For more than fifty years the United States has maintained the world’s preeminent military. Now, at the beginning of a new century, the continued dominance of that force may be in serious jeopardy. Future defense budgets are unlikely to grow substantially; indeed, the Bush Administration long-range budgets assume defense spending that is essentially flat. The magnitude of supplemental defense appropriations is certain to decline. In addition, the projected growth in entitlement programs threatens to crowd out all other discretionary spending, including for defense. A new administration may seek a “peace dividend” by cutting defense spending even further. The confluence of these forces presents defense planners with two equally unpalatable choices. They will either have to reduce the overall size of U.S. armed forces significantly, compromising America’s role in the world, or forego critical recapitalization and modernization efforts intended to keep the military from becoming obsolete.
Increases in defense spending in recent years have gone largely to meeting the costs of war or to addressing the consequences of more than a decade of inadequate resources for defense. Moreover, much of the potential buying power of defense spending increases has been eroded by rapidly rising costs, particularly for personnel and operations and maintenance. As these costs have increased, there has been a migration of resources away from defense investment accounts (procurement and research, development, test and evaluation) making it more difficult to modernize the force.
There have been increasing calls from well respected individuals and organizations to ensure an adequate national defense capability by putting a floor under defense spending. Such a bold step would have a number of benefits. It would end the repeated “boom-and-bust” cycles in defense spending. Both the Pentagon and defense industry could make long-range plans and commitments based on a stable budgetary environment. It would protect defense spending from being crowded out of the budget by mandatory expenditures.
Analysis by a number of organizations demonstrate that a defense budget pegged to the equivalent of four percent of gross domestic product (GDP) appears to be a reasonable floor for defense spending. This amount would go a long way to addressing projected funding shortfalls in the Department of Defense’s long-term program plan. Over the long-term, as GDP grew (historically, it has grown at three percent a year), so too would defense spending.
Four percent of GDP for defense is a reasonable amount to spend to insure continued U.S. military preeminence. This is well below the six percent of GDP spent on defense during the height of the Reagan defense buildup, much less than the 11 percent of GDP allocated to defense during the Korean War. The four percent solution would provide a relatively inexpensive insurance policy that the nation’s defense would remain adequate in the face of an uncertain future security environment.
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