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The US government's deficit, explained

America's debt is its biggest national security challenge, according to top Pentagon brass. Here's why.

Mainly two places: social entitlements and national security.

Entitlement programs burn nearly 60 percent of the total budget — $2.1 trillion out of $3.7 trillion. Most of that goes to retired people. The government pension program (Social Security) costs $761 billion, and health care for the elderly costs $468 billion. A smaller allotment ($269 billion) supports health care for the poor, known as Medicaid. And a final $598 billion funds "other mandatory programs" established by Congress, including unemployment, Food Stamps, and retirement benefits for soldiers and federal civil servants.

These entitlements pose a challenge for lawmakers: cutting them would harm the most vulnerable, and would impact many voters, making this both practically and politically unpalatable.

The rest of the spending goes to national security. By sheer force of firepower, America is the strongest nation in history, able to wipe out entire countries at the press of a button. But that force comes at a steep cost.

America’s sprawling national security apparatus is poised to cost $881 billion in 2012, up from $815 billion in 2010. To put this in perspective, if the U.S. security budget were a country, it would be the world’s 19th biggest economy, behind Australia (population 22 million) but ahead of Iran (73 million), the world’s fourth biggest oil producer. Only two states, New York and California, have economies bigger than the security budget.

Incidentally, the Corporation for Public Broadcasting’s hotly debated federal subsidy ($445 million) is equal to about four hours of security spending (disclosure: GlobalPost syndicates journalism to the PBS NewsHour, which is supported by the Corporation for Public Broadcasting).

How does the U.S. manage to spend so much on security?

The Defense Department budget accounts for the biggest portion of this: $553 billion. That’s roughly equivalent to what America’s biggest company (Wal-Mart) and biggest bank (Bank of America) collected in gross revenues in 2010. If it were a country, the Pentagon budget would be the world’s 26th biggest economy, ahead of South Africa.

In fact, that $553 billion is only part of what the Pentagon spends. America’s two major wars, in Iraq and Afghanistan, are funded by a line item called the “Overseas Contingency Operations,” which adds $118 billion to Pentagon coffers for 2012. Ironically, that’s roughly the size of Iraq’s entire economy ($118 billion in 2010). It dwarfs Afghanistan’s ($30 billion).

The good news for taxpayers is that spending on Iraq and Afghanistan is down from a peak of $195 billion in 2008. Of course, battlefield realities and politics will determine whether Congress will add even more money before the year ends.

Including the wars, the Pentagon spends $671 billion. That’s more twice the 2001 figure of about $300 billion.

So if the Defense Department spends $671 billion, where does the other $210 billion in security spending go?

Other major security programs are still pricey, but they are somewhat more opaque. According to Chris Hellman, military policy fellow at the Center for Arms Control and Non-Proliferation, the budget includes the Department of Homeland Security ($53.5 billion), the Energy Department’s nuclear weapons program ($19.3 billion), the State Department’s contribution to the war on terror ($8.7 billion), and $129.3 billion for veterans programs (including disability, education and medical fees).

Additionally, the intelligence budget is classified, but the 2010 allocation is known to be at least $80 billion, according to Hellman.

How does the Pentagon manage to spend so much money?