“Why the U.S. Can and Should
Cut Military Spending”
The National Security Forum
Reno, Nevada
November 13, 2012
Christopher Preble
Source: http://www.downsizinggovernment.org/
Department of Defense
Budget Authority, 1948-2012
$800
$700
$600
$500
$400
$300
$200
$100
Source: Fiscal Year 2012 Green Book
Table 6-8 – Dept. of Defense BA by Title
Figures in billions of constant FY 2012 dollars.
20
12
20
08
20
04
20
00
19
96
19
92
19
88
19
84
19
80
19
76
19
72
19
68
19
64
19
60
19
56
19
52
19
48
$0
Global Military Expenditures, 2010
Latin America
3.37%
Central/South Asia
2.29%
Sub-Saharan Africa
0.89%
Russia
5.27%
Middle East and
North Africa
6%
East Asia and Australasia
7%
United States
47.65%
China
9.52%
Non-NATO Europe
1.24%
NATO Ex-US
15.29%
Department of Defense
Budget Authority, 1948-2012
$800
$700
$600
$500
$400
$300
$200
$100
DOD Budget
War Spending
Source: Fiscal Year 2012 Green Book
Table 6-8 – Dept. of Defense BA by Title
Figures in billions of constant FY 2012 dollars.
20
08
20
03
19
98
19
93
19
88
19
83
19
78
19
73
19
68
19
63
19
58
19
53
19
48
$0
Department of Defense
Budget Authority, 1998-2012
$800
$700
$600
$500
$400
$300
$200
$100
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
$0
DOD Budget
War Spending
Source: Fiscal Year 2012 Green Book
Table 6-8 – Dept. of Defense BA by Title
Figures in billions of constant FY 2012 dollars.
Department of Defense
Budget Authority
Actual and Projected, 1998-2022
$800
$700
$600
$500
$400
$300
$200
$100
DOD Budget
War Spending
Sequestration
Source: Fiscal Year 2012 Green Book
Table 6-8 – Dept. of Defense BA by Title
Figures in billions of constant FY 2012 dollars.
20
20
20
18
20
16
20
14
20
12
20
10
20
08
20
06
20
04
20
02
20
00
19
98
$0
Current Baseline
Department of Defense
Budget Authority
Actual and Projected, 1948-2022
$800
$700
$600
$500
$400
$300
$200
$100
19
48
19
53
19
58
19
63
19
68
19
73
19
78
19
83
19
88
19
93
19
98
20
03
20
08
20
13
20
18
$0
DOD Budget
War/OCO
Sequestration
CW Average
Source: Fiscal Year 2012 Green Book
Table 6-8 – Dept. of Defense BA by Title
Figures in billions of constant FY 2012 dollars.
Current Baseline
AIA Studies
• In October 2011, George Mason University
Professor Stephen Fuller argued that a
reduction of $45 billion in DoD procurement
spending would result in a decline of about
$86.5 billion in GDP in 2013, and the loss of
1,006,315 full-time, year-round equivalent jobs.
• Fuller updated his findings in July 2012, and
now concludes that the automatic cuts under
sequestration, both defense and non-defense,
will reduce the nation’s GDP by $215 billion, and
cost 2.14 million jobs.
Zycher Cato Study
• On August 8, Cato published a study by
economist Benjamin Zycher, which concluded
that a reduction of $100 billion per year, nearly
twice what is called for under sequestration,
would reduce costs in the wider economy by
$135 billion per year (the difference due chiefly
to the excess burden of taxation).
Zycher Cato Study (continued)
• Even accepting Fuller’s decision to ignore the
benefits that would flow from shifting resources
from less to more productive uses, Zycher
shows that Fuller’s multiplier is grossly inflated.
• Military spending contributes very little to GDP
growth, and cuts would have very little long-term
impact on GDP.
Defense Contribution to Real U.S. GDP Growth, 2000-2011
(Annual Pct)
20
00
20 :I
00
:IV
20
01
:
20 III
02
:
20 II
0
20 3:I
03
:IV
20
04
:
20 III
05
:
20 II
0
20 6:I
06
:IV
20
07
:
20 III
08
:
20 II
0
20 9:I
09
:
20 IV
10
:
20 III
11
:II
10
8
6
4
2
0
-2
-4
-6
-8
-10
Real GDP Growth
Defense Contribution
Year:Quarter
Private Investment Contribution to Real U.S. GDP Growth, 2000-2011
(Annual Pct)
20
0
20 0:I
00
:I
20 V
01
:
20 III
02
:
20 II
03
20 :I
03
:IV
20
04
:
20 III
05
:
20 II
0
20 6:I
06
:I
20 V
07
:
20 III
08
:
20 II
09
20 :I
09
:IV
20
10
:
20 III
11
:II
10
8
6
4
2
0
-2
-4
-6
-8
-10
Real GDP Growth
Private Investment Contribution
Year:Quarter
The Bottom Line on Sequestration,
Military Spending and the Economy?
• Cuts currently under consideration are modest,
and consistent with past post-war drawdowns.
• The United States will maintain a sufficient
margin of military superiority over any
conceivable combination of rivals even if it
spends far less.
• Cuts in military spending should benefit the
economy, and certainly in the long run.
Where Should We Be Going?
Real cuts are politically feasible – and
strategically wise – if we revisit some basic
premises.
Strategic Misapprehensions
• At least four false, expensive, and bipartisan
assumptions inhibit real spending cuts.
– Counterterrorism requires nation building (aka COIN),
and we can master nation building.
– Alliances distribute our defense burden rather than
adding to it.
– Primacy pays; we should try to run the world.
– Security threats are imminent, and require urgent
attention and persistent global presence.
Strategic Misapprehensions
• At least four false, expensive, and bipartisan
assumptions inhibit real spending cuts.
– Counterterrorism requires nation building (aka COIN),
and we can master nation building.
– Alliances distribute our defense burden rather than
adding to it.
– Primacy pays; we should try to run the world.
– Security threats are imminent, and require urgent
attention and persistent global presence.
Strategic Misapprehensions
• At least three false, expensive, and bipartisan
assumptions inhibit spending cuts.
– Alliances distribute our defense burden rather than
adding to it.
– Primacy pays; we should try to run the world.
– Security threats are imminent, and require urgent
attention and persistent global presence.
New Rules for the 21st Century
• We should not engage in military operations
overseas unless there is a compelling U.S.
national security interest at stake.
• There must be strong public support for the
mission.
• The mission must be clearly defined, and
reasonably attainable.
• We should remember that war is a last resort.
Questions?
Christopher Preble
Vice President, Defense and Foreign Policy Studies
cpreble@cato.org