Cutting the Pentagon Budget

Reductions in military spending are both necessary and possible.

Military expenditures are one of the reasons the U.S. government's financial path is unsustainable. Setting aside expenditures related to the country's ongoing wars, the fiscal year 2011 defense budget requested by President Barack Obama is $549 billion, 2.8 percent more than last year. The wars in Iraq and Afghanistan are expected to cost $159 billion more. That comes to $708 billion, the biggest military budget that the United States has seen since World War II.

Defense will represent 19.6 percent of the federal government's overall spending and 64 percent of discretionary spending. Even adjusted for inflation, according to Travis Sharp, a research associate at the Center for a New American Security, this level, $644 billion in 2000 dollars, 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 peak ($574 billion). 

And we might end up spending even more than that. In March the administration came back mid-year to ask for $33 billion more to support the troops in Afghanistan. Don't be surprised to see another supplemental spending request in fiscal year 2011.

Liberals often view the Pentagon as an item that should be cut but can't for political reasons. Commentator Matthew Yglesias writes: "The military is the most trusted institution in America and then on top of that the defense sector of the economy has a lot of money and economic reach. Consequently, it's very politically difficult for a president to do anything that provokes the ire of the defense establishment whether or not it polls well in the abstract."

Yet such cuts have been achieved in the past. Figure 1 shows large variations, increases and decreases, in military spending since 1942. During the last 70 years, the defense budget was cut 26 times by an average rate of 10 percent (Figure 2). The biggest cuts followed World War II, with a 72 percent reduction in 1947. The last cut was in 1998.

Figure 2 shows that most of the cuts have taken place after the end of a war. But cuts were also achieved in the late 1960s and early '70s, despite the ongoing conflict in Vietnam. Politicians explicitly debated how to cut spending without cutting security, and they still managed to get re-elected.

If liberals underestimate the political feasibility of Pentagon cuts, conservatives often overestimate the value of the spending. Many seem to believe the military budget should never be trimmed. The right-wing Heritage Foundation, for example, points to the "long war against Islamic terrorists" to justify the need for always-growing Pentagon budgets. 

Here too, the data tell a different story. In 2008 the U.S. military budget represented 48 percent of the $1.4 trillion in military spending worldwide (see Figure 3). That's six times as much as runner-up China and more than 10 times as much as Russia. Are all the other countries of the world in less danger of a terrorist attack than we are? 

Perhaps the level of spending and the level of danger don't have much to do with one another. After all, our military budget was already massive and growing ($364 billion in 2000 dollars, 40 percent of world spending) before we were attacked on September 11, 2001. 

As Benjamin Friedman, a defense analyst at the Cato Institute, recently noted in The Christian Science Monitor, "North Korea, Syria, and Iran trouble their citizens and neighbors, but with small economies, shoddy militaries, and a desire to survive, they pose little threat to us. Their combined military spending is one-sixtieth of ours.…And with an economy larger than ours, the European Union can protect itself."

Furthermore, the degree of waste and fraud that attends Pentagon contracting and spending is infamous. A March report from the Government Accountability Office compiles an impressive list of serious financial management problems at the Department of Defense, including misreporting of contracts, assets, and properties. Travis Sharp, the defense analyst, tells me: "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 or by reforming the Pentagon's supply chain, I.T., and personnel management practices. Of course, winding down operations in Afghanistan and Iraq would add even more to these potential savings."

It is true that military spending as a percentage of GDP has gone down, declining from 6.2 percent at its high in the 1980s to 4.6 percent in 2009. In response, some on the right, including Sen. John McCain (R-Ariz.) and Adm. Michael Mullen, chairman of the Joint Chiefs of Staff, have proposed that Pentagon spending be fixed at 4 percent of GDP. It's a strange suggestion: Indexing military spending to GDP makes about as much sense as indexing your rent to your salary. And I suspect McCain and Mullen would not agree that the budget should be slashed from its current 4.6 percent level to the 4 percent ideal.

The important question is not how much money we spend but whether we spend it effectively and meet our defense needs in the process. Demanding that military spending be driven by economic growth is just another way of saying that military spending is not about safety. It's about spending as an end in itself. 

Veronique de Rugy ([e-mail]) is a senior research fellow at the Mercatus Center at George Mason University.