February 17, 2011

Your $5,555 Defense Bill Chokes on Waste: Veronique de Rugy

Featuring Travis Sharp

Source: Bloomberg Business Week

Republicans have promised to cut spending and restore fiscal discipline in Washington. Yet they shy away from one of the biggest pieces of our federal budget: defense spending.

Republican Congressman Buck McKeon, chairman of the House Armed Services Committee, reacted to Defense Secretary Robert Gates’s recent and ever-so-modest effort to reduce the growth in the Pentagon’s budget by saying, “We are fighting two wars; you have China, you have Iran: Is this the time to be making these types of cuts?”

Well, yes. With fiscal pressures rising, the U.S. doesn’t have the luxury to pretend that every defense dollar increases security. Nor can we shelter defense from fiscal imperatives.

First, America’s military budget is massive. Even setting aside expenditures related to the country’s current wars, the amount requested by President Barack Obama for 2012 is $553 billion. The wars in Iraq and Afghanistan are expected to cost $117.8 billion more. On top of mandatory spending and other defense related programs, that comes to roughly $702 billion, or some $5,555 per American household.

Adjusted for inflation, the U.S.’s annual spending is 13 percent higher than the Korean War peak ($624 billion), 33 percent higher than the Vietnam War peak ($534 billion), and 23 percent higher than the Reagan-era military buildup ($574 billion).

Perceived Threat

Second, the important question isn’t how much money is spent but whether it is spent effectively. Unfortunately, the current levels of expenditure and the threat to national interests don’t have much to do with each other. After all, the U.S. military budget was already immense and growing ($364 billion adjusted for inflation and 40 percent of world spending) before we were attacked on Sept. 11, 2001.

In 2009, the U.S. defense budget represented 43 percent of the $1.5 trillion worldwide military spending, according to the Stockholm International Peace Research Institute. That’s more than six times greater than the runner-up, China, and more than 70 times that of Iran. Even under the assumption that the U.S. faces a threat from these nations, the disparity remains vast.

To be sure, the U.S.’s self-appointment as world policeman explains why America’s arsenal is larger than the potential threats would dictate. But the disparity can also be explained by budgetary and bureaucratic inertia. Looking at defense- spending data from 1886 to 1989, Benjamin E. Goldsmith at the University of Sydney found that bureaucrats tend to perpetuate existing funding levels and discourage big reductions in spending even if threats diminish. They will, however, boost expenditure as perceived threats increase. So, not every dollar spent increases security.

Buy Votes

While some funds are used to support defense interests, others are directed to buy votes. This accounts for the Cold War weapons and submarines included in the Obama budget.

“Reports from across the political spectrum, including from watchdog groups and defense contractors, have estimated that over $50 billion per year could be saved by eliminating a few controversial weapons systems,” says Travis Sharp, a research associate at the Center for a New American Security. The U.S. could save more money by reforming the Pentagon’s supply chain, information technology, and personnel-management practice. We could also save by ending the wars.

Excessive defense spending may ultimately make the country less safe. Today, the U.S. military’s missions include containing China; turning failed states into democracies; capturing terrorists; protecting Europe, Asia and Middle Eastern states from aggression; keeping oil cheap and cyberspace secure; delivering humanitarian relief; responding to natural disasters and more.

Stretched Thin

There will never be enough money for the military to do it all. Yet, a military that is stretched so thin leaves the nation less safe from true threats.

In addition, the degree of poorly allocated spending and outright fraud that historically attends to Pentagon contracting and spending is well-known. A March 2010 Government Accountability Office report compiled an impressive list of serious financial-management problems at the Defense Department, including misreporting of contracts, assets and properties.

Finally, while the threats that America’s enemies pose are important in shaping the size of our defense budget, so do competing government priorities in the face of limited resources. After years of across-the-board overspending, the country is crushed with debt. If we don’t reverse course, economic disruptions may overwhelm our security.

Fire Sale

Entitlement and defense are the two biggest items in the federal budget, and they should be overhauled today. If not, the U.S. might be forced into a fire sale when the crisis hits and there will be no time for consideration about security.

The good news is that defense spending can be cut. Over the last 70 years, the defense budget was trimmed 26 times at an average rate of 10 percent. The biggest decreases followed World War II, with a 72 percent cut in 1947. But these don’t just come immediately after wars. The last budget cut took place in 1998.

Obviously, the political environment at the time of these reductions is important. Most have taken place after a war. But some were also achieved in the late 1960s and early 1970s, while hostilities continued in Vietnam.

The bottom line is that it isn’t only fiscally responsible to cut military spending. It is also the safe thing to do.



  • Travis Sharp