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On US defense budget

Posted by Picard578 on December 1, 2012

While Chinese and Russian defense budgets are incomplete, so is the US defense budget. In reality, US defense sprending is between 1 and 1,4 trillion USD a year, that is 6,3 to 8,8 % of US GDP of 15,974 trillion USD as opposed to the base budget of 711 billion USD in 2012 (or 4,5 % of GDP; to compare, Croatian defense budget accounts for 1,7% of GDP). 2012 defense-related budget request was between 1,09 and 1,42 trillion USD, depending on variables.

For another comparision, base UK defense budget was 62,7 billion USD, around 2,6% of GDP, and that of China was 143 billion USD, or 2% of GDP. When adjusted for Purchasing Power Parity, base defense budget of China was 228 billion USD, or 32% of US one, while China’s GDP is 48,4% of US one. While it is indeed correct that China’s total defense spending is higher than these figures – up to 250 billion USD, not accounting for PPP – that is, as I have shown above, also true of the US defensu spending, so the ratio remains similar.

In fact, using PPP values, total defense budgets of largest NATO spenders (US, UK, France, Germany, Italy, Canada, Turkey) combined add up to 932,6 billion USD. When major non-NATO allies (Japan, Australia) are thrown in, value goes up to 993,9 billion USD in PPP, with United States accounting for 71,5 % of total value. Thus, United States outspend China 5:1, or 3:1 when PPP is taken into account. However, unless United States are going to attack China first, they will have support of NATO, as well as Japan and Australia. Thus, spending ratio will be – even with PPP – in 4,4:1 neighbourhood. For comparision, take a look at the graph below.

defense spending comparision

defense spending comparision

US major allies alone spend more than China on defense, while United States alone spend more than four times as much as China does. Yet, China has populace of 1,347 billion people, compared to the US 314 million.

In 2011, there have been many developmental programmes. Low-performance bomber F-35 was the most costly at 11,4 billion USD. By cutting it, and other programmes of very questionable usefulness (LCS, UAVs), 16,6 billion USD could have been saved.

Fact is that large US defense budget does not produce military capability that is in line with size of the budget. Reasons for that have to be looked for in how weapons procurement works: contractors in armaments industry are free to work with almost no oversight, and lessons from past wars are ignored. In fact, armament manufacturers are inclined to increase complexity and cost of every single weapons system, as it means that they spend less on raw materials and work force, while receiveing large sums of money on both production and drawn-out R&D. Such complexity increases do not, however, mean that weapon is really more capable. Due to that, we get to the paradox where less defense spending could result in more capable military.

Many spending-defenders argue that defense spending saves jobs. That is not true even when looking only at the defense industry. In fact, Lockheed Martin and Boeing have fired thousands of workers at the same time they were receiveing very lucrative contracts.

While increase in defense spending can indeed create jobs when done right, it is terrible job creator even then. For example, only 1,5% of F-35 program costs goes on workers’ pays. In fact, same amount of defense spending creates 25% fewer jobs than a tax cut; one and one-half times fewer jobs than spending on clean energy production; and two and one-half times fewer jobs than spending on education. It also creates less jobs than public works. For exact figures, consider that every 100 billion USD of a military budget (not spending) creates, approximately, 830 000 jobs in military and military industry. When same amount of money is spent for education, both the number of jobs and the average pay are going to be higher. If it is spent on health care or infrastructure, average pay will be less, but total pay compensation will be more than with military industry, and number of jobs created will be far more (for the same amount of money, health care 151%, education 207%, mass transit 231% and construction of infrastructure 150% as much jobs as defense establishment. All of them have additional benefits: more capable work force, reduced pollution, etc. Also, US infrastructure is currently in very poor shape). Total compensation to economy is also larger than that of defense, at 23 – 124% more.

In fact, “Converting the American Economy” study from 1990s has found that a gradual reduction in military spending, starting with $35 billion in 1990 and reaching $105 billion in 1994, would have produced a net gain of 477,000 jobs within the U.S. Economy.

Yet, only 75 billion USD were spent on education in 2007, and military spending accounts for 50% of total Federal spending.

Tax cuts, however, are the worst option for helping the economy, possibly even worse than defense spending. One of reasons is the fact that tax cuts primarly target the wealthy part of the populace, who accumlate money. As economy is all about flow of money, not its accumulation, result is economy slowdown. Tax evasion has similar effect, however – and major armaments companies are spending large sums on lawyers so as to evade taxes.

Important thing about the defense budget is that it must not be governed by GDP, but by military realities. One reality is that United States should not, as it is doing now, fixate on China as a threat. China does seem to be impatient and agressive, but question remains how much of blame for that goes to the United States themselves. While United States should be able to defend itself, military solution of its issues with China should be the last option. However, there are more powers on work here, such as US military contractors, who need a dangerous opponent so as to justify further defense spending increases, and maintain their influence as well as their peace of the budget cake. As such, realistic assessment of situation cannot be expected, at least from the US Government and weapons contractors.

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