August 16, 2022

Economix: Can We Afford the Military Budget?

Today's Economist

Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul.

Defense Secretary Robert M. Gates gave a speech in Brussels on Friday in which he berated our allies in the North Atlantic Treaty Organization for not carrying their weight in terms of providing resources for the common defense. “For all but a handful of allies, defense budgets — in absolute terms, as a share of economic output — have been chronically starved for adequate funding for a long time, with the shortfalls compounding on themselves each year,” Mr. Gates said.

An examination of the latest NATO data shows that in 2010, the United States spent 5.4 percent of its gross domestic product on its military — twice as much as spent by Britain and three to four times as much as most of our NATO allies, as shown in the following table.

North Atlantic Treaty Organization

A crucial reason for this gap is that the United States spends almost as much today as it did during the Cold War. Every other NATO country spends substantially less.

Secretary Gates also made another point about military spending by our allies: they spend much more on personnel and less on equipment than the United States. “The result is that investment accounts for future modernization and other capabilities not directly related to Afghanistan are being squeezed out — as we are seeing today over Libya,” he cautioned.

According to NATO, the United States spends 46.7 percent of its military budget on personnel. All but five other NATO countries spend more — often considerably more. The average for all NATO countries other than the United States is 56.7 percent of their military budgets spent on personnel, with a number of countries spending two-thirds to three-quarters.

Consequently, there is little money left over for equipment. The United States spends 24.2 percent of its military budget on equipment and only five NATO countries spend more. The average for all NATO countries other than the United States is 16.7 percent of military spending going to equipment, with a number of countries spending less than 10 percent.

But what about our adversaries? Don’t we need to maintain a high level of military spending to counter the capabilities of countries like Russia and China?

For those data, we need to look to a different source. According to the latest yearbook from the Stockholm International Peace Research Institute, the standard nonclassified source, Russia spent 4.3 percent of its G.D.P. on military outlays in 2009, down from 15.8 percent in 1988; China spent just 2.2 percent of its G.D.P. on the military budget, about the same as it has been since 1989.

Stockholm International Peace Research Institute

The institute notes that the United States accounted for virtually all of the increase in world military spending in 2010.

And because the United States has the world’s largest economy, its share of world military spending is outsized, accounting for 43 percent of all the military spending on Earth — six times as much as China, which has the world’s second largest military budget and accounts for 7.3 percent of world military spending. Russia accounts for just 3.6 percent.

With polls showing declining support for the war in Afghanistan and increasing talk in Congress, even among Republicans, about cutting the military budget, it appears certain that the Defense Department is going to be downsized and our foreign military commitments scaled back in coming years.

This is going to require serious rethinking of what we perceive to be our strategic threats and whether the United States can continue to afford to be the world’s peacekeeper.

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