Outside the Beltway

AP reports that the Senate is near approval of a $386.6 billion defense bill, and includes this:

The bill is $3.1 billion below Bush’s budget request for the fiscal year beginning Oct. 1, and represents a Defense Department budget increase of slightly more than 1 percent. That does not count a $62.4 billion emergency spending bill passed earlier this year to cover the cost of war in Iraq.

It also does not include the costs of military operations in Iraq and Afghanistan in the new fiscal year. Bush is likely to request that money in a separate bill.

So, in actuality, the defense budget is roughly $450 Billion–plus whatever we spend fighting wars! That’s a lot of money in a world with no peer competitor. Indeed, we’ve almost certainly reached the point where we spend more on the military than all the other countries on the planet combined. We were pretty close to that a year ago and are spending a whole lot more money now:

Courtesy Global Issues

Retired Admiral Eugene Carroll, Jr., of the Center for Defense Information has remarked, “For 45 years of the Cold War we were in an arms race with the Soviet Union. Now it appears we’re in an arms race with ourselves.”

Afghanistan War, Military Affairs

Afghanistan, Cold War, Defense Department, Iraq, Soviet Union

19 responses to “DEFENSE BUDGET”

Matthew

July 17, 2003 at 8:51 pm

James, it was always my understanding that the costs of defense systems were so high because we were paying for both the units and a subsidy to keep defense firms up and running while production was kept below an efficient level. (One might think of it as a kind of peacetime diseconomy of scale.)

If this is true, then the spiraling defense costs could be explained in part by the fact that we’re still buying units at a “cost-plus” level rather than paying for the real value of our weapons.
carl

July 18, 2003 at 1:45 am

Matthew: so what your’re saying is that if only there was a nice big war (allowing greater economies of scale) the US could spend less on “defense”?
The mind boggles.

Of course, if you’re suggesting that the production of limited numbers of units of new weapon systems raises the cost per unit, you are absolutely right.

The overriding reason for massive US military spending is that it is almost always in the immediate interest of Congress, the Pres. and the top brass to spend more. No doubt you are aware of why this is the case, so I won’t spell it out here.

I’m not sure it make sense to speak of the “real value” of many weapons, since there is nothing resembing a free market. Who else is shopping for missle defense? Probably more accurate to call it the “cost of production” or something.

And while it’s true that vast amounts of “defense” spending are a subsidy to high-tech industry, (also known as corporate welfare), this has nothing to do with whether “production is kept below an efficient level”.
raj

July 18, 2003 at 2:35 am

OK, I’ll bite. If the US is spending US$400 billion annually on offense (I know, they call it “defense,” but it really is offense), what is that supposed to cover, if not–offense? Why is there an additional expense if they really go to war?
Matthew

July 18, 2003 at 4:30 am

No, Carl, that’s not what I’m saying. Perhaps I was a bit awkward in my phrasing.

I tried to say that we maintain a diseconomy of scale in defense outlays for fear that if we didn’t shell out money for overpriced weapons and equipment, the defense industry would shut down and we’d lose infrastructure necessary to supply the US with weapons in the event of an actual war. So we pay through the nose for systems that should in fact be cheaper.

This was, I believe, Clinton’s rationale for keeping the Seawolf submarine afloat after Cheney canceled the program in the first Bush administration.

In other words, this is an institutional policy that amounts to corporate welfare, which is pretty much in line with what you were saying. And with an increase in purchases because of the war on terror, there should be a subsequent renegotiation of contracts and prices, but I see no evidence that costs are coming down. Thus, I think we’re getting ripped off.
bryan

July 18, 2003 at 11:50 am

well it’s always struck me that the military is the American version of Keynesian system of economic stimulus. And the bonus is that when the economy has been properly stimulated there’s a lot of cool weapons left over.
Paul

July 18, 2003 at 1:25 pm

Many critics are missing the fact that we are in a trasitional phase with our military.

We are spending potloads of money on research and development right now.

There is nothing in our inventory right now that will not be completly changed in 10 years. (Even if it is the same airframe, the electronics will be completely replaced.)

Even during the cold war, we did not develop this fast.

And for those of you (morons) who want to complain about the money the DOD spends on R&D and don’t understand these technologies benifit everyone, please turn orr your COMPUTER and by all means get off the INTERNET.

It never ceases to amaze me the number of people on the INTERNET that will make that agrument.
Dan Cock

July 18, 2003 at 1:55 pm

Um…procurement costs a lot more than R&D, and procuring the newest fighter system or guided artillery platform isn’t going to have many positive externalities for the rest of us.

And I may be a moron, but you’re missing the point entirely. What’s so important about “developing even faster than during the cold war?” Who do we have to race against?

If you wanna talk R&D, talk about Bush’s cutting of R&D spending for scientific research. The opportunity cost of military R&D versus normal, civilian R&D is massive. For just a fraction of the research done on new weapons systems, we could develop mulititudes of new drugs and vaccines.

Or we could have universal health care AND maintain the most powerful armed forces in the world. Talk about positive externalities from universal health care.
anon

July 18, 2003 at 11:06 pm

Ah yes, the internet. And what was ARPA’s total expenditure in millions (not billions) for the entire experiment? Never mind that much of the www is the invention of, ummm, Old Europe! 🙂

[ see http://public.web.cern.ch/ ]
Paul

July 18, 2003 at 11:47 pm

Um…procurement costs a lot more than R&D, and procuring the newest fighter system or guided artillery platform isn’t going to have many positive externalities for the rest of us.

Dan, Perhaps basic economics escapes you. How the HELL can we procure “the newest fighter system” if no money is spent on R&D to produce it?

That is my point. The “procurement” money is mostly R&D.

How much would a 50 million dollar jet be without the cost of development?

How does military spending “help the rest of us?”

Have you hear those “On Star” commercials where peoples’ lives are saved because of GPS and cellular technology?

Where the hell do you think that thechnology came from, the Easter bunny?

Or we could have universal health care

Say no more… Any reason would be lost.

—

Never mind that much of the www is the invention of, ummm, Old Europe!

Apparently you miss the point. We use millions of things every day that are products of research done for DOD. The internet would not exist with the military.

And “old europe’s” contribution to the internet can not hold a candle to the contribution of the American consumer.

–

As I said above, people will use the internet to make the case we all don’t benifit from DoD R&D.

Simply amazing it its irony and short sightedness.
Paul

July 18, 2003 at 11:50 pm

OH (as if it matters)

When I said that in the cold war we did not develop as fast as we are now, I did not mean quantity of weapons, I meant technologically.

That was an incredible ramp up of military might but contained not near the technological advances.
chad

July 19, 2003 at 6:34 am

I, too, am just a moron, an old one at that. But I have long wondered if it was really true that the only sources of technological advancement are the Easter Bunny and war making equipment. Is it possible that we could develop good things for their own sake and not merely as coincidental spinoffs? And having now twice seen the arrogance of power in action, I am begining to doubt that vulnerability is more dangerous than perceptions of invincibility.
Paul

July 19, 2003 at 11:16 am

First, I never said that was the only way we achive technology. Further I did not see anyone else in this comments section say that.

That is a figment of your imagination.

But even the casual student of history knows that for all of recorded time the vast majority of technological and medical advancements have been produced to win wars.

You might not like that fact. You might think it is a damn shame. You might think it speaks poorly of us as a species.

But denying it is to deny reality.

We are presently involved in a major upgrade of our military that we not only give them more ability but will have a multitude of spinoffs in the civilian sector.

You can talk of the arrogant use of power. You can sit around all day and sing kumbaya.

But none of that changes that the vast majority of technology has come from warfare and will in the future.

Happy thoughts are fine. Never confuse them with reality.
chad

July 19, 2003 at 7:24 pm

You are of course right. You did not say developing the capacity to make war is the only way to make technological progress. In fact you specifically suggested that the Easter Bunny as an alternative. I understand the rhetorical import of that. Still I find “either/or” arguments to be weak, so I could not help making fun of yours. I should not have joined you in your sarcasm game. I am trying not to be as arrogant as I once was now that I have grown up. But some times I just can’t help myself.

I do not sing. But if I did, I would select kumbaya rather than Que sera,sera, as you seem to prefer. Historicism is as flawed a notion now as it was when Plato fell for it. The fact that we have followed the same counterproductive behavior throughout our history does not mean that we are condemed to make the same stupid mistake over and over again till the end of time. Indeed we can benefit from trying not to do that, in spite of our penchant for it.

I do not deny that technological advancement useful for other purposes comes from military R&D. However, it seems to me that additional benefit is mere happenstance and inefficient. I suggest that the spinoffs are not a sufficient basis to continue unwise military expenditure. A rational nonmilitary program of science would seem to be more productive if we can find a motivation other than fear.

My take on the history of the cold war is what worked was the mutual vulnerability inherent in the balance of power. And what did not work was the constant effort to gain military superiority resulting in the arms race. If I am right about that then military and economic hegemony is not only wasteful and inefficient, it is dangerous.