Defense Budgets 101:

The Truth about US Military Spending

To incentivize a long-term debt reduction deal, members of Congress last year set up painful mandatory cuts called sequestration. Because budget negotiations failed, Americas men and women in uniform will suffer nearly $500 billion in cuts over the next decade unless Congress acts by Jan. 2. This 10 percent chop comes on top of more than $800 billion in cuts already imposed by the Obama administration. Secretary of Defense Leon Panetta says sequestration would be devastating but others contend the worlds mightiest military needs a trim. What are the facts?

Defense spending doubled over the past decade. Cant we return to previous levels?
No. That would mean returning to an era when general readiness was at a nadir and equipment was aging. Excluding funds associated with war fighting in Iraq, Afghanistan, and the global war on terror, the defense budget from 2001 to 2008 increased by just 4 percent annually, adjusted for inflation.

But arent todays defense budgets at historic highs?

In constant, real dollars, yes. But a better way to gauge the cost of defense is by measuring it as a percentage of the US economy. In that respect, the economic burden of defense has been cut almost in half, from a 50-year Cold-War average of about 7 percent to 4.1 percent today (3.4 percent without war costs).

We spend more on defense than many other nations combined. Isnt that excessive?
Not if you look at what we ask our military to do and the value it generates. Our preeminence yields enormous strategic returns: (1) It protects the security and prosperity of the United States and its allies; (2) It amplifies Americas diplomatic and economic leadership; (3) It prevents the outbreak of great-power wars so common in previous centuries; and (4) It preserves the international order in the face of aggressive, illiberal threats. These benefits are a bargain at 4 cents on the dollar.

Sequestration hits defense and domestic programs equally. Fairs fair, right?
Sequestration does virtually nothing to address the source of the federal governments fiscal problem, which is the unchecked growth in entitlement spending. In 2012, Medicare, Medicaid, and Social Security accounted for more than $1.5 trillion in federal spending, compared to $1.2 trillion for total discretionary spending, about half of which was defense. Think about it this way: defense and discretionary spending and entitlements and debt service are not equal slices of the budget pie; indeed, one of the smaller slices is taking a disproportionately high cut. That is not an equal share. Nor is it right to jeopardize the most fundamental function of governmentprotecting its people.

Weve all heard stories about $1,000 hammers. Surely there is waste to be cut?
There will always be waste in government, but the military is demonstrably one of the most efficient branches of government. Most Americans would love it if the postal service ran as well as the military.

Look me in the eye and tell me the F-35 program is not an outrageous waste.
We agree its been a fiscal debaclelargely because of government mismanagement. Remember, the F-35 program was originally justified as an efficiency measure. We can still realize that efficiency if we scale production properly. Ending it means loss of crucial air superiority, billions of dollars, and decades of effort.

Given our fiscal problems, shouldnt we rely more on offshore balancing?

Its tempting, but it undercuts deterrence and weakens ties to allies. Lasting victories are most often the result of onshore intervention. It is the triumph of hope over experience to think that we can avoid that requirement in future engagements.

Does the size of the military matter, given how much more todays ships and planes can do?
No matter how advanced, todays ships and planes still cannot be in two places at once, nor can they shrink the size of the skies or oceans. Numbers matter in war, and, for deterrence, in peace. The problem with the US military is not just that it is smaller than it used to be, but that, in a dangerous world, it is smaller than it needs to be.

Bonus charts
It has become popular to use charts like this to argue that defense spending is really growing

Source: Office of Management and Budget; Department of Defense; Congressional Budget Office; CRS Report RL33110. Data Note: War funding accounts for military and Overseas Contingency Operations (OCO). Produced by Veronique de Rugy, Mercatus Center at George Mason University.

but it is not growing as a percentage of the US economy. Defense and Entitlement Spending as Percentage of GDP
12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Entitlements National Defense
Source: Table 8.3Percentage Distribution of Outlays by Budget Enforcement Act Category: 1962 2017, www.whitehouse.gov/omb/budget/Historicals

But if thats the nature of the argument, lets look at the supermarket analogy:
In 1960, a gallon of milk cost: $0.49. In 2010, $3.67. Outrage. In 1960, average per-capita income: $5,315.00. In 2010: $40,065.00. Proportion of cost to income? Roughly the same. By contrastdefense? Proportionately, it is costing less than half of what it did in 1960.

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