• In inflation-adjusted dollars, SIPRI's measure of U.S. military spending rose sharply after the terrorist attacks of 2001.
• In 2011, military spending declined by almost $9 billion, the first such decline since 1998.
• Sequestration scheduled to take effect in January promises about $55 billion in cuts to U.S. military spending, although the baseline against which these cuts will be made remains unclear.
• The president's 2013 budget requests $728 billion in military spending. If this were used as the baseline, sequestration would mean a 7.5 percent reduction in military spending from the president's requested level in FY 2013.

• When U.S. inflation-adjusted military spending fell by one-third in the 1990s, the U.S. share of global military spending only fell by six percentage points because other countries, particularly Russia, reduced their military spending as well.
• By contrast, the 1.2 percent fall in U.S. military spending in 2011 resulted in a 0.6 percentage point fall in the global share, as military spending by the rest of the world simultaneously increased.

• From 1990 to 2000, U.S. growth roughly kept pace with global growth. So the impact of U.S. growth on the nation's share of global military spending (represented by the red bars) offset the impact of rest-of-the-world growth (represented by the purple bars). As a result, the net growth effect, shown by the blue line, was close to zero.
• Over the past ten years, faster foreign growth has reduced the U.S. share of military spending.

• The impact of growth on military budgets, shown above, has been disguised by shifting policy on how much of GDP to allocate to defense.
• In the 1990s, the United States cut the defense budget (shown in the blue bars), whereas in the 2000s, the defense budget increased.
• Between 1990 and 1995, cuts in foreign allocation of GDP to defense (especially in Russia) boosted the U.S. share of total military spending (the green bar). Since 1995, the rest of the world has spent a fairly stable share of GDP on the military.

• Combining the two previous charts, it is clear that changes in spending as a percentage of GDP have buoyed the U.S. share of world military spending, while changes in GDP have been a headwind.
• A decline in the U.S. share of world military spending seems likely in the absence of a new sense of insecurity.

• Overall funding for overseas contingency operations has declined by just over 50 percent since 2008 as the war in Iraq has wound down.
• Funding for the two operations was as high as $187 billion in fiscal year 2008, which represents 30 percent of SIPRI's measure of U.S. military spending for that year.
• War funding is projected to come to $96 billion in fiscal year 2013, but it is likely to decline thereafter with the winding down of the war in Afghanistan.

• As of fiscal year 2012, the number of troops deployed in Afghanistan and Iraq has declined 49 percent since fiscal year 2008.
• Troop levels are projected to decline a further 28 percent in 2013.

• U.S. national defense spending has ranged widely, from less than 1 percent of GDP in 1929 up to 43 percent in 1944. These extremes illustrate that resource allocation to defense can increase rapidly when a war demands it.

• Focusing just on the post-World War II period, U.S. national defense spending as a percent of GDP has ranged from a high of 15 percent in 1952 (during the Korean War) to a low of 3.7 percent in 2000 (the period of relative tranquility preceding the terrorist attacks of the following year).

• In the post-Cold War world, the U.S. national defense budget has fluctuated within a relatively narrow band. It fell by about three percentage points of GDP as the nation reaped the peace dividend of the 1990s, then rose after the terrorist attacks of 2001.
• President Obama's budget proposes cutting security spending to 3.7% of GDP in 2018. This would match the 2000 level and represent the lowest allocation of GDP to defense spending in the post-World War II era.

• Democracies are generally regarded as friendly to the United States, and this chart delivers a similar verdict to the last one.
• After the collapse of the Soviet Union, democracies accounted for the vast majority of the world's military spending.
• However, since the early 1990s, this share has declined slightly.

• The United States accounts for almost half of all military spending by democracies.
• A decline in U.S. military spending is therefore likely to have a large impact on democracies' military spending as a share of the global total.

• This chart compares each country's share of spending and share of military equipment. The equipment measure includes twenty-one categories such as tanks, aircraft, and satellites.
• Spending and equipment levels are correlated. Russia is the exception, perhaps because it still has equipment left over from its period of high spending before 1990.

• Unlike equipment, personnel is relatively uncorrelated to spending.
• Because of differences in labor costs, $1 million in the United States will hire fewer soldiers than $1 million in Russia or China.
• If military budgets were compared in a way that reflected varying personnel costs, U.S. military preeminence would appear smaller than it does using straightforward comparisons based on market exchange rates.

• The effect of defense cuts on personnel would depend on which part of personnel spending suffered.
• Of the $195 billion in Department of Defense payroll outlays, only $84 billion went to active-duty military pay.
• Retired military pay, which does not directly increase defense capabilities, accounted for nearly 20 percent of total personnel expenditures in 2009.

• The number of personnel employed by the Department of Defense has declined since the 1960s, while personnel costs have risen rapidly, in part due to rising U.S. health-care costs.
• The cost of military pay and allowances and military health care has risen 90 percent since FY 2001, while the active-duty personnel count has risen by less than 3 percent.
• Military health-care costs have risen from $19 billion in FY 2001 to $48.7 billion in FY 2013.

• The cost of military hardware has grown more than inflation. Today's spending results in less procurement than does spending in the past.
• Although the rising cost of hardware partly reflects rising quality, shipbuilders reported to the RAND Corporation that uncertainty surrounding the number of ships ultimately purchased increases labor costs and reduces the incentive to invest in processes that could reduce costs.

• Countries such as the United States that have invested a substantial sum in their military must spend simply to maintain existing levels of equipment.
• The chart shows that the United States must spend about 1 percent of GDP on military hardware just to tread water.
• Spending in countries that have low military capital stocks will result in larger increases in defense stocks due to lower levels of depreciation.

Explore our other Chart Books:

Foreign Ownership of U.S. Assets

Foreign Exchange Reserves in the BRICs

Economic Recovery

Economic Downturn