Sen. Angus King, I-Maine, discusses the need to increase defense spending to assure America’s global role in maintaining stability and economic prosperity, making choices and the legacy of President George HW Bush with Defense & Aerospace Report Editor Vago Muradian at the Reagan National Defense Forum at the Ronald Reagan Presidential Library in Simi Valley, Calif. Our coverage was sponsored by L3 Technologies and Leonardo DRS.
Senator Angus King
Reagan National Defense Forum
Vago Muradian: Welcome to the Defense and Aerospace Report. I’m Vago Muradian here at the Reagan National Defense Forum at the Ronald Reagan Presidential Library in Simi Valley, California, one of America’s great defense events with military, civilian, political, economic, industry, as well as thought leaders from around the world. Our coverage here is sponsored by L3 Technologies and Leonardo DRS.
We’re honored to be talking to the Senator from the great state of Maine, the Independent, Angus King. Sir, it’s a pleasure talking to you. And full disclosure, my son is a part-time Maine resident because —
Senator Angus King: He goes to Bodin College.
Mr. Muradian: He goes to Bodin College, right up the street.
Senator King: We call you a patriot because you send a hunk of money to Maine every so often.
Mr. Muradian: On a regular basis, and we’re honored to do it, sir. We’re honored to do it. It’s a great school. It’s a terrific state. In fact, our other son wants us to buy property in Maine, so I will let you know as soon as that happens.
More importantly, it was an extraordinary conference and your comments at the very top were very interesting about getting that balance point right, about how much investment the nation puts into this, but also retire the debt which is massive and looming. We have infrastructure challenges. We’re going to have a medical reform challenge. And then there’s always the debate about taxation and how much should be raised.
The National Defense Strategy Commission put its findings out and said hey look, we’re going to need about a trillion dollars on a sustained basis to build U.S. forces up lest the global order be jeopardized. But also, the United States could face a defeat.
From the standpoint of the upper house, what’s the right way to communicate to the American public clearly about the nature of the problem, given that Americans have this perception of we have the best forces in the world, whereas now leaders are saying, well, they might not be as good as they need to be. But also, how do we free up these resources? Because folks look at these resources, because folks look at this as something that is purely an efficiencies thing, and at the end of the day that might not make it.
What’s the right way to have this national debate about the resources that are going to be necessary and the tradeoffs necessary to make that happen?
Senator King: I think one of the first things to do is to start with the data. Start with the facts. What a lot of people don’t realize is, they look at the absolute number, the $700 billion a year for the defense budget and they say oh, that’s a terribly large number, it’s bigger than anywhere else in the world. It’s huge, we can’t afford it.
The reality is, as a percentage of GDP or as a percentage of federal spending it’s about as low as it’s been in the past 70 years. Seventy years. And what’s happening is, several things are happening at once.
One is, threats are multiplying. I honestly believe it’s one of the most dangerous periods that we’ve had probably since the end of World War II. We’ve got an aggressive Russia. We’ve got a rising China. We’ve still got a counterterrorism threat with ISIS, they’re not done. We’ve got rogue states — Iran, North Korea. North Korea working on nuclear weapons. I mean it is a very dangerous world, and we have responsibilities all over the world.
So the first thing is to understand okay, why do we have to spend this money, and why is it important? And I think if you put it in perspective, as I mentioned, put it in the context of the size of our economy and how much we’re spending compared with how much we did 20, 30, 40 years ago.
Now having said all that, one of the threats to our country that in some ways is just as real as the ones I reeled off, is the debt. We now have like 75 or 80 percent of our annual gross domestic product, that’s how much the debt is. It’s the highest since World War II, and it’s been built up at a time of relative good times in terms of the economy.
So my problem is, here we are facing all of these threats, plus the need to recapitalize the defense enterprise because a lot of the big capital things like submarines, strike bombers, those kind of things, their useful life is gone, we’re going to have to do it again. So we’ve got this lump of capital expenditures coming at the same time we need to have greater readiness.
The problem I have, is we’ve had three major tax cuts in the past 15 years, all in the middle of the deficit. When you cut taxes and you simply borrow to fill the hole, that’s not really a tax cut, that’s just shifting the tax to your kids. They’re going to have to pay that off with interest. And that’s something that we need to talk about.
I mean the math is pretty simple. Right now we’re spending 20 percent of GDP on government expenditures — defense, Social Security, Medicare, Medicaid, Agriculture Department, you name it. We’re collecting 17 percent of GDP in revenues. You don’t have to be a mathematician — three percent of GDP, that’s $600 billion a year, soon will be a trillion dollars a year of added debt.
So I think we’ve got to talk about how we do this, and the idea that we can nickel and dime the Defense Department or the Agriculture Department or Head Start and save enough to fill that hole is just not true.
Mr. Muradian: So how does that happen? For example, numerous people we talked to said look, entitlement reform is the answer. But actually, entitlement reform is a very, very complicated thing to do. In part, because everybody’s living longer. If people only drank and smoked and drove drunk I mean we could solve some of this problem. It’s a cynical point.
Senator King: One of the, if you dig into the data, expenditures for what we call domestic discretionary spending, again the Department of Agriculture, the FCC, you name it. It’s pretty flat over the past half dozen years. Defense. Pretty flat. There’s been some growth, but again, as a percentage of GDP about flat. What’s been growing are Social Security, Medicare, Medicaid, veterans’ pensions, the VA, and a lot of it, if not, I would say it’s fair to say the lion’s share of that growth is being driven by health care.
We’ve had a big debate in this country over the past ten years on who pays for health care? Affordable Care Act, private insurance, Medicare, Medicaid. But the real issue is not who pays, but how much we’re paying. We’re paying twice as much per person for health care in this country as virtually any other country in the world, and the results aren’t any better.
So we’ve really got, I believe we, thought of us who are trying to do policy here, we really need to start talking about how do we do something about this constant escalation of health care costs because whoever’s paying, whatever that debate comes out, it’s going to break us. That’s what’s driving the so-called entitlements. I think that’s one of the things that we have to look at.
But we also have to look at revenues. As I say, when you spend 20 cents and take in 17 year after year after year, as Charles Dickens said, happiness is, what is it, 20 pence of income and 19 pence of expenditure and the opposite is misery. That’s where we are.
Mr. Muradian: Is there a certain part of this that’s pay now or pay later, right? That we either have to invest in deterrence now because of the concern and I think Ambassador Edelman, the co-chair of the Commission made clear that look, the global rules-based order depends on American power. The minute that that American power degrades, the most dangerous position for a super power to be in is to be regarded by its adversaries as really hollow ultimately, and that leads to a miscalculation.
Is that maybe the best way to drive forward the message that the investment is important? That’s the first part of the question. The second part of the question is, everybody talks about making choices. And yet nobody ultimately wants to make the choices because there’s a political constituency for these choices.
Senator King: Cutting taxes is really easy and spending is really easy. I think the balance is tough. But you know what? Fifty states do it every year. States don’t run deficits. I was a governor. If the revenues ran short you had to either cut or raise revenues. There was no printing money. And if 50 states can do it the federal government can do it. I think that’s one of the places that we have to get.
But I think an important point is the one that Eric Edelman made and that you made, and that is backing out of the world is not an option. We tried that. It was called the ‘30s. The result was World War II and 55 million people were killed. We can’t — there are aggressive, bad people in this world, unfortunately. That’s just the way the world is. And to the extent we back off, they’re going to reach in.
I made the analogy today to a hotel thief who goes down the hall of the hotel, tries every door until he finds one that’s open, and that’s where he goes. We can’t leave those doors open because there are people that will take advantage of us.
Brother Putin is challenging us right now in Ukraine. He’s seeing, will they respond or can I basically violate the right of innocent passage in the Azov Sea.
So these are the kinds of issues that we have to respond to and if we don’t, then we end up with a much more serious — the cheapest war is the one you don’t have to fight. And if we end up in a place where we can’t ignore it and yet we’ve in a sense invited it because of our lack of commitment, then that’s a catastrophe for everyone.
Mr. Muradian: There are those who say that even with 900 billion dollars a year we wouldn’t be able to build the right kind of defenses given changing threats and what our adversaries are doing, and that hard choices will be needed. What does that mean to you as a Senator? What are the kind of hard choices we’re going to have to make?
Senator King: What it means is we have to figure out what the conflict of the future looks like. For example, the thing that keeps me up at night is cyber, and we don’t necessarily need bombers for that. We need a strategy, we need a deterrent strategy, we need a capability. So it’s, I think the really important part is thinking about what exactly the challenges we’re going to face.
The other challenge is what I call gray warfare. The tanks aren’t going to roll into Poland but they’re going to sink a ship in the Northern Black Sea. How do we deal with that when it’s not clear black and white? It’s easy if they send a rocket to you, you know how to respond. But if it’s little green men in Crimea or in Lithuania or somewhere else in the world, or in Latin America, how do we respond in such a way that can deter that without necessarily escalating into a more serious confrontation? That’s the challenge and that’s what’s really hard about this. There’s no simple answer.
But those are the two things. I think we need to develop a cyber strategy, and we need to develop a strategy for dealing with what I call hybrid warfare.
Mr. Muradian: And how do you think this budget cycle’s going to play out? Are we just going to end up saying okay, 700 on the one side, 733 on the other? We’re just going to split the difference. How do you think this is going to play out over the next couple of years top line wise?
Senator King: I think a lot of the question is what does the President do? If the President is pushing for a cut then that’s going to make it hard. Although I think that Congress understands the magnitude of the challenge and the necessity of increasing readiness, of recapitalizing some of these systems that are so important to our deterrent capability.
So I think Congress is going to go ahead and do what it thinks is right. I can’t give you a number. I don’t know what that’s going to be. But it’s going to have to be justified, and we’re going to have to be able to go home and explain it and tell our constituents why are we spending this money and what’s it for and are we getting value?
Mr. Muradian: Folks are looking at it from a DoD perspective. Last question. The Coast Guard is equally important. The budget pressures have remained on the Coast Guard but at least it has a modernization plan. You’re a key member of the Arctic Caucus. Talk to us a little bit about the Coast Guard modernization and why icebreakers and an Arctic focus on our strategy is so important.
Senator King: The Arctic is the future. I mean it’s a future area of enormous importance for trade, energy development, it’s a relationship between our countries, and the fact that we only have basically one and a half icebreakers is just ridiculous. Russia has something like 40. That’s the infrastructure of the Arctic for at least the next 20 or 30 years. I think it’s got to be part of the priority for the Coast Guard.
The Coast Guard is doing new offshore cutters. That’s good, that’s important. We need those resources, particularly for drug interdiction, but we also need to do icebreakers because that area of the world is the next frontier.
Think of the Arctic Ocean as the discovery of the Mediterranean Sea. It’s a hugely important body of water that has been unavailable throughout human history. Suddenly it’s there and we have to be able to act decisively. Not necessarily in a military way, but we need to be able to utilize that resource and it’s something, it happens to be a resource that’s bordered by a long piece of Russia.
Mr. Muradian: Angus King from the great state of Maine. The Independent Senator. Sir, thanks very much. Absolute pleasure.
Senator King: Great to be with you. A pleasure. Good questions.