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February 28, 2002November 15, 2013Loren B. Thompson, Ph.D

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An Assessment of the Proposed 2003 Defense Budget

February 28, 2002November 15, 2013Loren B. Thompson, Ph.D

Testimony before the U.S. Senate Budget Committee

Mr. Chairman and members of the Committee, thank you for inviting me to comment on the Bush Administration’s proposed defense budget for fiscal 2003. This morning, I want to briefly discuss three subjects: the size of the defense budget, the priorities it reflects, and its principal defect — inadequate spending for procurement.

Concerning size, much has been made of the fact that at $379 billion, the proposed budget for 2003 would roughly match the combined spending of the 15 next-biggest military powers. Just the proposed increase between 2002 and 2003 — $48 billion — is as much as the entire military budget of Russia or China.

However, as a share of national wealth, the proposed budget is much lower than the norm over the last two generations — despite the fact that we have embarked on a global campaign to counter terrorism. Between 1950 and the year 2000, defense spending averaged about 7% of gross domestic product annually. If GDP in 2003 surpasses $11 trillion as expected, then the administration’s defense budget would represent about 3.3% of the economy — less than half the average of the last 50 years.

Of course, the economy has grown considerably during that period. But if we consider the overall scale of the economy today, the proposed level of defense spending is relatively modest. For example, it has been estimated that Americans devote 6% of GDP to gambling. At that rate, the Navy’s proposed $6 billion shipbuilding budget for 2003 would be about equal to what is spent on gambling each weekend.

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