Chart of the Week – Military Spending

Chart based on numbers from the Stockholm International Peace Research Institute

This week President Obama released his budget for 2012. Republicans scoffed, and rightly so, at the paltry $1 trillion he proposed to cut from the deficit (not the budget) over the next ten years. In fact, his budget adds over $7.2 trillion to the debt over that time. And this is if we accept all of the rosy numbers the administration anticipates for GDP growth and low inflation.

But is the Republican proposal really that much better? They have proposed $58 billion in cuts for the rest of this fiscal year which ends on September 30. Paul Ryan, chairman of the House Budgetary Committee calls is a “down payment” on the $100b per year Republicans promised to cut during the election. Hmm. Even the stingiest proposals from the Republican leadership add trillions to the budget over the next decade.(1)

Part of the problem is that Republicans (and many Democrats) refuse to cut anything from defense spending. The politicians always talk about cutting “discretionary non-defense spending.” The problem is even if they cut 100% of discretionary non-defense spending (that is, everything the government does with the exception of defense, entitlements, and servicing the debt) they would not balance the budget. 

Can anyone seriously think that there’s no fat to trim from the defense budget? The chart above clearly shows that there’s plenty of room to cull. The U.S. spends more on defense than the next 16 biggest countries combined. We spend six times more than the next biggest spender, China. And that chart actually under-represents the amount we spend on national defense each year. The article from the Independent Institute excerpted below claims that total defense spending is over $1 trillion per year.

To estimate the size of the entire de facto defense budget, I gathered data for fiscal 2009, the most recently completed fiscal year, for which data on actual outlays are now available. In that year, the Department of Defense itself spent $636.5 billion. Defense-related parts of the Department of Energy budget added $16.7 billion. The Department of Homeland Security spent $51.7 billion. The Department of State and international assistance programs laid out $36.3 billion for activities arguably related to defense purposes either directly or indirectly. The Department of Veterans Affairs had outlays of $95.5 billion. The Department of the Treasury, which funds the lion’s share of military retirement costs through its support of the little-known Military Retirement Fund, added $54.9 billion. A large part of the National Aeronautics and Space Administration’s outlays ought to be regarded as defense-related, if only indirectly so. When all of these other parts of the budget are added to the budget for the Pentagon itself, they increase the fiscal 2009 total by nearly half again, to $901.5 billion.

Finding out how much of the government’s net interest payments on the publicly held national debt ought to be attributed to past debt-funded defense spending requires a considerable amount of calculation. I added up all past deficits (minus surpluses) since 1916 (when the debt was nearly zero), prorated according to each year’s ratio of narrowly defined national security spending—military, veterans, and international affairs—to total federal spending, expressing everything in dollars of constant purchasing power. This sum is equal to 67.6 percent of the value of the national debt held by the public at the end of 2009. Therefore, I attribute that same percentage of the government’s net interest outlays in that year to past debt-financed defense spending. The total amount so attributed comes to $126.3 billion.

Adding this interest component to the previous all-agency total, the grand total comes to $1,027.8 billion, which is 61.5 percent greater than the Pentagon’s outlays alone.

To be clear, national defense is the most important function of the federal government (and one of the few things they do that is actually authorized by the Constitution). But to assume that we need to spend more than all of Europe on defense is getting carried away. We could cut our defense expenditures in half, cutting $330 billion per year from the budget, and still be spending three times more than China every year.

So how would we do it? Ending the wars in Iraq and Afghanistan would be a good start. Many experts believe that those wars make us less safe for two reasons. First, because militarily occupying another country causes resentment among many of the people of that country and is the most important factor motivating suicide bombers. Second, because the high expense adds to the unsustainable national debt that threatens to destroy the economy, making us less able to protect ourself in the future.

But even if both wars are absolutely necessary and cutting a single penny would threaten our safety, do we really need 865 military bases (not including the bases in Iraq and Afghanistan) in over 130 countries? Do we really still need 268 bases in Germany, 124 bases in Japan and 87 in South Korea?

If Republicans are serious about balancing the budget then they need to admit that military spending cannot be sacrosanct. Then they can man up and start tackling entitlement reform.


(1) It should be noted that Republican Senator, Rand Paul, has proposed a budget with $500 billion of cuts in discretionary spending in one year. He plans to also address entitlement reform and cuts in the next few weeks.

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