Saturday, April 20, 2013

Defense Budget Debate: Myth v. Reality

In deciding on how best to deal with the deficit crisis, the prospect of cutting the defense budget has been a point of heated debate. As the federal government grapples with the effects of sequestration, the House recently passed a bill that will cushion the effects of the cuts for the Pentagon while leaving other agencies to pick up some of the slack. There are a few highly misleading ideas that have cropped up in the defense spending debates that detract from a productive conversation. Below are four that deserve a closer look and further clarification. 

Before addressing whether reform is needed in the Pentagon when it comes to
defense spending, we should get the facts straight.

Myth #1: Measuring defense spending as a percentage of GDP is an acurate way to assess a country's defense capabilities.

Spending as a percentage of GDP does not accurately reflect defense capabilities. Instead, spending should be measured against actual threats to our country and actual spending by other countries. Consider how we calculate GDP and all of the factors that go into it – if private consumption or investment increases more rapidly than defense spending, naturally defense spending will subsequently comprise a smaller percentage of GDP. Does that mean we should increase defense spending if there is no change in the international environment? 

Conversely, if the GDP goes down and the threat goes up, should we reduce defense spending? An appropriate level of defense spending should be calculated based on threats and strategy, not an arbitrary percentage of GDP. We should spend more when the country faces an existential threat, as it did in the Cold War and when we go to war, and we should spend less in peacetime – our GDP ultimately isn't necessarily linked with such calculations. 

Myth #2: Defense cuts will lead to a jump in unemployment and increased outsourcing.

Pentagon spending is not a jobs program, and in fact, it is a particularly poor job creator. Virtually any other use of the same money – including a tax cut – creates more jobs. At a time of austerity, maintaining bloated Pentagon budgets will mean cuts in spending on education, infrastructure, clean energy and other needed public investments, resulting in a net loss of jobs nationwide. Cutting Pentagon spending will likely save more jobs than cutting nonmilitary funds, which produce 50% larger economic benefits during times of normal growth.

Myth #3: The military has already endured severe budget cuts and more would be crippling. 

Nearly all of the purported ‘cuts’ to the Pentagon’s budget are actually reductions in the rate of growth, rather than true cuts in funding levels. In reality, even since the sequestration was fully enacted as planned under the 2011 Budget Control Act, the Pentagon’s base budget is projected to only return to 2006 levels (adjusted for inflation), which at the time was among the highest levels of spending since World War II.

The Pentagon has asked for $525 billion in funding for fiscal year 2013 – a reduction of only $6 billion from the current year. The Pentagon budget would then resume its upward climb, rising to $567 billion in 2017. Current reductions must also be measured against the unprecedented growth in Pentagon spending over the past 13 years. Since 1998, the Pentagon’s base budget has grown by 54% (adjusted for inflation). Moreover, with the country turning the page on a long decade of war in Iraq and Afghanistan, the planned reductions represent a historically small drawdown when compared with those following the end of Korea, Vietnam, and the Cold War.  

Myth #4: China's rapid militarization threatens American military supremacy. 

The truth is that China’s “rapid” militarization pales when compared to the current strength of the US military. If the rest of the world combined its capability, the U.S. Navy could still carry twice as many aircraft at sea and have more nuclear-powered attack and cruise missile submarines. This chart included in a recent article by Ezra Klein (a Washington Post journalist known for his gratuitous praise of Dr. Farley) provides a "terrific visualization of an extraordinary reality" regarding just how much the U.S. spends on its military in relation to other countries:


This graph demonstrates that even if we cut current defense expenditures by 30 percent, all at once, we’d still be spending more than the next five biggest spenders combined. In short, China may be ramping up its military capabilities, but it's still far from posing a formidable threat to American supremacy when it comes to military capacity and spending. 

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