“spending on the military and spending on social programs”

EconoFact Weekend Reading:

Guns vs. Butter Programs

The phrase “Guns vs. Butter” is used to illustrate the choice a government must make between spending on the military and spending on social programs. President Trump’s recently released 2027 budget proposal tilts towards guns and away from butter. It calls for a 44 percent increase in defense spending, boosting it to $1.5 trillion, while reducing non-defense spending by 10%. The proposed reduction in safety net programs comes on the heels of the cut in federal Medicaid funding by an estimated $1 trillion over ten years in last year’s One Big Beautiful Bill Act (OBBBA)  which the Congressional Budget Office estimates will cause nearly 15 million people to lose health coverage. This Weekend Reading discusses the size of the social safety net and the effects of cuts to it. 

Discretionary funding on Defense represented 56 percent of discretionary spending in 2025 and this share rises to 64 percent in the proposed 2027 budget. This rise cannot be meaningfully offset by cuts to social safety net programs, as discussed by Melissa Kearney and Luke Pardue in the EconoFact  memo Is Cutting the Safety Net an Effective Way to Reduce Government Spending? They point out that Medicaid, SNAP (Supplemental Nutrition Assistance Program, formerly known as Food Stamps), and TANF  (Temporary Assistance to Needy Families) are often the focus of budget-cutting discussions. However, these programs constitute a relatively modest share of overall federal outlays – in 2022, their shares were 4.5 percent (Medicaid for Aged, Blind, or Disabled), 4.4 percent (Medicaid for Children and Adults), 2.4 percent (SNAP), and 0.3 percent (TANF). They argue that cutting programs that primarily serve children and low-income families produces limited fiscal savings in the short run while imposing substantial human costs. 

The rate of child poverty responds to policies – it dropped precipitously in 2021 with pandemic relief efforts, but rose again to pre-pandemic levels more recently.  Cuts to food assistance programs like SNAP and TANF will adversely impact vulnerable children. In the  EconoFact memo “Reducing Food Insecurity Among Children in the U.S.,” Lisa Gennetian and  Diane Schanzenbach  document that nearly 20% of U.S. children live in households that receive SNAP benefits, with average monthly benefits of $574 per household. These benefits reduce food insecurity, improve long-term metabolic health and school performance among children, and play an especially important role during economic downturns when families experience job or earnings losses. In The Potential for State Policies to Improve Child Food Insecurity, a group of researchers from Emory University point out that the OBBBA’s shifting of SNAP costs onto states puts low-income families at heightened risk. Since most states must balance their budgets even in recessions, shifting federal SNAP funding to the state level may cause the program to contract when need is greatest. 

The OBBBA is expected to cut Medicaid by almost $1 trillion over the next eight years and starting in January 2027 access to Medicaid will be more restricted. The analysis of Joshua Gottlieb and Mark Shepard in the EconoFact memo Evidence on the Value of Medicaid shows Medicaid improves beneficiaries’ financial security, by reducing out-of-pocket medical expenses and medical debt, as well as mental health outcomes. David Slusky, in the EconoFact memo Impact of Medicaid Expansion on State Budgets and Mortality, provides evidence that expanding Medicaid under the Affordable Care Act reduced mortality without significantly raising net state expenditures, in part because the federal government covered the large majority of expansion. This Federal support is scheduled to be reduced.

Cutting social safety net programs provides some short-term fiscal relief but at the cost of longer-run problems. Medicaid spending on children ultimately saves the government money by improving their long-run health and economic outcomes. Melissa Kearney concludes her EconoFact  memo Child Poverty in the U.S. by noting that “Investing in poor children would not only yield economic benefits for those children, but also for society at large. While recognizing that child poverty compromises the goal of promoting economic opportunity and the future health of the economy, it is also vital that we do not lose sight of the fact that poverty is a human tragedy and speaks to the moral standing of a nation.”