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National Security Spending in Crisis

The economic slowdown will create a huge gap of a $1.2 trillion deficit in 2010. To reduce this gap, reaching 12 percent of GDP in 2009, Obama will have to cut a portion of the budget, which is called the discretionary spending. Defense spending represents more than 50% of the discretionary budget (about $700 billion per year), making it a rather obvious choice for cuts. The entire basket of national security spending, including defense spending and the budgets of the Veterans Administration, the State and Homeland Security Departments, and the interest on the US national debt that accrued as result of such security spending is about $900 billion. All of these components of national security basket are primary candidates for cuts.

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