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Billions Wasted on Defense Spending

By Ivan Eland
February 7, 2007

Editor's Note: The Bush administration justifies a hefty increase in defense spending because of the "war on terror." But is that the real reason for the high costs or is it just an excuse to fill the troughs for the contractors of the military-industrial complex?

In this guest essay, Independent Institute's Ivan Eland compares the spending for big-ticket military items against the needs of the counter-insurgency war against terrorists:

Each year, one of the most important events in the nation’s capital is the release of the federal budget. Yet the media provides insufficient coverage because the budget is technical, unglamorous, and requires hard work sifting through mounds of data to uncover the key truths.

It is much sexier to cover whether Condi Rice’s star has fallen as a result of the Iraq War. Very little happens in public affairs, however, without the money to effectuate it. And much has happened.

The Bush administration has turned on the funding spigots—with the most rapid budget increases of any administration since that of LBJ.

The administration has wasted hundreds of billions of dollars on everything from expanding benefits in an insolvent Medicare program to massive increases in the defense and homeland security budgets. Like LBJ, Bush has spent taxpayer dollars on both guns and butter simultaneously.

Since taking office, Bush has increased domestic discretionary spending at a rate greater than any president since LBJ. He has also increased defense spending by 50 percent and doubled spending on homeland security.

The Wall Street Journal—surprisingly hawkish and supportive of defense contractors, despite the drain defense spending imposes on the civilian economy—crows that Bush’s guns and butter program has left little inflation and low interest rates.

The newspaper also argues that defense spending currently is only at 4 percent of U.S. GDP, versus the 6–9 percent during the Vietnam War and the roughly 6 percent during the Reagan military build up.

But the Journal admits that the most important reason that the federal deficit created by the guns and butter program is not causing inflation and high interest rates is that foreign countries are willing to lend the United States money—to substitute for the negative savings rate in the United States.

Of course, if foreign investors and lenders lose confidence in the American economy, this source of funds could quickly dry up. One way Bush could reduce the precariousness of the country’s position is to reduce defense spending.

I know, there are wars on—which is the main justification given for the ballooning defense budget. It is true that during Bush’s tenure, the wars in Iraq and Afghanistan have squandered a staggering $500 billion—all to actually increase the chances that anti-American terrorism will again occur.

But the military services, which play the bureaucratic budget game well, have used the 9/11 attacks and the wars in Afghanistan and Iraq to fund high-tech military toys that have little to do with fighting against terrorism or in Iraq or Afghanistan.

And according to the hawks, such as the Journal, the taxpayer should be happy that all of this wasted money, plus some legitimate spending on what should be relatively inexpensive efforts against terrorists, comes in at only 4 percent of the GDP!

No armed force ever fought another—even a guerrilla army or terrorist group—with a percentage of GDP. This statistic is merely some indication of the strain the defense budget puts on the economy. However, as noted above, even this historically restrained figure is contributing to the staggering national debt, which is propped up by foreign lenders.

Armed forces fight each other with weapons purchased with absolute dollar amounts. Hawks like to talk about percentage of GDP to make the U.S. defense spending seem lower; but in fact, it is massive.

The Bush administration’s fiscal year 2008 defense budget request of $650 billion (including $140–$160 billion to continue fighting in Iraq and Afghanistan) will be greater than the combined military spending of the rest of the world.

Yet, the increased spending on Special Forces troops, augmented human intelligence, and unmanned aerial vehicles needed to counter al Qaeda should be comparatively cheap. However, the military bureaucracies’ priorities—and thus their budget increases—don’t go to fighting terrorists.

It should not be surprising, given the disappointing results in destroying al Qaeda, that the military has never been all that enthusiastic about fighting terrorists. In fact, as the equally abysmal results in Iraq and Afghanistan have shown, the armed services are not that enamored with fighting guerrillas either. Instead, even though a great power enemy will probably not arise for quite some time, the military is nevertheless readying itself to fight one.

For example, the military wants to increase spending on warships and one of three new fighter aircraft (the F-35 Joint Strike Fighter) and develop and build new unneeded submarines, aircraft carriers, future armored vehicles, and nuclear weapons. None of these systems have much applicability to fighting guerrillas or terrorists.

Even when the administration and Congress do something to ostensibly augment the U.S. capability to fight guerrillas and terrorists—adding 92,000 troops to the Army and Marines—it may not be all that effective. More than added troops, the United States needs forces that are trained in counterinsurgency and counterterrorism tactics and given an effective war plan to counter guerrillas and terrorists.

Yet neither counterterrorism nor counterinsurgency warfare is sexy for the U.S. military or Congress because they do not provide big dollars to defense contractors or much employment in congressional districts.

Since the military is institutionally incapable of focusing its efforts on counterinsurgency and counterterrorism, instead of increasing the numbers of personnel in the armed forces to do these missions, perhaps the politicians should make a greater effort to avoid unneeded brushfire wars—which will reduce the need to do both of them.

Ivan Eland is Director of the Center on Peace & Liberty at The Independent Institute and Assistant Editor of The Independent Review. Dr. Eland has been Director of Defense Policy Studies at the Cato Institute, Principal Defense Analyst at the Congressional Budget Office, Evaluator-in-Charge (national security and intelligence) for the U.S. General Accounting Office, and Investigator for the House Foreign Affairs Committee.

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