from The Water's Edge

The President's Inbox: Should the United States Spend Less on Defense?

U.S. Air Force F-35A aircraft form up during an exercise at Hill Air Force Base in Utah.
U.S. Air Force F-35A aircraft form up during an exercise at Hill Air Force Base in Utah. U.S. Air Force via Reuters.

Each week between now and the Iowa caucuses, I’m talking with two experts with differing views on how the United States should handle a foreign policy challenge it faces. These special episodes are part of CFR’s Election 2020 activities, which are made possible in part by a grant from the Carnegie Corporation of New York.

January 15, 2020

U.S. Air Force F-35A aircraft form up during an exercise at Hill Air Force Base in Utah.
U.S. Air Force F-35A aircraft form up during an exercise at Hill Air Force Base in Utah. U.S. Air Force via Reuters.
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Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

The latest episode of The President’s Inbox is live. This week, I discussed defense spending with Mackenzie Eaglen, resident fellow of security studies at the American Enterprise Institute, and William Hartung, director of the Arms and Security Project at the Center for International Policy.

Here are three takeaways from our conversation:

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1. Yes, there is fat in the Pentagon’s budget. Bill, who favors cutting defense spending, estimates that perhaps $30 billion of the defense budget falls into the waste, fraud, and abuse category. That’s a lot of money in absolute terms, but just 4 percent in relative terms. Wringing inefficiencies out of the defense budget, though, is easier said than done. Mackenzie, who favors spending more on defense, notes that the recent failures of Congress and the White House to pass the annual defense appropriations bill on time have made it harder for the Pentagon to spend money smartly. Partisan gridlock has real-world costs.

2. Big savings in the Pentagon’s budget, though, come only by changing roles and missions. Making sizable cuts in the Pentagon’s budget requires making tough decisions about the size of the force, how they are armed, and what they are asked to do. People, weapons, and operations are expensive.

3. Decisions about what constitute the Pentagon’s proper roles and missions turn on beliefs about what threats the United States faces and how best to address them. Mackenzie sees a world of renewed great-power competition, in which the best strategy for preserving peace is to prepare for war. That, in her view, requires significantly more spending. Bill agrees that conflict prevention is the top priority. He thinks, however, that the wiser, and less costly, way to achieve that goal is to invest in diplomacy and to leverage the capabilities of allies.

Mackenzie and Bill have addressed these points in their writings. Back in 2017, Mackenzie laid out her strategy for repairing the U.S. military. She has warned that Secretary of Defense Mark Esper will be repeating the mistakes of his predecessor Robert Gates if he concentrates on trying to squeeze inefficiencies out of the Pentagon’s budget rather pushing for more topline spending. She has also warned that the Pentagon should resist adding roles and missions that don’t advance its core mission of deterring great-power competitors. In pieces coauthored with Rick Berger, Mackenzie has argued, among other things, that proposed U.S. defense budgets “do not adequately account for the full breadth and scope of what the nation asks the U.S. military to do”; that the frequent use of continuing resolutions costs money and undercuts the military’s morale; and that complaints about the Overseas Contingency Operations (OCO) account, which has come to cover more than just the war-fighting costs not borne by the Pentagon’s so-called base budget, could be solved if “arbitrary” budget caps on military spending were removed.

Bill argues that “America’s military is misdirected, not underfunded.” He has warned that the Iran crisis should not be used “as an excuse to boost Pentagon spending.” He has examined the historical forces that in his view have produced “bloated” defense budgets. He also has argued that the best response to a possible conflict with a rising China is not to spend more on defense but to invest more in diplomatic and economic instruments “focused on how to prevent such a conflict from occurring in the first place.” On that score, Bill has applauded Elizabeth Warren’s call to eliminate the OCO account. He wrote that “for years it has been used as a slush fund to pay for tens of billions of dollars-worth of items that have nothing to do with fighting current conflicts.” He also has written that the Pentagon won’t begin to spend money efficiently until the “infamous ‘revolving door’ between weapons companies and the government” comes to a halt. In all, Bill is convinced that “the oft-repeated assertion that the U.S. military has been underfunded during this decade is simply not true.”

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Last month, Congress passed, and President Trump signed into law, a bill that appropriated $738 billion for defense spending in FY20, the fiscal year that began last October 1. That was up from $716 billion in FY19. Those two topline figures include spending for both the base budget and the OCO account.

What are those funds spent on? The following chart, which reflects President Trump’s budget request, provides a rough guide to where defense dollars will go in FY20. Two quick points. One, “people costs” account for roughly a quarter of the Pentagon’s budget. Two, the services all get roughly the same size slice of the budget pie. 

This chart shows the break down of the Defense Department's budget.

How does $738 billion compare with past Pentagon budgets? The best way to answer that question is to look at so-called real spending on defense, that is, after taking inflation into account. Here is a chart that the Washington Post generated last year that does just that: 

U.S. defense budget adjusted for inflation.

As the chart’s caption states, Pentagon spending in real terms is at near record levels, at least when compared with the past four decades.

Another way to look at defense spending is to measure it as a percentage of gross domestic product (GDP). As the chart below shows, by this measure U.S. defense spending is at near record lows.

U.S. defense outlays as a percent of GDP.

As you might imagine, proponents of spending more on defense tend to flag defense spending as a share of GDP in support of their position.

Another way to think about defense spending is in terms of how much other countries spend. As the chart below shows, the United States’ defense budget is larger than the next seven countries combined.

The United States spends more on defense than the next seven countries combined.

Three of the countries in the next seven are U.S. treaty allies (France, Germany, and the United Kingdom), and two are friendly countries (India and Saudi Arabia). As you might guess, proponents of cutting U.S. defense spending like to point to charts like this one.

A final, and admittedly self-promotional, note. Feedspot.com has named The President’s Inbox one of the Top 10 Foreign Policy Podcasts. Everyone involved in putting together The President’s Inbox appreciates the recognition. I urge you to check out Feedspot.com’s list for the great suggestions on other podcasts that can help you stay on top of what’s happening in foreign policy.

Margaret Gach helped in the preparation of this post.

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