Defense Spending: What Does It Pay For?

How much does America spend on national defense?

Last year, the US spent almost $800 billion on defense, or about 3% of Gross Domestic Product (GDP, a measure of the size of the US economy), with roughly equal amounts for the Army, Navy and Marines, and the Air Force.  

It is important to remember that this budget does not take into account expenditures for active warfare; it is only the cost of maintaining the United States military during peacetime. For example, Congress spent around $2.3 trillion in ‘Overseas Contingency Operations’ in the 20 years since 9/11.  The total also does not include military assistance to other nations, such as the over $30 billion in weaponry sent to Ukraine over the last two years.

What are the major components of defense spending?

Defense spending can be broken down into several major categories. Operations ($278.1 billion) maintains bases and military hardware and pays for fuel and other logistics.  Personnel ($172.7 billion) includes pay for 1.3 million military personnel as well as 750,000 civilians who work for the Department of Defense.  Procurement ($162.2 billion) pays for new hardware, from airplanes to office supplies.  Research and testing ($136.7 billion) funds the development of new technologies and weapons systems.  

‍

‍How has the size of the defense budget changed over time?

The national defense budget makes up a significant portion of overall federal spending, though the specific amounts have changed over time.  In general, the overall budget has increased dramatically since the 1960s.  On the other hand, defense spending as a percent of GDP has dropped considerably in the same time frame.

‍

‍

How does America’s defense budget compare to its allies and principal adversaries?  

The US spends more on national defense than any other country, including other large industrialized countries. In fact, America’s current military spending is more than the next 11 highest-spending countries combined. (One caveat is that official spending levels in authoritarian regimes may significantly underestimate actual spending.)  However, as shown below, measuring defense spending in terms of GDP shows that US spending is comparable to its allies and adversaries.  The US spending rate (3.5%) is most of the G7 countries, but below Russia (4.1%).

‍

Why is defense spending so high when we’re not at war?

A large defense budget is crucial for preserving national security interests, both domestically and internationally.  A large military may deter aggression by other countries.  Cuts to the defense budget could weaken our military capacity and make it difficult to be at high capacity should a conflict arise.  In addition, a large defense budget helps the broader economy by maintaining employment numbers and supporting the entire defense industry. Nevertheless, critics point out that high defense spending comes at the expense of using public funds to support domestic programs or infrastructure projects.  

What are the options for cutting defense spending?

Cutting defense spending is a complex and politically sensitive issue. Policymakers could reduce personnel, equipment, global operations, or research and development spending.  They could also reconsider US alliances. However, each option has serious potential consequences.

Reducing the number of personnel would lead to major cuts in defense spending. However, any significant cuts would increase unemployment and limit the capacity of the DoD to undertake its missions.

Cutting spending from the other major areas could result in reduced military readiness and a more vulnerable national security status. Research and development funding remains vital as the United States fights to maintain competition with China, which currently leads in the competition for emerging technologies.  Weapons procurement is equally essential as we prepare for future engagements or assist partners during a conflict like Ukraine.

A final method to reduce the defense budget would be to reconsider our foreign commitments and overseas presence. Since WWII, the US has been heavily involved in many alliances, security agreements, and partnerships, each with its own financial obligations. Such commitments are arguably in our national security interest, but further deepen our defense budget and cannot be easily removed without angering partners.  However, renegotiation or outright withdrawal might lead to significant cuts in defense spending.