Should the US defense budget be cut?

Proposals to cut the US defense budget have been cricitised by a number of contributors to Catallaxy and elsewhere. Yet the same people think that the US budget deficit is ‘out of control’.

I don’t see why the US defense budget shouldn’t be cut. It is bloated and I doubt that US taxpayers are getting good value for money.

Let’s leave aside the qualities of the present Commander-in-Chief. Yes, he is probably one of the worst in history along with the likes of William Henry Harrison, Millard Fillmore, Chester Alan Arthur and James Buchanan.

But he is definitely the worst US President of the 20th and 21st centuries though.

It is all very well for us to argue for high US military spending. Australia enjoys the positive externalities of US military spending.

But do we really think that US taxpayers are getting bang for their buck? Is there no scope for efficiency gains in the US military?

According to the SIPRI database, the US spent 4.4 per cent of its GDP on the military in 2012. You have to look at countries such as Algeria, Oman, South Sudan and a few others that spend a higher percentage of their GDP on the military. Australia spent 1.7 per cent of its GDP in 2012.

The chart below (drawn from the SIPRI database) shows a time series of military spending by a few countries using constant price USD.

US military spending dominates all other countries, including China and Russia.

In 2012, the US military spending was 4.2 times that of China and 7.4 times that of Russia.

Also in 2012, there were 1,430,000 active serving personnel in the US, 2,285,000 in China and 766,000 in Russia.

  • The US spends $US 470,000 for each of its serving military personnel
  • Russia spends $US 118,000 for each of its serving military personnel
  • China spends $US 69,000 for each of its serving military personnel

Sure, we could discuss technology, although Russia and China have some pretty impressive military technology including nuclear weapons. The US military is a good example of diseconomies of scale.

But the biggest argument to cut US military spending is that the US military is impotent.

Militaryspending

 

About Samuel J

Samuel J has an economics background and is a part-time consultant
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43 Responses to Should the US defense budget be cut?

  1. jupes

    But the biggest argument to cut US military spending is that the US military is impotent.

    The US military itself isn’t impotent, it is the most powerful military machine known to man.

    It is the way it is used that renders it impotent.

  2. Samuel J

    Potential power is useless unless it can be credibly deployed. Since the US military cannot be used effectively, it is impotent.

  3. Harry Buttle

    Samuel, in the short term you are right, but all it takes is a POTUS with balls and the equation changes radically – the problem is it takes a long time to rebuild capabilities that can be squandered overnight.
    and the USA has real enemies out there.

  4. jupes

    Since the US military cannot be used effectively, it is impotent.

    My point is that the US military CAN be used effectively.

    It is just that those who lead it don’t have the will to do it.

    Put me in charge and they would never lose another war.

  5. entropy

    Francis de Marais: Why don’t you Americans learn from us – from our mistakes? Mon Dieux! With your Army, your strength, your power, you could win if you want to! You can win!

    where does that come from, jupes?

  6. jupes

    where does that come from, jupes?

    That would be Apocolypse Now entropy.

  7. entropy

    A pity I don’t have a hello kitty prize like Blair has going at the moment.

  8. Ed

    I don’t see why the US defense budget shouldn’t be cut. It is bloated and I doubt that US taxpayers are getting good value for money.

    Yeah I agree. Cut the defense budget.

    They spend stupendous amounts on defense. I don’t think people fully grasp just how many squillions get spent on defense. And it’s not just about inefficiencies either; there’s a serious question about overcapacity.

  9. Paridell

    The size of the US military is intended to allow the United States to fight two major wars simultaneously, as it did in Europe and the Pacific in the Second World War. Samuel’s argument that it is ripe for cutting because it “cannot be deployed effectively” begs an awful lot of questions. Most US allies would argue that it is already deployed effectively at strategic points around the world. One of their main anxieties is in fact that this deployment will be wound down in the final years of the Obama Administration.

    The US military has underwritten the peace ever since 1945. I for one would not like to see the US lose this capability, and least of all through short-sighted budget cuts.

  10. Samuel J

    For those opposed to US defenseman cuts: are you willing to donate money to assist the US military budget? Otherwise are we not just another form of rent seeker trying to grab a bit of the US taxpayer largesse?

  11. JC

    SJ
    A cut in US military spending wouldn’t spell efficiency gains. They would just continue doing the same shitty stuff only less of it.

    How’s this… As a Australian living in Oz I don’t want the US to cut it’s spending. If I were living in the US I’d be doing cartwheels if they cut it. It’s been a good ride for us.

  12. Ed

    Most US allies would argue that it is already deployed effectively at strategic points around the world.

    The problem is that the strength of the US defense umbrella has encouraged free-riding, and lots of it. And what’s more, paradoxically, a country that free-rides tends to foster an anti-military culture that resents the US for being overbearing and militarised.

  13. Peter

    Has that comparison allowed for the difference in cost between a soldier deployed in combat and a soldier in peace-time barracks?
    The very obvious costs are maintenance and replacement of equipment and the cost of expendable items such as fuel and ordnance.

    If not, then is the comparison valid?

  14. Ed

    In short, the US bears the brunt of peaceniks around the world (and in the US) because it is far more militarised than other countries; but this is because many of those countries don’t have to spend on defense …. because the US does it for them.

  15. Paridell

    Samuel, surely you do not think that the proceeds from cuts to the US military will go to taxpayers?

    Obama has announced that ‘austerity is over’, which, being translated, means he is bent on looting the Pentagon budget to fund his loony-left schemes on behalf of non-taxpayers.

    The US taxpayer will be an also-ran, at best.

  16. Splatacrobat

    Maybe its the fact that one in four Americans are employed either directly or indirectly in defence industries that the government find it hard to subdue this behemoth.

    Australia closes three car plants and they talk about 70-80,000 jobs gone. This is a list of the top 100 defence contractors.

    First imagine how many sub contractors sit under the top 100. Then imagine how many people they would have to let go if they cut spending by even 1% of GDP.

    Their whole economy is based on manufacturing swords not plowshares. Hard to stop once you start with no plan B.

  17. Splatacrobat

    The US military has underwritten the peace ever since 1945.

    Because the UN went MIA. The US should send a bill to all the freeloaders.

  18. Ant

    Their deficit is over 100% of GDP. And they got there before Obamacare was rammed down taxpayers’ throats.

    That it’s “out of control” appears to be a no brainer.

    And don’t even scare yourself by looking at their unfounded liabilities.

    Sure, their military budget is an obvious area where efficiencies would be found, but Obama isn’t interested in efficiencies. He’s into the “fundamental transformation” business.

    Now, just what do you reckon this community organising hard left ideologue is interested in transforming the planet’s most awesome military machine into?

    Check his record, observe what the world’s more malevolent regimes are currently up to, slap yourself out of your cushy slumber, and be serious!

  19. Disillusioned

    Army numbers will be decimated with those with families first to leave because they will not be able to provide for their families on reduced allowances. Those soldiers represent the most combat experienced available to the US. I doubt they will join the reserves. The Air Force will not be able to risk piloted aircraft so there goes any projection of force outside of continental US.I don’t think US citizens would be doing cartwheels if they realised that the only enemy that the US Army is being geared up to fight is internal and not of the left wingnut type. Anyone with an opinion to the right of Obama is a suspect enemy. If you don’t believe it how do you explain the billions, yes billions of rounds purchased or ordered by Homeland Security including several million sniper rounds. I suspect they don’t trust the Army to turn on the populace without a gun at their head. Of course it could also be a bold attempt to maintain an ammunition shortage for the population which has been going on for several years.
    Obama has already reduced the number of carriers at sea and reduced the funds to maintain the carriers in dry-dock. He wont expose the limited carrier resources to harm which limit force projection.
    Basically the US is impotent.

  20. Paridell

    Because the UN went MIA. The US should send a bill to all the freeloaders.

    Except that the US is the main funder of the UN as well: in 2010 alone, $7,691,822,000.

  21. Leo G

    But he is definitely the worst US President of the 20th and 21st centuries though.

    Not possible. Only Bill Clinton qualifies.

  22. .

    I do not want militarism, waste or any taxes but lower taxes, but we should increase defence spending – we can no longer rely on America.

    The US should allow the F-22 to be exported to her close allies (the five eyes group), etc.

    Personally I’ve always been perplexed why we didn’t arm the F-111/F-35/interim super hornets with genuine cruise missiles (not extended range ASMs) as well as the Collins class subs, and perhaps our frigates – along with not having a denser chain of OTH radar such as the Jindalee. Combing a few of those with the five eyes/Pine gap and some of the trendy new Israeli “Green Pine” systems would see us well positioned to never be put over a barrel.

    We ought to develop our own NMD and integrated air defence. I also say we should buy some missile cruisers alongside the frigates.

  23. .

    If the Rudd Government stimulus was spent on replicating the snowy hydro scheme, we could have had that plus 28 bn to spend on the military (engineering journals recently have claimed that the stimulus could have built the equivalent of “three snowy schemes” – source – a consulting civil engineer I know who does only contract work).

    Let’s say we do it with no debt.

    So the surplus gets spent in year one, builds the new dams, and 4 bn or so spent on the military and in 2010 and 2011, we spend on the military and two years ago we would have had a much stronger military than we do now.

    Oh dear. We kinda fucked up.

  24. Demosthenes

    That would be Apocolypse Now entropy.

    One of the best scenes in a movie not short of great ones.

  25. C.L.

    Ahahahahaha.

    Remember Hillary Clinton’s “reset button” – whose purpose was to herald a new, sophisticated modus vivendi with Russia, in marked (and alleged) contrast to dumb Bush’s foreign policy?

    Jim Hoft does.

  26. “The US military has underwritten the peace ever since 1945.”

    The US of A has been in almost continuous conflict in one for or another since 1945, and the world has been far from peaceful in that period as well. US Military cuts are likely to stem from the economic reality that the US of A simply no longer has the money to pay everyone else’s defence bills, and the political reality that the Americans themselves are rather war weary and wouldn’t mind having the rest of pull our own weight and come out from behind their skirts.

    The US of A could cut their defence budget in half and still be the biggest spender on defence by a greater magnitude than most people could comprehend.

  27. C.L.

    The US of A could cut their defence budget in half and still be the biggest spender on defence by a greater magnitude than most people could comprehend.

    Right.

    http://foxhugh.files.wordpress.com/2012/02/bar-chart-defense-spending.jpg

  28. Blogstrop

    Start economising by defunding the UN. Then inflict some short, sharp defeats on the first numpties who wanna try their luck. Let that be a lesson to the others.

  29. Blogstrop

    After Iraq and Afghanistan, it is demonstrably futile to use the Mr. Nice Guy Nationbuilder approach anywhere in the ME or in any muslim country. Don’t bother trying that again.

  30. Zatara

    “The US of A could cut their defence budget in half and still be the biggest spender on defence by a greater magnitude than most people could comprehend.”

    In gross terms perhaps, but it’s a bullshit figure beloved by the left because it sounds so terrible, but upon inspection isn’t at all. US spending on defense isn’t just about defending the US. They have been picking up the tab for the free world since 1945 allowing other country’s defense budgets and forces to shrink to ridiculously small levels. THAT is why that number looks so huge. It’s not that the US are warmongers, it’s that the rest have been free-loading for 60+ years and the US has born the financial and human burden of that.

    GDP to Defense cost is a more useful comparison than a flat spending chart anyway. Even with the burden of defending the rest of the world the US spends 4.2% of GPD on defense while Russia for example, spends 4.5% of theirs.

    More US spending to consider is the fact that the US distributes more than twice as much as any country in the developed world as Foreign Aid. Or funding of the UN by Country where the US pays 25% of the costs for the entire UN. Federal “entitlements” such as Welfare, Food Stamps, Pensions and Obamacare eat up more than 65% of the US Federal Budget.

    So, from a US taxpayer point of view, the defense budget isn’t necessarily the most wasteful spending they have going on at the moment. At least it keeps people employed and their factories open.

    Last but not least, this is not 1938-1945. Weapons systems are vastly more complex and physically building a military takes much longer. Soldiers can’t be minted overnight, tanks built at 1 per hour, destroyers and submarines built over the weekend, 70 Aircraft Carriers plus their Air Wings built in a year, etc. (as was done in the US in 1943-1944). A lesson was learned by the US then. He who slacks off on maintaining capability between wars shall pay for it in the blood of their daughters and sons as they fight desperate delaying actions to enable the home country time and space to create a wartime military again. And strangely enough, they never seem to start on the beancounters schedules.

  31. JC

    The US of A could cut their defence budget in half and still be the biggest spender on defence by a greater magnitude than most people could comprehend.

    I think we need to be a little careful with this. The US is the only country that is able to project force at a lethal scale pretty much anywhere in the world at a moments notice. No one else is able to do so at this scale so comparing budgets doesn’t necessarily offer a complete picture.

    I’m not talking about missiles, but being able to put boots on the ground. The lethality of one aircraft carrier is perhaps bigger than most national air forces in the world.

  32. Fibro

    Samuel J, can you repost this graph in percent of GDP? Perhaps even defence heads to total employment in the country.

    I don’t disagree that the total dollar spend is huge, and probably out of control, but countries like the US and China in particular have defence as integral to their overall employment participation rates. I wouldn’t be suprised that if you charted GDP/Employment/Defence that Australia actually has the worst bang for the buck.

    Is Defence now really about defence, or is it really about employment? At the end of the day, all anyone has to do now is push the red button and it’s all over anyway.

  33. Joe Goodacre

    The leadership of the US military may be impotent now, but that doesn’t mean it will be impotent in the future.

    We saw with Operation Sovereign Borders that if people with the right will are in charge, immediate results can be achieved. The US military is the same and if you cripple the US military through spending cuts then more than a simple change of leadership would be required to reassert itself down the track.

  34. John Comnenus

    And what are those ratios if you factor in the full net operating cost of personnel in each country? I would guess that US servicemen cost more than four times a Russian serviceman and ten times a Chinese serviceman. This is a meaningless metric.

  35. Andrew

    Think about the electoral capabilities of decreasing military spending. Democrats are addicted to spending, especially Obama, so he won’t look to find ‘efficiency gains’. Republicans will not look to cut defence spending because it will hurt their support from the electoral base that they have.

    In other words, not gonna happen.

  36. Ed

    I would guess that US servicemen cost more than four times a Russian serviceman and ten times a Chinese serviceman.

    If you compare using “proportion of GDP” it should take that into account better than raw expenditure figures.

  37. Zatara

    “In other words, not gonna happen.”

    In point of fact it has happened and is continuing to happen.

    The CBO projected in February 2013 that under the sequester and Budget Control Act caps:

    - Defense spending outlays (including “overseas contingency operations” for Iraq and Afghanistan) will be reduced from $670.3 billion in 2012 to approximately $627.6 billion in 2013, a decrease of $42.7 billion or 6.4%. Defense spending will fall again to $593.4 billion in 2014, a decrease of $34.2 billion or 5.5%.

    - Defense spending will fall steadily from 4.3% GDP in 2012 to 2.8% GDP by 2023. Defense spending averaged 4.0% GDP from 1990 to 2012, ranging from 3.0% GDP to 5.2% GDP

    And those were before the latest round of cuts Odummer announced.

  38. He who slacks off on maintaining capability between wars shall pay for it in the blood of their daughters and sons as they fight desperate delaying actions to enable the home country time and space to create a wartime military again.

    As happened at every battle or campaign of the First World War between Neuve Chapelle in 1915 and Passchendaele in 1917. It wasn’t until mid 1918 that the British Expeditionary Force (including the Aussies and Canadians) had enough artillery and shells to fight two major set-piece battles at once (or even in rapid succession), which is what they’d have needed to do in order to accomplish anything of substance.

    The lessons have been there for a hundred years. The issue is not the money; the issue is that it’s being spent on an army of kings and queens, too precious to risk in battle, without sufficient numbers of the rooks, knights and bishops that do the hard work of backing the pawns up and can be risked in less critical moments.

  39. kingsley

    I think just as there is social welfare dependency there is defence budget dependency and every first world nation has it, including us bar our mutual benenfactor the US. It seems strange to me that the US has had to spend so much over the decades to defend Western Europe! Maybe the first couple of decades after WWII made sense but thereafter? Just like social welfare though if someone insists on doing it for you then of course you take it. Likewise Japan and in more recent times Sth Korea.
    The US probably does have the advantage that if they spend money on new tanks etc all the money stays in the USA but nevertheless its been a helluva good deal for the rest of us.

    That said I do note the cognitive dissonance on people’s face when discussions come up about the US deficit and you explain the relatively minor part defence spending has played in that compared to health and social welfare spending. The classic is total debt 17 trillion yet Iraq and Afghanistan only cost ~1.3trillion. Where did the other 15.7 trillion go? The MSM have done a very good job at creating the view the US spends almost nothing on poor and sick people but insane amounts on defence.

  40. Harry Buttle

    The problem with your rent seeker argument Samuel is that it assumes that the USA would get no benefit from clearly being the most powerful nation on earth. This is not the case, the USA has had vast influence based on this fact for the last 60 years.

  41. Zatara

    “The US probably does have the advantage that if they spend money on new tanks etc all the money stays in the USA but nevertheless its been a helluva good deal for the rest of us.”

    Interestingly, as popular as it is to accuse the US of being greedy in this regard, they have been quite open to sharing the wealth of those jobs and assisting other countries in maintaining their own production capabilities.

    Take the Oliver hazard Perry/Adeliade class of Fast Frigates:
    - HMAS Sydney and Darwin were built in the US
    - HMAS Melbourne and Newcastle were built by Australian Marine Engineering Consolidated
    Spain built 6 of them, Taiwan 8.

    I don’t have the numbers but I seem to recall F-18 Hornets for the RAAF were assembled in Adelaide? Similarly I don’t have the facts to hand but seem to recall a similar arrangement for the the M-113.

  42. stackja

    Samuel J
    #1212611, posted on March 4, 2014 at 11:17 pm
    For those opposed to US defenseman cuts: are you willing to donate money to assist the US military budget? Otherwise are we not just another form of rent seeker trying to grab a bit of the US taxpayer largesse?

    Australia 1920s supported an Empire Defence scheme then England lost its empire. USA defence budget includes many bases in the USA that USA regions like for their budget. Australia should contribute to regional defence, SEATO comes to mind but the Left again is the problem.

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