US Defense Spending 'Cost vs Affordability'

[bobbymike]

Around the web I have gotten into several 'discussions' concerning US defense spending. One side always leads with 'We spend more than X countries combined' I usually interject that percentage of GDP is a more important gauge of 'affordability' while the dollar amount relfects the 'cost' of defense. Not a perfect comparison and usually results in a least one person calling me a 'crazed pro-military hawk' - as if that offends me ;D but it did get me to thinking because sometimes the initial story also has a 'But what are we getting for it' theme as well.

But quickly back to 'cost vs affordability'. The example I give is the person who makes $50,000/annum and spends $25,000 on a car and the person who makes $1,000,000/annum and spends $250,000 on a car. Everyone here knows where I am going with this one person pays 10X as much but that purchase is more 'affordable' to them because it is only 25% of income as opposed to 50%. Now you can say the high income person is an idiot to spend that much but nontheless they could afford to spend the money.

However, as a person with some knowledge of economics I know when dealing with a whole economy other factors can and should be taken into consideration but my intent is not to get into the weeds on the issue. Also, regardless of these other issues my basic conclusion, mainly, that at 3.3% of GDP non-war defense spending is easily affordable for the US.

Now to the 'What we are getting for the money' argument. Well regarded members of the defense media on both sides of the spending issue seem to indicate we are not getting our money's worth. One comparison is that they point to the size of the Reagan military compared to today when we are spending similar 'inflation' adjusted dollars as in the mid-80's.

But that led me back to the % of GDP issue. At the height of the Reagan build-up we were spending around 6.1% of GDP compared to today's 3.3% so if defense spending was equal on this measure today's defense budget would be $976 billion compared to the roughly $525 billion we spend today. That extra $451 billion would leave us with an even larger military than in the 80's if my estimates are accurate (feel free to correct). Some point to the cost of F-22s and that we only have 186 of them compared to the hundreds of F-15's that were to be replaced. With the extra $450 billion we could afford similar replacement numbers OF A MUCH better fighter.

So all things considered IMHO I think we are getting a pretty good deal.

Now how to spend the extra $450 billion ;D

Any input other members have would be appreciated and if the forum members feel there is no value to the post I will not be offended if it is banished from the site.

 

[overscan (PaulMM)]

Well, 4.7% is a lot more than most countries spend now. Unlike in the Reagan years, USA isn't currently engaged in winning an arms race against a roughly equal opponent.


UK: 2.6%
France: 2.3%
Germany: 1.3%
Japan: 1.0%


Put another way, halving the US defence budget to put it on the same proportion as France would free up $262 billion for your favourite political hobbyhorse, be that green energy, education, space exploration, or tax cuts.

 

[Hobbes]

The % of GDP is a useful indicator, but not enough on its own. The question that should concern the US right now is 'how much debt can we afford to owe'. If spending 4.7% of GDP leads to trillion-dollar deficits, it's not affordable after all.

 

[bobbymike]

The % of GDP is a useful indicator, but not enough on its own. The question that should concern the US right now is 'how much debt can we afford to owe'. If spending 4.7% of GDP leads to trillion-dollar deficits, it's not affordable after all.

However, the US government collects an average of 18% to 20% of GDP in taxes (the latest recession saw it drop to 15% but now is back to around 18%) so if defense is a shrinking part of that same pie then other programs are driving the deficit.

Also I consider defense a core function of the federal government (one can argue that principle) or looking at it like a family budget your income is rising but you are in the hole every month, yet, your food, housing, transportaion and clothing budgets are shrinking AS A PERCENTAGE of rising income then the question would be what else are you spending money on to put yourself in debt every month cause that would be the problem items.

 

[chuck4]

It doesn't matter whose core functionality defence is or how much more money can be be freed up for defence. The point is defence spending, like any public or private spending, earns some net benefit to the long term national economy and welfare. Like most types of spending, the net benefit diminishes as spending increases. If already spending more than the next 20 country combined, doubling the spending probably bring relatively little incremental benefit. At some point, the net incremental benefit from additional defence becomes less than some other net benefit that would accrue from spending the money elsewhere.

They key is be estimate where that point is and spend to that point and no more. Investing more in defence than that point would be poor policy and detrimental to national welfare. Bring the soviets out of the grave and ask if they agree. So we should discuss what is the optimal defence spending, not how much we can afford if we were willing to be reprobate spenders.

 

[sferrin]

It doesn't matter whose core functionality defence is or how much more money can be be freed up for defence. The point is defence spending, like any public or private spending, earns some net benefit to the long term national economy and welfare. Like most types of spending, the net benefit diminishes as spending increases. If already spending more than the next 20 country combined, doubling the spending probably bring relatively little incremental benefit.

How is what the US spends compared to what everybody else spends relevant at all? We have different needs and requirements. (Not to mention Chinas is most likely significantly under reported.)

 

[bobbymike]

It doesn't matter whose core functionality defence is or how much more money can be be freed up for defence. The point is defence spending, like any public or private spending, earns some net benefit to the long term national economy and welfare. Like most types of spending, the net benefit diminishes as spending increases. If already spending more than the next 20 country combined, doubling the spending probably bring relatively little incremental benefit. At some point, the net incremental benefit from additional defence becomes less than some other net benefit that would accrue from spending the money elsewhere.

They key is be estimate where that point is and spend to that point and no more. Investing more in defence than that point would be poor policy and detrimental to national welfare. Bring the soviets out of the grave and ask if they agree. So we should discuss what is the optimal defence spending, not how much we can afford if we were willing to be reprobate spenders.

In my first post I specifically said I was not commenting on the efficacy of different levels of defense spending only of the affordability issue and what we get for the money IN defense products and services for that price.

Defense is affordable at present levels and higher levels in my opinion. If we are to argue if we are spending too much or too little specifically we would have to complete a full global strategic review and I don't have the manpower for my own QDR.

Whether we are spending too much is open to debate whether we CAN AFFORD the current level of spending is another question all together. One 'hypothetical' question would be, 'If we spent let's say $50 billion more per year on defense in the 90's could that have prevented 9/11?' that caused a $2 Trillion dollar loss of national wealth (which yes we got back from a rising strock market) but also (again arguably) caused us to spend $1.5 Trillion in A-stan and Iraq.

 

[chuck4]

It doesn't matter whose core functionality defence is or how much more money can be be freed up for defence. The point is defence spending, like any public or private spending, earns some net benefit to the long term national economy and welfare. Like most types of spending, the net benefit diminishes as spending increases. If already spending more than the next 20 country combined, doubling the spending probably bring relatively little incremental benefit.

How is what the US spends compared to what everybody else spends relevant at all? We have different needs and requirements. (Not to mention Chinas is most likely significantly under reported.)

It is relevent because How much each country can spend on defence is ultimately a function of how big its economy is. Our national economy is only 1/3 the size of the next 20 country combined. It is less then twice as big as Chinese economy alone. By 2016 or thereabouts, Chinese economy is forecasted to overtake ours in size. And they have pretty tiny levels of national debt. We currently outspend the Chinese in defence by a big factor. If 6 is too high because they underreport, 3 is probably not too big. This means they spend half as much on defence as we do relative to the size of their economy. It also means they can increase their defence spending by a factor twice as large as we can if push comes to shove. If we deem our current spending level just barely supports enough capability to balance theirs, we would be up the shit creek if in 4 years if they decide to engage in an all out arms race against us because their economy would allow them to expand their capability by a much bigger factor than ours can.

So the real issue is not how much we spend. It is what really are our true national objectives that we really can defend if things come to a prolonged arms race. I think right now we define national objectives expansively, and unsustainably. The fact that we are spending more than the next 20 nations combined is the warning sign we should heed.

Most economic forecasts predict the Chinese economy will continue to get bigger faster than ours will for several decades after they overtake ours in size, peaking around 2050 at 2-4 times our size. So we need to think long and hard about what is really important for us to defend, and also how we can spend defence dollars much more efficiently than they do, and not just think "well, we can still spend more" because within 5 or 10 years at most, they will be able to outspend us no matter how much we spend.

 

[bobbymike]

It doesn't matter whose core functionality defence is or how much more money can be be freed up for defence. The point is defence spending, like any public or private spending, earns some net benefit to the long term national economy and welfare. Like most types of spending, the net benefit diminishes as spending increases. If already spending more than the next 20 country combined, doubling the spending probably bring relatively little incremental benefit.

How is what the US spends compared to what everybody else spends relevant at all? We have different needs and requirements. (Not to mention Chinas is most likely significantly under reported.)

It is relevent because How much each country can spend on defence is ultimately a function of how big its economy is. Our national economy is only 1/3 the size of the next 20 country combined. It is less then twice as big as Chinese economy alone. By 2016 or thereabouts, Chinese economy is forecasted to overtake ours in size. And they have pretty tiny levels of national debt. We currently outspend the Chinese in defence by a big factor. If 6 is too high because they underreport, 3 is probably not too big. This means they spend half as much on defence as we do relative to the size of their economy. It also means they can increase their defence spending by a factor twice as large as we can if push comes to shove. If we deem our current spending level just barely supports enough capability to balance theirs, we would be up the shit creek if in 4 years if they decide to engage in an all out arms race against us because their economy would allow them to expand their capability by a much bigger factor than ours can.

So the real issue is not how much we spend. It is what really are our true national objectives that we really can defend if things come to a prolonged arms race. I think right now we define national objectives expansively, and unsustainably. The fact that we are spending more than the next 20 nations combined is the warning sign we should heed.

Of course the reality is the PLA runs about 1/2 the economy and pays its soldiers well below US standards so once again comparing 'the dollar amount we spend' against the 'dollar amount spent by other nations' is NOT a good measure of affordability. Also the 2016 date you use for the Chinese economy to surpass the US economy is based of Purchase Power Parity, not a comparible value of goods and services produced.

But the question remains, if we were able to spend over 5.5% to 6% ON AVG. during the 45 years of the Cold War why is 3.3% non-war defense spending today considered straining to our economy.

 

[chuck4]

But the question remains, if we were able to spend over 5.5% to 6% ON AVG. during the 45 years of the Cold War why is 3.3% non-war defense spending today considered straining to our economy.

Because our tolerance for the strain has changed. One could tolerate a very high level of strain on the economy, for a while, if one is convinced of a truly existential threat. Soviet Union with her nuclear arsenal was a convincing existential threat. One would be less tolerant of the strain if the threats are really more annoyances. Right now we have no really existential threat. Even a china with GDP larger than ours is not necessarily an existential threat, just a very annoying inconvenience, provided we don't get into a nuclear arms race. Then they would become an existential threat.

 

[chuck4]

Of course the reality is the PLA runs about 1/2 the economy and pays its soldiers well below US standards so once again comparing 'the dollar amount we spend' against the 'dollar amount spent by other nations' is NOT a good measure of affordability.

Actually, it is a good measure of affordability. It is just not a good measure of how many bangs you should be expecting for the bucks. You are saying we get less bang for the buck, but that doesn't mean we therefore have more bucks to spend.

We should be focusing on getting more bangs for the buck, because they will soon have many more bucks than we will.

 

[sferrin]

The fact that we are spending more than the next 20 nations combined is the warning sign we should heed.

Saying it twice doesn't make it any more relevant. Look at the % of GNP compared to historical figures. What's being spent right now is nothing new. It's entitlements that's killing us. Those have exploded.

 

[chuck4]

The fact that we are spending more than the next 20 nations combined is the warning sign we should heed.

Saying it twice doesn't make it any more relevant. Look at the % of GNP compared to historical figures. What's being spent right now is nothing new. It's entitlements that's killing us. Those have exploded.

Historically, we had better reason to be more motivated.

 

[TaiidanTomcat]

Because our tolerance for the strain has changed. One could tolerate a very high level of strain on the economy, for a while, if one is convinced of a truly existential threat. Soviet Union with her nuclear arsenal was a convincing existential threat. One would be less tolerant of the strain if the threats are really more annoyances. Right now we have no really existential threat.

"Whats the "war on terror" and why is it costing us billions?" I wonder as I am X-rayed at the airport by an army of federal employees. The WoT may be "small ball" but its draining us just fine. after a nearly 12 year build up things are finally starting to go "back to pre war" if you think the WoT hasn't been a strain especially with a housing bubble burst in there, I have to wonder what its like living in the year 2000, and if I can join you?

If theres no threat I would love for that to be passed onto our federal overseers because the money could really be spent in better places than patting down people at an airport.

 

[Hobbes]

The fact that we are spending more than the next 20 nations combined is the warning sign we should heed.

Saying it twice doesn't make it any more relevant. Look at the % of GNP compared to historical figures. What's being spent right now is nothing new. It's entitlements that's killing us. Those have exploded.

Why do you keep saying that that number isn't relevant? The question "how much defence do you need" is rather important when setting a defence budget. If you allow affordability to be the only deciding factor for your defence budget, you're basically building a charity for defence contractors.

 

[sferrin]

The fact that we are spending more than the next 20 nations combined is the warning sign we should heed.

Saying it twice doesn't make it any more relevant. Look at the % of GNP compared to historical figures. What's being spent right now is nothing new. It's entitlements that's killing us. Those have exploded.

Why do you keep saying that that number isn't relevant? The question "how much defence do you need" is rather important when setting a defence budget. If you allow affordability to be the only deciding factor for your defence budget, you're basically building a charity for defence contractors.

How much defense do you need is relevant. What countries X, Y, and Z spend is not. It's as ludicrous as saying, "why do you need a home security system when your neighbor only has a lock on their front door".

 

[Arjen]

The fact that we are spending more than the next 20 nations combined is the warning sign we should heed.

Other countries also perform a balancing act between defence and competing needs. The assumption here - which I think is valid - is that the USA's situation is sufficiently similar to that of (some) other countries, that comparing the USA's defence budget as a fraction of total government spending with the defence percentage in those other countries makes sense.

 

[bobbymike]

But the question remains, if we were able to spend over 5.5% to 6% ON AVG. during the 45 years of the Cold War why is 3.3% non-war defense spending today considered straining to our economy.

Because our tolerance for the strain has changed. One could tolerate a very high level of strain on the economy, for a while, if one is convinced of a truly existential threat. Soviet Union with her nuclear arsenal was a convincing existential threat. One would be less tolerant of the strain if the threats are really more annoyances. Right now we have no really existential threat. Even a china with GDP larger than ours is not necessarily an existential threat, just a very annoying inconvenience, provided we don't get into a nuclear arms race. Then they would become an existential threat.

Oh I have no doubt our tolerance for a certain level of defense spending has changed since the Cold War, but this is a perception issue and does not answer the question based on actual numbers. Interestingly a recent Gallup Poll had 53% of people supporting everything be cut but defense, although since this is the first such poll I have seen with these numbers I'll take it with a grain of salt until further evidence.

If something cost you 6% to 10% of your budget for 45 years and now costs you 3.3% you cannot make the argument it is only NOW that it is straining your budget.

 

[bobbymike]

The fact that we are spending more than the next 20 nations combined is the warning sign we should heed.

Other countries also perform a balancing act between defence and competing needs. The assumption here - which I think is valid - is that the USA's situation is sufficiently similar to that of (some) other countries, that comparing the USA's defence budget as a fraction of total government spending with the defence percentage in those other countries makes sense.

But I think you are back to talking strategy and not just dollars. No other country defends two massive coasts and the world's trade through a massive navy with very, very expensive carrier battle groups. When you combine this with our other missions including our extended deterrence umbrella, which again no other country provides, then a comparison to other counties I believe is not valid.

You can openly debate how many carriers, SSBNs and bombers, etc. we need but that in strategy not affordability (although at a certain point it becomes an affordability issue) As of now we are doing this bascially spending 3 cents for every dollar the national economy produces, CHEAP CHEAP ;D

 

[Hobbes]

How much defense do you need is relevant. What countries X, Y, and Z spend is not. It's as ludicrous as saying, "why do you need a home security system when your neighbor only has a lock on their front door".

When all your neighbours only need a lock on their front door, you should ask yourself, 'do I really need a moat, a drawbridge and 30-foot concrete walls?'. There's nothing ludicrous about asking that question.

 

[Hobbes]

never mind, clicked the wrong button and now I can't delete my post.

 

[bobbymike]

How much defense do you need is relevant. What countries X, Y, and Z spend is not. It's as ludicrous as saying, "why do you need a home security system when your neighbor only has a lock on their front door".

When all your neighbours only need a lock on their front door, you should ask yourself, 'do I really need a moat, a drawbridge and 30-foot concrete walls?'. There's nothing ludicrous about asking that question.

But if you are de facto in charge of not just your home, which is the biggest home most targeted by thieves, but the nieghbors rely on you to protect them and the keep the streets, (i.e. global trading lanes) open so they can get mail, go get groceries, etc. and the criminals know you have this responsibility then maybe your moat, etc is not too much.

As a homeowner maybe you stop doing this because of the cost but in the meantime have decided it is in your strategic interest to protect your home and your neighbors homes that is your current strategy and not relevant to what the neighbors are doing. You can demand they pay more - which the US has asked in the past of NATO countries - but if they refuse you will still have to live up to your commitment.

 

[TaiidanTomcat]

How much defense do you need is relevant. What countries X, Y, and Z spend is not. It's as ludicrous as saying, "why do you need a home security system when your neighbor only has a lock on their front door".

When all your neighbours only need a lock on their front door, you should ask yourself, 'do I really need a moat, a drawbridge and 30-foot concrete walls?'. There's nothing ludicrous about asking that question.

What about when you're neighbors only have to lock their doors because they are within your castle walls behind the moat and drawbridge?

It came up on another forum where a Canadian was lambasting the United States for is defense expenditure, while bragging Canada hardly spent any money, less than Israel in fact. "Well-- location, location, location" was my response. In Canada's case for example thanks to the Treaties the two nations have the US refuels Canadian aircraft on northern patrols and both Canada and the US switch off patrols obviously its mutually beneficial but in Canada's case they get a great break because they don't have to invest in big wing refuelers, which saves some scratch. (Canada has 2 refuelers then about 15 C-130s) They can also save thanks to the US and Canada being allies and of course the US being an extremely powerful military (especially with naval power). Now its not that Canada doesn't have a great military, and I'm not trying to saying anything against the Canadians, they have been great, but if not for the US they would be spending more money to conduct their patrols. Not that they couldn't afford it, but its nice they don't have to. It would be even worse if Canada and the US were unfriendly, in that case you are spending a lot more to insure security and rapid response etc.

The Entire Canadian military for example couldn't garrison Japan and Korea in the Numbers the US does, luckily they don't have to,


How much money a country does or does not spend depends on its objectives, its location, its situation, the people in power, treaties, allliances etc.

"America garrisons not rebellious colonies but sovereign allies, so they can spend their tax revenues on luxuriant welfare programs rather than tanks and aircraft carriers and thereby exacerbate further the differences between America and the rest of the free world." --Mark Steyn

 

[Hobbes]

Thanks TaiidanTomcat and Bobbymike for providing arguments. That's what I missed in Sferrin's assertions.

 

[2IDSGT]

How To Cut The Defense Budget Without Killing The Force
http://defense.aol.com/2013/03/21/how-to-cut-the-defense-budget-without-killing-the-force/

...The system is much more favorably disposed to cutting weapons. Despite all the conspiracy theories about how weapons makers manipulate Washington, the historical record shows that the Pentagon's investment accounts have much less political protection than other types of military spending...

 

[chuck4]

But the question remains, if we were able to spend over 5.5% to 6% ON AVG. during the 45 years of the Cold War why is 3.3% non-war defense spending today considered straining to our economy.

Because our tolerance for the strain has changed. One could tolerate a very high level of strain on the economy, for a while, if one is convinced of a truly existential threat. Soviet Union with her nuclear arsenal was a convincing existential threat. One would be less tolerant of the strain if the threats are really more annoyances. Right now we have no really existential threat. Even a china with GDP larger than ours is not necessarily an existential threat, just a very annoying inconvenience, provided we don't get into a nuclear arms race. Then they would become an existential threat.

Oh I have no doubt our tolerance for a certain level of defense spending has changed since the Cold War, but this is a perception issue and does not answer the question based on actual numbers. Interestingly a recent Gallup Poll had 53% of people supporting everything be cut but defense, although since this is the first such poll I have seen with these numbers I'll take it with a grain of salt until further evidence.

If something cost you 6% to 10% of your budget for 45 years and now costs you 3.3% you cannot make the argument it is only NOW that it is straining your budget.

I think you really can't separate the Affordability and appropriate strategy. What is affordable is not how much you theoretically can spend witout going bankrupt. it is how much you can spend without compromising the appropriate long term strategy.


Consider the Soviet union. She committed 20-25% of her economy to defence for 40 years, and when Gorbachev came to power the soviet economy was still solvent. Government revenue was still reasonably in line with government expenditure. Soviet economy really only became truly insolvent and bankruptcy due to greatly diminshed revenues steming gorbachev's inept reforms 1986-1990. So it might be argued the soviet economy could have sustained a defense spending equal to 25% of economy indefinitely so long as her leaders remain more competent and less idealistic.


But what was the strategic consequence of this? The chronic high military spending lead to chronic underinvestment in soviet civil and industrial infrastructure. As a result, except for the directly defence related industries, the rest of the soviet union fell further and further behind the west in infrastructure, technology and productivity. From. Late 1960s the overall soviet economy became smaller and smaller relative to western economies, particularly the US. it wouldn't have mattered if the soviet union kept spending its theoretical maximum sustainable defence spending rate of 25% till hell froze over. Because her economy is getting smaller and smaller relative to the west, she was going to spend relatively less and less on defense in real terms, so she was going to lose the arms race, along with her strategic goal of remaining one of the two strategic poles in the world.


Now back to the US. back during the cold war, no one is seriously threatening to overtake American economy in total size. So we don't seriously need to worry about invest in infrastructure and domestic economy or lose our superpower status. Our economy was 4 times the size of the soviet economy and if we match the soviets dollar for ruble in defence spending, we would come out ahead and sooner or later they would drop dead. So a high defence spending can be afforded because it didn't conflict with national strategy.


Right now situation is much different. We are not just in danger of being over taken economically, we almost certainly will be overtaken. Furthermore the up and comer is projected to keep going and grow to much several time our size. If Chinese economy is 4 times our size in 2050, face it, we really wouldn't be a superpower any more. So what is our appropriate national strategy? I think it would be to maximize our economic growth rate so the Chinese won't peak out in 2050 so far ahead of us. One study shows if American economy would grow at just 2% higher growth rate than our current growth forecast, then in 2050 the Chinese would peak at only one point something times our economy rather than four times.


In the context of this national strategy, how much we can afford to spend on defence is going to be different from the best strategy that could be pursued during the cold war.

 

[TaiidanTomcat]

But the question remains, if we were able to spend over 5.5% to 6% ON AVG. during the 45 years of the Cold War why is 3.3% non-war defense spending today considered straining to our economy.

Because our tolerance for the strain has changed. One could tolerate a very high level of strain on the economy, for a while, if one is convinced of a truly existential threat. Soviet Union with her nuclear arsenal was a convincing existential threat. One would be less tolerant of the strain if the threats are really more annoyances. Right now we have no really existential threat. Even a china with GDP larger than ours is not necessarily an existential threat, just a very annoying inconvenience, provided we don't get into a nuclear arms race. Then they would become an existential threat.

Oh I have no doubt our tolerance for a certain level of defense spending has changed since the Cold War, but this is a perception issue and does not answer the question based on actual numbers. Interestingly a recent Gallup Poll had 53% of people supporting everything be cut but defense, although since this is the first such poll I have seen with these numbers I'll take it with a grain of salt until further evidence.

If something cost you 6% to 10% of your budget for 45 years and now costs you 3.3% you cannot make the argument it is only NOW that it is straining your budget.

I think you really can't separate the Affordability and appropriate strategy. What is affordable is not how much you theoretically can spend witout going bankrupt. it is how much you can spend without compromising the appropriate long term strategy.


Consider the Soviet union. She committed 20-25% of her economy to defence for 40 years, and when Gorbachev came to power the soviet economy was still solvent. Government revenue was still reasonably in line with government expenditure. Soviet economy really only became truly insolvent and bankruptcy due to greatly diminshed revenues steming gorbachev's inept reforms 1986-1990. So it might be argued the soviet economy could have sustained a defense spending equal to 25% of economy indefinitely so long as her leaders remain more competent and less idealistic.


But what was the strategic consequence of this? The chronic high military spending lead to chronic underinvestment in soviet civil and industrial infrastructure. As a result, except for the directly defence related industries, the rest of the soviet union fell further and further behind the west in infrastructure, technology and productivity. From. Late 1960s the overall soviet economy became smaller and smaller relative to western economies, particularly the US. it wouldn't have mattered if the soviet union kept spending its theoretical maximum sustainable defence spending rate of 25% till hell froze over. Because her economy is getting smaller and smaller relative to the west, she was going to spend relatively less and less on defense in real terms, so she was going to lose the arms race, along with her strategic goal of remaining one of the two strategic poles in the world.


Now back to the US. back during the cold war, no one is seriously threatening to overtake American economy in total size. So we don't seriously need to worry about invest in infrastructure and domestic economy or lose our superpower status. Our economy was 4 times the size of the soviet economy and if we match the soviets dollar for ruble in defence spending, we would come out ahead and sooner or later they would drop dead. So a high defence spending can be afforded because it didn't conflict with national strategy.


Right now situation is much different. We are not just in danger of being over taken economically, we almost certainly will be overtaken. Furthermore the up and comer is projected to keep going and grow to much several time our size. If Chinese economy is 4 times our size in 2050, face it, we really wouldn't be a superpower any more. So what is our appropriate national strategy? I think it would be to maximize our economic growth rate so the Chinese won't peak out in 2050 so far ahead of us. One study shows if American economy would grow at just 2% higher growth rate than our current growth forecast, then in 2050 the Chinese would peak at only one point something times our economy rather than four times.


In the context of this national strategy, how much we can afford to spend on defence is going to be different from the best strategy that could be pursued during the cold war.

The problem though is we think of cutting in terms of only defense. Even if we cut our forces to 25 percent of what they are now its a drop in the bucket. If we want to play the Guns butter or cows game, its not a matter of cutting defense =savings and strong economy.the first step to any cuts is insuring they stay cuts and aren't just seen as "free money to a good home" For what the US Government is spending on things like SS and Medicare as a huge population of baby boomers hits that age, the military spending will hardly be noticeable.

Cutting the blue part doesn't mean anything if all it does is grow the green and orange part.

 

[Void]

I have always wondered why the DoD does not come out with a list of proper PPP adjusted military budgets. Comparing the budgets of countries like China or Russia in dollar terms is almost worthless, they are not paying American prices. Is there a shortage of economists or something?

 

[bobbymike]

I have always wondered why the DoD does not come out with a list of proper PPP adjusted military budgets. Comparing the budgets of countries like China or Russia in dollar terms is almost worthless, they are not paying American prices. Is there a shortage of economists or something?

I great point in 2016 using PPP China's roughly $7 Trillion economy is said to be about equal to the US's $17 Trillion so that would make China's $260 billion defense budget equal to around $630 Billion USD comparible so YES they would be spending more under PPP economics.

 

[chuck4]

Actually, china's current GDP of 7.3 trillion at exchange rate is equal to 11 trillion at PPP according to CIA. It won't exceed forecasted 2016 US GDP in PPP terms of until it's exchange rate GDP reaches about 12 trillion. At annual growth rate of 9%, it's exchange rate GDP will hit that level around 2016.


China's announced defence spending this year is $100 billion at exchange rate. Double it as does most pessimistic serious estimate - as oppose to sensationalistic newsmax style hype - puts it at $200 billion, not $260 billion. Adjust for PPP puts it at about $330 billion, not $600 + billion. Even given most pessimistic estimate, they still spend only 2/3 as much of their economy on defence as we do, in PPP terms.


To offset this, announced Chinese military spending includes large sums devoted to internal security and propaganda functions, which would not be considered part of the defence appropriation in the US. So only a percentage of the Chinese military spending is directly comparable to American military spending. The rest consist of the Chinese military doing civiliany things like putting out patriotic pop record labels, funding and organizing patriotic gala concerts, and cracking skulls in Tibet.

 

[topspeed3]

It doesn't matter whose core functionality defence is or how much more money can be be freed up for defence. The point is defence spending, like any public or private spending, earns some net benefit to the long term national economy and welfare. Like most types of spending, the net benefit diminishes as spending increases. If already spending more than the next 20 country combined, doubling the spending probably bring relatively little incremental benefit.

How is what the US spends compared to what everybody else spends relevant at all? We have different needs and requirements. (Not to mention Chinas is most likely significantly under reported.)

AlJazeera says US spends as much as rest of the world combined; http://www.youtube.com/watch?feature=player_embedded&v=f1bux1W4yJI#!

 

[jsport]

Rep. Ken Calvert: A hedge strategy for US military superiority - Breaking Defense

In an exclusive op-ed, Rep. Ken Calvert, the Chairman of the House Defense Appropriations Subcommittee, lays out how he hopes to improve the military's technological capabilities.

breakingdefense.com

 

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Pentagon's global train and equip projects plagued by delays, unreliable equipment: GAO - Breaking Defense

"The system functioned for approximately three months before becoming inoperative because of factors such as insufficient battery life, damage to ground wiring by local fauna, and sensor failures in extreme temperatures,” the GAO wrote about one $7.6 million project with a partner nation for a...

breakingdefense.com

 

[jsport]

Co-everything: Pentagon teases series of weapon production partnerships with friendly nations - Breaking Defense

“Where we're headed is co-development, co-production, and co-sustainment with our partners,” said Undersecretary of Defense for Acquisition and Sustainment Bill LaPlante.

breakingdefense.com

 

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INDOPACOM stands up new directorate to better connect industry, DoD innovation efforts - Breaking Defense

"So we think we can actually help make it easier for you to be able to get after the key programs that the warfighter needs," Adm. John Acquilino said.

breakingdefense.com

 

[jsport]

Budget endgame scenarios: From acceptable to apocalypse - Breaking Defense

In this new analysis, budget experts Elaine McCusker and John Ferrari lay out a trio of likely scenarios for the upcoming budget negotiations - including one they deem the "doomsday" scenario for DoD.

breakingdefense.com

 

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Offset-X: Now is the time for the Pentagon to change how it approaches technology - Breaking Defense

In this new op-ed, members of the Special Competitive Studies Project (SCSP) lay out their vision for how the Pentagon should work with new technologies.

breakingdefense.com

 

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Pentagon restarts meetings to implement new industrial strategy

The meetings will last until the end of the month as the department shifts to putting its new strategy into action.

www.defensenews.com

 

[Forest Green]

Congress passes $825 billion defense spending bill amid political battles, government shutdown threat - Breaking Defense

For the Pentagon, the bill’s passage signifies some return to normal order after having operated the first six months of the fiscal year under a continuing resolution.

breakingdefense.com

 

[jsport]

Fast food or the military? Recruiting solutions overlook the obvious.

Opinion: In this opinion piece, the author argues that services have been overlooking an obvious solution to the recruiting crisis: Increasing junior enlisted pay.

www.militarytimes.com

Caught amid the morass of solutions, it appears that the services have been overlooking the most obvious solution: raising the pay of junior enlisted. Contrasting what an Army E-3 or E-4 earns in the military with pay earned in the fast food industry in California reveals this to be true.

As detailed in my newly published analysis, the need for a large pay increase among the E-1 to E-4 pay grades is clear when one considers the new fast food minimum wage in California. Starting April 1, most fast food workers in the state will be paid a minimum of $20 per hour.

Factor in this wage increase, couple it with free meals (valued at $1,193 per year) provided during shifts, and subtract the cost of medical insurance provided under the Affordable Care Act (valued at $2,256 per year) and a 19-year-old working at a Los Angeles, California-area McDonald’s would earn roughly $40,537 per year.

Now, compare that to the earnings of an Army E-3 with less than two years of service. Starting with base pay, this soldier would earn about $2,377.50 per month, or $28,530 per year. Add in benefits, such as an automatic 1% match on their Thrift Savings Plan account and Basic Allowance for Subsistence pay, while keeping medical costs steady at zero, and the Army E-3 earns $34,338 per year. In other words, the 19-year-old McDonald’s employee would earn about 18% more than the Army E-3.