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Home Publications Blogs Beat the Press The Military Is Projected to Spend $7.8 Trillion Over the Next Decade

The Military Is Projected to Spend $7.8 Trillion Over the Next Decade

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Thursday, 04 August 2011 04:56

The Washington Post is trying to win yet another Pulitzer for bad reporting. Today's entry is a page 4 story discussing the impact of potential cuts to the military budget. The Post told readers that the Pentagon could face $600 billion in cuts over the next decade.

That is supposed to sound really really big. But is it? It would have been helpful if the Post had bothered to tell readers the baseline level of spending. The Congressional Budget Office baseline is $7.8 trillion over the decade, putting the proposed cuts at a bit under 8 percent of projected spending.

Another useful benchmark is the pre-2001 level of spending. If spending were the same as a share of GDP as the pre 9-11 level, we would spend approximately $5.4 trillion on the military over the next decade.

Comments (22)Add Comment
$7.8T is Peanuts for First Rate Security
written by izzatzo, August 04, 2011 9:22
Who IS your nanny Baker? How dare you put military entitlement spending on the table.

Show us your papers. Now.

Stupid liberals.
Once Again.
written by Scott ffolliott, August 04, 2011 9:46
"The impact of war is self-evident, since economically it is exactly the same as if the nation were to drop a part of its capital into the ocean."
--Karl Marx, Grundrisse, 1857-58
Let's stop being the world's policeman.
written by Jeff77450, August 04, 2011 10:42
I’m a retired soldier and I’d like to see the U.S. stop being the world’s policeman. Defense needs to be cut by about 1/3, maybe more (over a period of time). If countries that live in “bad neighborhoods” like Iraq, Kuwait, Bahrain, Saudi Arabia, Korea, Japan et al want U.S. troops to remain then our response could be “Fine, but you pay (pick-a-number) 80% of the *total* cost of stationing them there–recruitment, training, equiping, deploying, supplying, troop-rotations, etc.” (Why not 100%? I recognize that the U.S. derives some benefit from the armed forces being a certain size; employment, economies-of-scale,etc.).

Just the thought of all the nations that we’ve defended, liberated, given money to–who routinely bad-mouth the U.S. and engaged in blatantly unfair trade practices–being over-run by islamic & mongolian hordes fills my heart with a malevolent *glee*. (Exceptions would include our genuine allies like the U.K., Australia and Israel; maybe a couple of others). I should be ashamed—but I’m not.

Defense Spending Has Nothing To Do with Defense
written by Paul, August 04, 2011 11:06
We should be increasing defense spending and the size of our army and navy to provide jobs for under-educated youth and expensive products for export to rich oil producing countries, e.g., Norway is buying our F-35s for no apparent reason.
Turning Guns into Butter
written by ieJasonW, August 04, 2011 11:10
Is there a way to shift the expected defense spending into domestic spending? In other words, instead of buiding F-35s can we built I-35s? As in Interstates? I know I'd like to see more infrastructure spending...

This also brings up another point. If an increase in government spending stimulates the economy, then why wasn't Bush's increased defense spending stimulative? Honest question about Keynesian economics from a liberal to an economist.

-JW
Iraq, Kuwait, Bahrain, Saudi Arabia
written by Scott ffolliott, August 04, 2011 12:49
Iraq, Kuwait, Bahrain, Saudi Arabia - perhaps it might not be such a bad neighborhood if their incredible riches were used to serve the liberty and freedom of all their citizens. Ah, but with American military help the oppression goes on.
Turning Guns into Trains
written by Scott ffolliott, August 04, 2011 12:54
Turning Guns into Butter is a good idea, but why do we need all these cars?
The reason be build highways is to support the car industry. We have been living in the company town and forced to use the company store for far too long. Let's walk away from the Faustian deal that was made in our name and make a better life for all.
...
written by Jim, August 04, 2011 1:01
Administrator-
I unintentionally hit the "report abuse" button for one of the comments. Sorry about that!
Jim
...
written by jumpinjezebel, August 04, 2011 1:38
Comments about more highways are misguided. What we need is more ways to get around without oil as the basis of doing it. Better Electrical Grid points to waste less of the electricity. Put solar/hydrogen on houses to charge electrical cars. Give Big Corps tax credits for using their excess cash to Green-Up their properties.
We Can't Turn Guns Into Butter or Plowshares
written by Paul , August 04, 2011 2:16
Defense spending is the one thing that conservatives and liberals can agree on, especially if major projects like F-35s are built in the Congress person's district/state and provide vast employment plus local tax revenues.

Highway construction is always "too expensive" which is why the Interstate system had to be built as a defense project.

Defense spending is definitely Keynesian - WWII spending is what finally ended the Great Depression.
Defense and Keynes
written by ieJasonW, August 04, 2011 3:28
Agreed regarding WWII and the Great Depression. My question is this. Look at the increase in defense spending since 9-11. Shouldn't this have caused an increase in GDP? How big should the increase have been? If GWB didn't stimulate the economy with the increased spending, what would the national growth rate be? Would we have seen a faltering economy earlier? I just don't recall economic growth being _that_ high during GWB.

Also, I'm under the impression the downturn is due to a decrease in demand from sinking home prices. This obviously happened after much of the post-911 defense spending increases. Does that mean there are _other_ contributors to our weak economy than just decreased demand due to sinking home prices?

9/11 & Growth of Economy
written by Paul, August 04, 2011 4:05
W's defense spending definitely contributed to economic growth as shown by unemployment rates.

At the worst of the 2001-03 recession, unemployment reached a peak of 6.3% in June 03, which was a 9 year high. By Mar 07, the rate fell to 4.4% and was at or below 5% every month of 07. http://data.bls.gov/timeseries/LNS14000000

Another major contributor to economic growth in that time was housing expansion which became the housing bubble that collapsed in 08 and crashed the economy. Now we have decimated demand - reduced defense spending and all government spending, plus reduced consumer spending because of the housing collapse and financial crisis.

A Keynesian solution - massive increase of government spending and consumer demand - is definitely needed, but we are now going in the opposite direction.
...
written by Matt R, August 04, 2011 4:58
“If an increase in government spending stimulates the economy, then why wasn't Bush's increased defense spending stimulative?”

Lets see... Rumsfeld essentially privatized everything but the core functions of the military. The contracts for these functions (i.e. PT, communications, base building, technology, ect.) are distributed to a select number of large multinational corporations with connections in DC and the DOD. The functions are extremely capital intensive in the first place but the contractors also minimize labor cost whenever possible.

DOD contracts typically have guaranteed profits as a percentage of cost which has the effect of essentially encouraging contractors to go over budget. The defense contractors then use nearly all of the extravagant profits to issue stock repurchase. The stock repurchases have a negligible effect for most shareholders but maximize corporate ISO's. Did I mention the ISO's can be backdated to maximize profit and disclosure of the date of a corporate repurchase isn’t required by the SEC? The profits from the ISO's are then taxed at a nifty 15% capital gains tax. Anything left over after the repurchases is likely invested into R&D and infrastructure.

The unemployment rate has been high since 2003 so there isn’t any incentive for the DOD to raise military wages…

Stimulative… the DOD spending is the economic equivalent of strip-mining.


“If countries that live in “bad neighborhoods” like Iraq, Kuwait, Bahrain, Saudi Arabia, Korea, Japan et al want U.S. troops to remain”

I know for a fact that the Japanese and the Saudi Arabian government has asked the US to remove/ scale down the bases in those countries several times but has been ignored. The US actually imposes massive non-negotiable fees to these countries to pay for the bases… the same bases the countries themselves don’t even want. Many of the bases also create massive amounts of pollution. Incidents of sexual assault and violence are a common complaint of residents living near the bases. I don’t see why any country would'nt want a permanent US enclave next door...
...
written by fuller schmidt, August 04, 2011 5:20
Excellent post Matt. Ross Perot knew what was coming giant sucking sound-wise. The current people in charge will now be learning that capitalism is bottom up phenomenon, not top down.
Uh, No Matt, You Are Wrong
written by Paul, August 04, 2011 5:33
The unemployment rate has been high since 2003

The unemployment rate in 2007 averaged under 5% and hit 4.4% in two months which is essentially full employment.
http://data.bls.gov/timeseries/LNS14000000
Uh, No Paul YOU are wrong....
written by Matt R, August 04, 2011 5:54
Seasonally adjusted unemployment hit 6.3% in Jan 2003. Full employment is considered to be around 4% and often estimated to be even lower. Although, the unemployment rate did dip in 2006 and 2007 as a result of the bubble… it was elevated for the entire period.

The average monthly unemployment rate from Jan 2003- June 2011 was 9% not 5%.
The average monthly unemployment rate for Jan 2003- Dec 2008 was 5.3%. I would say these figures are much higher then the rates seen in the roaring 90’s when enlistment was slow…

See: http://data.bls.gov/timeseries/LNS14000000
World War II = 50 millions dead
written by Scott ffolliott, August 04, 2011 7:31
"Defense spending is definitely Keynesian - WWII spending is what finally ended the Great Depression."

What kind of monsters are you?
...
written by cemmcs, August 04, 2011 10:23
Scott ffolliott, SPENDING for WWII ended the Depression. If you the US wants to SPEND its way out of a Depression (Recession), it could simply spend on things other than making war. The idea of making (spending on) war to end a Depression (Recession) is... Well, yeah, monstrous!
War is Monsterous
written by ieJasonW, August 05, 2011 9:41
Just wanted to agree, publicly. I agree with cemmcs. Spending to end a recession is Keynesian. Spending on war to end a recession is monsterous.
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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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