The U.S. Defense Budget is, to put it mildly, rather large. The FY 2008 budget authority for defense is a staggering $508 billion, with expected outlays of $516.5. As has been pointed out numerous times here and elsewhere, we’re quite literally spending more on defense than all other countries on the face of the earth combined. (Click thumbnail for a rather gigantic budget table.)
It’s rather interesting, then, to see that our defense spending, when measured as a percentage of gross domestic product, is actually well below our 45 year average:
The chart is one of many interesting graphics in the new Heritage Foundation Federal Budget Chart Book, which my friend Robert Bluey, the new director of Heritage’s Center for Media & Public Policy, has been writing about.
One could argue that the “45 year average” baseline is somewhat skewed, given that the first three or four years of that range represented the height of the Vietnam War. Then again, the past five years include two significant ongoing wars in Afghanistan and Iraq and the larger “global war on terrorism.” Further, current spending as a function of GDP is well within the range of normalcy for the post-Cold War period.
I’ve never known what to make of GDP/spending ratio arguments. It seems to imply that these ratios should remain static, which not only creates a presumption for the status quo but presumes that the relative merits of various type of spending are not influenced by changing circumstances. Regardless of our national wealth, it made sense to cut spending on defense once the Soviet Union collapsed and to increase it again in the wake of the 9/11 attacks. Moreover, it’s not clear why the increased productivity of the American worker should necessarily give the government a claim to more money.
Perhaps expenditures in real (inflation-adjusted) dollars makes more sense. In that regard, spending is clearly up:
The table above, from Brookings’ Michael E. O’Hanlon, was constructed five years ago, using projections for the out years, so the graph is a bit off, but it’s close enough for eyeball comparisons with the Heritage chart. (Global Issues has updated real dollar figures through 2007 but their chart only goes back to 1998, providing a poor comparison with the Heritage chart.)
As you can see, there are wild swings in real defense spending which more-or-less correspond to perceived changes in the strategic environment. The constant dollar charts seem to track more closely in that regard than the percentage of GDP chart.
