $890 billion, and it keeps climbing to $1.57 trillion over the next decade.
This is a budget for a world that doesn’t exist, and Americans can hope it will never become law.
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U.S. Sending $300 Million in Ammunition, Weapons to Ukraine
The latest package will include more ATACMS missiles
By Nancy A. Youssef - Michael R. Gordon - March 12, 2024
The new military assistance is intended to temporarily ease some of Ukraine’s equipment shortfalls, which have contributed to battlefield setbacks amid Russian assaults.
“When Russian troops advance and its guns fire, Ukraine doesn’t have enough ammunition to fire back. That’s costing terrain, it’s costing lives and it’s costing us, the United States and the NATO alliance strategically,” said Jake Sullivan, President Biden’s national security adviser, at a White House news conference.
Sullivan told reporters that the aid would be rushed to Ukraine and might only sustain the country’s military for a couple of weeks.?
“It’s not going to be for a long time,” he said, underscoring the importance of securing congressional approval of the stalled aid package.?
Ukraine has also been pushing the Pentagon to provide long-range ATACMS missiles, which have a range of more than 180 miles and could add to Ukraine’s ability to strike Russian forces in Crimea, U.S. officials said.
Pentagon officials had previously insisted the U.S. military needed to retain all of its longer-range ATACMS to meet its own military requirements. But the Pentagon is now open to providing the longer-range ATACMS because of progress in acquiring a follow-on system dubbed the Precision Strike Missile, U.S. officials say.?
That removes a major impediment to providing the long-range variant of the missile, though officials declined to say whether President Biden will send the system.?
The Pentagon last provided $250 military aid to Ukraine in December, saying then it wouldn’t send more until it had additional supplemental funding from Congress. In all, the U.S. has said it has sent approximately $44.2 billion worth of military aid since Russia invaded Ukraine in Feb. 2022.
A new $95.3 billion aid package focused on Ukraine and Israel the Democratic-run Senate last month, but hasn’t moved in the House. Speaker?Mike Johnson (R., La.) has said he wouldn’t bring the funding bill to the floor in its current form.?
With a date for a vote on the package still uncertain, the Pentagon was able to find additional funds for Ukraine after contracts to replace U.S. military stockpiles with equipment and weapons already provided to Kyiv came in under budget, defense officials said.
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The cheaper-than-expected contracts allowed the Pentagon to move replenishment funds back to those dedicated to supporting Ukraine, the officials said, stressing that it wasn’t clear such savings would be available again.?
“This is a bit of an ad hoc or a one time shot. We don’t know if or when future savings will come in,” a U.S. defense official told reporters.?
House Democrats have moved to force a vote on the aid?bill for Ukraine and Israel, as impatience with Johnson prompted them to seize on a rarely used parliamentary tactic that could enable them to circumvent Republican leadership.
Democratic leaders told rank-and-file lawmakers that they would begin accepting signatures on a so-called discharge petition Tuesday morning. A discharge petition allows rank-and-file members to bypass House leaders and put legislation directly on the floor provided they can garner 218 signatures—or a majority of the seats in the House.
The additional funding comes as Defense Secretary Lloyd Austin is expected to lead the Ukraine Contact Group meeting next week in Germany, where he will meet with allies, some of whom have sought bolster military aid to Ukraine amid stalled U.S. efforts.
In Brussels, European Union member states are poised to reach a deal on providing an additional 5 billion euro in funding to bolster military aid for Ukraine, EU diplomats said.
An EU fund, which has been in place since the early days of the war, compensates member states for a portion of the costs of the military supplies they deliver to Ukraine. So far, the fund has committed around 6 billion euro in repayments to EU countries.
Member state ambassadors will meet on Wednesday to make a final decision. However EU diplomats said a deal appears to be in place after France compromised on its insistence that money be used to compensate member states only for weapons purchased within the EU for Ukraine.
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Understanding the Israel-Hamas War
By George Friedman - March 5, 2024
Understanding why Hamas attacked Israel on Oct. 7 requires an understanding of Hamas’ fundamental goal: the creation of a Palestinian state. The group understood that the attack would all but necessitate a shift in Israel’s national security strategy, but it likely believed that weakening the alliance that was coalescing around it – comprising Arab states such as the United Arab Emirates and Saudi Arabia – made the risk worth it. Hamas further understood that it lacked the military capacity to defeat the Israeli military, so ahead of the attacks, it sought support from the Arab world. It’s difficult to believe Hamas could have done this without Israel finding out, so it’s likely that Israel did find out and dismissed its goal as impossible to achieve.
In a sense, Israel was correct. No Arab or Islamic country or movement was prepared to ally militarily with Hamas. The group thought that while a direct, combined attack on Israel would not succeed, it was still possible to force Israel into an untenable position. We now know that this was the line of thinking because Hamas did indeed attack Israel and, in doing so, isolated it from other potential allies. This decision shows Oct. 7 was more complex and, to an extent, more successful than initially thought.
The attack surprised Israeli intelligence, which had failed to understand Hamas’ thinking. Oct. 7 was designed not to break the Israeli military but to create a situation in which Israel could neither decline combat nor bring decisive force to bear because it did not want to endanger the lives of the hostages Hamas was holding. The taking of hostages was meant to drive Israel into a sense of rage and impotence and to sow seeds of doubt in Israeli intelligence.
It’s possible that Hamas expected other Arab forces, particularly Hezbollah, to join the fray. When that didn’t happen, Hamas went to Plan B. If reinforcements weren’t coming, then it wanted to focus Israel on a target that did not have decisive value but was essential to attack and would incur political costs. Thus Hamas activated forces in northern Gaza and introduced reinforcements knowing that the cost would be high. Israel had no choice. With the hostage situation unresolved, a massive attack in northern Gaza would mean that rather than weakening, Hamas was widening its presence. Wars are political affairs, and the Israeli Cabinet had to decide to attack from the air to calm the situation and mollify the growing hostility to the government. Israel hoped that airstrikes and special operations would break Hamas. But Hamas was fighting urban warfare on its own terrain – a terrain where disengagement and sudden counterattacks were practical choices.
I suspect that Hamas knew – or at least more sophisticated movements in the Arab world advised them – that a massive Israeli response in northern Gaza that brought the world’s attention to the Palestinian casualties could bring enough pressure on Israel to force an outcome favorable to Hamas. Israel tried to counter the narrative by pointing to the hostages taken by Hamas, but Israeli public relations campaigns have been poor, to say the least. (Israel has historically been good in this regard but failed to grasp that the decisions being made and broadcast about Hamas were vastly outperforming their own efforts.)
Israel is now caught in a war in northern Gaza with a rigid Cabinet that won’t accept a strategic retreat and a media ecosystem criticizing its approach. Hamas had been seen as responsible for the war; now it’s Israel.
At this point, Israel’s military options are limited, thanks in no small part to the shift in public opinion in its most important ally, the United States. The possibility of a successful assault on Hamas is dwindling, and even Israeli citizens are demonstrating for a deal to be made for the remaining Israeli hostages. Someone once asked: How many military divisions does opinion have? The answer is none, but it can shape the world and is thus vital to a small country like Israel.
When I look at all this, I think that Hamas by accident struck at Israel’s political and military structure and that Israel has still not understood that there are different kinds of war, any one of which can defeat you. It would also seem to me that Israel made a fundamental mistake: Its military, while competent and technologically savvy, has convinced the country that it is a bigger power than it is in reality. Technology is fine, but war is driven by subtle and careful leaders who do not overestimate their power or underestimate the power of manipulating the enemy’s mind. An important lesson for us all.
About: George Friedman
George Friedman is an internationally recognized geopolitical forecaster and strategist on international affairs and the founder and chairman of Geopolitical Futures.
Dr. Friedman is also a New York Times bestselling author. His most recent book, THE STORM BEFORE THE CALM: America’s Discord, the Coming Crisis of the 2020s, and the Triumph Beyond, published February 25, 2020 describes how “the United States periodically reaches a point of crisis in which it appears to be at war with itself, yet after an extended period it reinvents itself, in a form both faithful to its founding and radically different from what it had been.” The decade 2020-2030 is such a period which will bring dramatic upheaval and reshaping of American government, foreign policy, economics, and culture.??
His most popular book, The Next 100 Years, is kept alive by the prescience of its predictions. Other best-selling books include Flashpoints: The Emerging Crisis in Europe, The Next Decade, America’s Secret War, The Future of War and The Intelligence Edge. His books have been translated into more than 20 languages.
Dr. Friedman has briefed numerous military and government organizations in the United States and overseas and appears regularly as an expert on international affairs, foreign policy and intelligence in major media. For almost 20 years before resigning in May 2015, Dr. Friedman was CEO and then chairman of Stratfor, a company he founded in 1996. Friedman received his bachelor’s degree from the City College of the City University of New York and holds a doctorate in government from Cornell University.
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