Republicans have been railing on about the need to reduce spending, they also have been railing about the need to increase military spending. Although in the last post it was discussed how Military spending can stimulate the economy at this current point in time Military spending is not the best option of stimulus for several salient reasons.
Before we discuss the reasons an increase should not be the way to stimulate the economy it’s best to point out that Republican legislators are not really serious about increasing military spending. When you look at the amount they wish to increase spending by, $1.1 billion, you can tell that the spending increase is just rhetoric to get votes during the election year.
For the average American $1.1 billion dollars sounds like a lot of money but just think for a moment whether $1000 sounds like a lot to Bill Gates. In this case, the military consumption expenditures and investment is about $808.3 billion a year, so the Republican increase is a mere 0.14% increase and is unlikely to make much difference.
The reason why actual increases are not wise is that military spending is very high right now and raising spending as a war ends is just silly. Let’s go to a historical comparison we have a chart illustrating per-capita defense expenditures and gross investment in constant 2010 dollars. In other words the data is corrected for population growth and inflation allowing us to directly compare past spending to current. As you can see military spending oscillates with conflicts.
What we can see is that current spending is over one standard deviation, that is higher then the normal range of spending. It is not unusual for military spending to be above the normal level in times of war but to increase it as the war in Afghanistan is drawing down is absurd. Current military spending is a full fledged war level, as the wars draw down one can expect military spending to naturally decrease by as much as 30%. If it stays at current levels the reasons would either be another war or perpetual militarism.
In addition to comparing historical spending, we should also compare spending to potential threats. In this case we can compare the ratio of United States military spending to spending in other counties. The below chart shows two things first in compare the ratio of United States spending to that of the second biggest spender, in 1988 the Soviet Union and as of today China. Since the fall of the Soviet Union in 1991 no country has even come close to equaling the United States in military spending, even if the United States cut spending by 30% to return it to normal peacetime levels we would still be outspending China by about 3.73 times.
The second line compares US spending to that of the next ten countries after China and once again the United State out spends all ten countries and would continue to do so. The United States has the best funded military in the world and would continue to do so even with massive cuts.
Certainly the cuts cannot be immediate given that the War in Afghanistan won’t be over until 2014. Even then cut should be cautious to avoid the adverse affects to the economy. Further as China seems to be increasing their military spending recently it may be wise to our spending at a certain selected ratio of theirs. That said it’s clear that in the coming years there will be an excellent opportunity to decrease unnecessary military expenditure by roughly $240 billion a year, a 6.5% cut in federal government expenditures.
For comparison Republican’s instead are taking $4.3 billion dollar swipes at poor people. If the Republican party were truly serious about cutting excess government spending the military should be one of the first places they look.
Data on Federal Government: Current Expenditures, National Defense Consumption Expenditures & Gross Investment, PCE inflation rate, and the US Population were from the Saint Louis Federal Reserve “FRED” data base http://research.stlouisfed.org/fred2/graph/?g=7WU
Comparative Data on Military Spending in Multiple Countries was from the SIPRI Military Expenditure Database 2011, http://milexdata.sipri.org