FCNL Budget Analysis

Why does FCNL’s budget analysis differ from analyses by some other national groups – and why do they differ from each other?

It’s How You Slice the Pie (or stack the coins, or count the beans)...

Among the handful of groups that monitor either the whole budget, or the parts of the budget devoted to military spending, the figures and percentages vary. The differences have to do with which specific programs each group includes in a “slice” and how finely they cut each slice.

First – what pie?

FCNL’s analysis looks at the federal funds budget. This is the overall budget, including discretionary, entitlement, and mandatory spending, supported by general revenues, including income taxes and estate and gift taxes. Because the FCNL analysis aims to illustrate how our income dollars are spent, it does not include trust funds, such as Social Security and Medicare, which have their own dedicated revenues.

Some analyses include Social Security and Medicare in the definition of the budget. Because this analysis starts with a bigger pie (called the “unified budget”), the military appears as a relatively smaller slice, and social spending looks larger.

Conversely, some national organizations look only at “discretionary spending” – the part of federal spending that Congress handles through appropriations bills. In this case, they’re starting with a smaller budget pie than FCNL, so military spending appears to be a bigger slice.

But Congress has control over entitlement or “mandatory” spending as well as discretionary spending. Changes can be (and often are) made in the budgets for entitlement programs – they’re just made through a different congressional process. Whether discretionary or entitlement spending, the money still comes out of your income tax dollars.

Second – what’s included in the slice?

When FCNL talks about military spending, we talk about two slices – current military spending and spending due to past wars and military activity. The first slice, current military spending, is what most other analyses report on and what is most understandable on Capitol Hill. On the Hill, decisions before Congress generally focus on current military spending rather than the already-accumulated responsibilities for past military spending. At the same time, we recognize that the obligations of past wars are indeed a component of military spending and should be taken into account when Congress considers new or additional military commitments.

The Office of Management and Budget (OMB) looks only at current military spending; some organizations add current and past military spending together and present just one figure.

What’s in the current military slice?

FCNL’s analysis of current military spending includes the following:

• All spending for the Department of Defense (DOD).
• The “050 function,” a categorizing number that OMB uses to identify defense-related spending, regardless of the agency that spends the funds. This category includes funding in many “independent agencies” as well some parts of the Department of Homeland Security, parts of the Coast Guard, and other bits and pieces sprinkled through the budget.
• Responsibility for the Defense Department retirees as a military expense, although it is not listed as such by OMB.
• Portions of the foreign aid budget that are, in fact, military programs. These include the foreign military assistance accounts and international military training.

In the past, we included portions of the National Aeronautics and Space Administration (NASA) budget. We no longer include that money because NASA changed its arrangements with the Defense Department so that any work done for the DOD by NASA is paid for out of the DOD’s budget.

Most analyses of current military spending are similar. Differences arise in how much is included from agencies that include some defense-related functions. See “how finely do you slice it?” below.

What’s in the “past military” slice?

This slice includes primarily the Veterans’ Administration and a portion of the interest paid on the federal debt.

This slice is where some of the big differences between FCNL’s analysis and those of other groups arise. FCNL calculates the portion of the debt due to military spending by accumulating, year to year, the portion of each year’s budget that went to military spending. We don’t assume that the deficit would not have existed if military spending had been lower – we simply add up how much was added to the debt each year and allocate the percentage that was spent on the military that year.

How finely do you slice it?

Some pies include some guesswork or assumptions about future congressional behavior. Some of these guesses may be fairly well rooted in recent experience and may be quite valid. FCNL has chosen to report only what the president proposes for the upcoming fiscal year and what was actually spent (outlays) in the past fiscal year.

We also examine closely agencies with a “mixed” mission and include only specific military-related activities in our military numbers. For example, a portion of the budget of the Department of Homeland Security is allocated to immigration and border activities, the Federal Emergency Management Agency (FEMA), and the non-military activities of the Coast Guard (boat safety, rescues, etc.). While some of these activities are police-related, we do not categorize them as military activities.