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The Truth Behind Competing Claims About the DoD Budget

Feb. 8, 2012 - 10:48AM   |  
By KATE BRANNEN   |   Comments
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Depending on who you’re listening to in Washington, you could think the defense cuts mandated by the Budget Control Act are going to cause the sky to fall or they’re no big deal.

Participants on each side of the debate often rely on certain facts to support their points. After hearing these statements over and over and back to back, you begin to wonder: Is defense spending over the last decade at an all-time high or historically low? Is the U.S. military the best equipped and most capable it’s ever been, or is it relying on old, worn-out weapons and equipment?

At an event in Washington last week, U.S. Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, commented on how facts on their own can be misleading.

“Maybe it was Mark Twain who said it, but ‘facts are a stubborn thing,’ but in the absence of context, they don’t prevail,” the four-star said. “What prevails in this town, and in history, is the best context.”

Below is an attempt to put some of these facts into context, with input from Todd Harrison, an analyst at the Center for Strategic and Budgetary Assessments; Mackenzie Eaglen, resident fellow at the American Enterprise Institute; and Gordon Adams, who oversaw defense budgeting for the Clinton administration and now is at the Stimson Center in Washington.

Defense spending as a percentage of GDP is at an all-time low.

This is not true, Harrison said.

In fiscal 2012, defense spending (only looking at the Defense Department budget) including war funding is 4.2 percent of GDP. Without war funding, it’s 3.4 percent of GDP. From 1996 to 2002, DoD spending was less than 3.4 percent of GDP, according to Harrison.

Eaglen said she prefers to use three metrics when evaluating defense spending: as a percentage of GDP, as a percentage of the federal budget and in real terms.

Under the limits imposed by the Budget Control Act, the 2013 DoD budget will represent 3.4 percent of GDP, compared with the 50-year Cold War average of 7 percent, she said.

Looking at defense through the lens of GDP is completely unhelpful, according to Adams. “This has nothing to do with defense. All this measures is the growth of GDP.”

Under sequestration, defense spending would fall only to 2007 levels.

It is true that with the automatic cuts imposed under sequestration, the base defense budget would return to 2007 levels of funding, adjusted for inflation, Harrison said.

For Eaglen, the key takeaway here is that when evaluating defense spending through all three metrics, the defense budget is falling by every measure — before and after sequestration.

Adams said he’s less concerned about the overall levels and is more interested in whether DoD is spending its money on things that defend the national security interests of the U.S.

The U.S. in the past was able to defend its interests at levels far below what it is spending today, he said.

Military equipment and weapon systems are old and ruined by years of war.

Behind this statement is a complicated picture of what 10 years of war spending bought the U.S. military.

While money is needed for equipment reset, this has been largely funded on an ongoing basis in the war funding bills, known as the overseas contingency operations (OCO) budget, Harrison said. For example, the fiscal 2012 OCO budget request included $11.9 billion for equipment reset; in 2011, it included over $20 billion for reset.

“The caveat on this is that while equipment reset has been funded all along in the war budget, it will need to continue to be funded in future budgets,” Harrison said. “We’re not yet done paying for reset.”

Eaglen agreed, saying a lot of military equipment was actually upgraded or reset over the last several years, but there is still much more to go.

“While we upgraded, reset and refurbished, what we did very little of [during] the past 10 years of Iraq and Afghanistan and the 10 before it during the ‘peace dividend’ was modernize, and by that I mean design, develop and build next-generation systems or leap-ahead technologies,” Eaglen said.

Adams said the military, particularly the Army, has been smart, upgrading systems to next-generation capability as they fix them coming out of war.

“The real question is, what and how much of next-generation do we need?” Adams said.

The Defense Department represents less than 20 percent of the federal budget.

As part of the total unified federal budget, which includes Social Security, this number is accurate.

When you combine the Pentagon’s budget with non-DoD spending, such as Department of Energy spending on nuclear weapons, the percentage of the overall budget is 18.9 percent, Harrison said.

However, when looking at discretionary spending, the part of the budget Congress controls through annual appropriations, defense spending is the “800-pound gorilla,” Adams said. It accounts for more than half of all discretionary spending.

At the heart of these numbers, and why they’re often cited, is the fight over what role defense spending could and should play in efforts to reduce the deficit.

“The failure by policymakers to control rapidly rising entitlement costs has placed immense and ever-increasing pressure on the defense budget topline,” Eaglen said. “You could zero out the defense budget and you’ve done nothing to solve the federal budget crisis.”

Adams agrees that you cannot solve the deficit problem on the back of one piece of the budget, whether that’s Medicare, defense or tax revenues. “You can only get there with everything on the table.”

U.S. defense spending is greater than the next 17 countries’ defense spending combined.

This is true, according to the Stockholm International Peace Research Institute database on military spending for 2010.

Adams said he’d add “at least” before the number 17, joking that it could be closer to the next 117 countries.

He noted that the metric depends on the value of the dollar, because to make the comparison, other countries’ budgets have to be converted into U.S. dollars, whose value fluctuates.

This statistic is useful “not because it’s says we’re gargantuan, but to say we’re global,” he said. “The reason we’re this big is we’re the only country with a global military. No other country has that ambition.”

Whether one thinks that’s a wise strategic posture is a separate issue, Adams said.

Harrison noted the lack of information available for what some countries spend on defense, particularly China and Russia, can cause these estimates to vary significantly.

It is also important to look at how effectively a country spends its defense dollars in addition to how much it spends, he said.

Eaglen said she does not find this figure relevant because of the U.S. military’s global scope, making it a comparison of apples and oranges.

“This statement reminded me of [former Defense Secretary Robert] Gates’ speech when he talked about our Navy’s ‘massive’ and ‘significant’ naval overmatch relative to other nations,” Eaglen said. “But, it’s impossible to compare the U.S. Navy fleet to the rest of the world’s navies, because the United States has a singular role and mission. We need a better Navy than anyone else.”

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