Wed, Oct 10, 2007 - Page 9 News List

GDP and military spending fixation makes little sense

The US is spending less on the military nowadays, but outlays still run to about two-thirds of levels when the nation and its allies faced the threat of World War II

By Doug Bandow

The US' governing Republican Party once professed to promote fiscal responsibility. Today Republicans are pressing to spend ever more on defense.

Military outlays ran to US$305 billion in 2001.

The administration of US President George W. Bush has proposed spending US$607 billion next year, and that is just the starting number.

Republican presidential candidate Mitt Romney promises to devote at least 4 percent of GDP to the military and favors "adding at least 100,000 troops and making a long overdue investment in equipment, armament, weapons systems and strategic defense."

Despite the end of the Cold War, former New York City mayor Rudy Giuliani contends that military spending should not have been cut at all.

"We must rebuild a military force that can deter aggression and meet the wide variety of present and future challenges," he said.

Many activists also have abandoned the traditional conservative belief in foreign restraint. The Heritage Foundation has published a new report in which editor Mackenie Eaglen said: "The US could recapitalize and sustain military strength by increasing and maintaining defense spending at 4 percent of GDP."

However, the share of GDP is essentially meaningless since GDP bears no relation to international threats. The US' GDP in 1944 was US$209.2 billion, when Washington devoted US$79.1 billion, or 37.8 percent of GDP, to defense.

That's the equivalent of US$2.367 trillion and US$895.1 billion respectively this year. Today's GDP is US$13.761 trillion, with military outlays of US$571.9 billion.

The US' real GDP is almost six times as great as in 1944, but the threat facing the US surely is not six times as great. The US is spending less on the military today, but outlays still run to about two-thirds of levels during the globe's worst conflagration. In 1959 the US' GDP was US$491 billion, or US$3.377 trillion in 2007 dollars; military outlays were US$49 billion, or the equivalent of US$337 billion today.

Threats have not increased fourfold like the GDP since 1959. Inflation-adjusted military outlays will soon run twice the level then. Is the world twice as dangerous today?

Obviously, there are significant limitations in comparing outlays across years. But that's precisely why fixating on a percentage of GDP for military spending makes no sense.

Despite the horror of 9/11, the US and its allies face nothing like the threats existing during World War II or the Cold War. First, the US alone accounts for roughly half of the world's military outlays. There is no state, or coalition of states, that can threaten the US' territorial integrity, constitutional system, or economic prosperity. Second, the US is allied with virtually every other major industrialized nation. Last year the US accounted for US$13.2 trillion of the US$48 trillion in global GDP.

Add the US' Asian and European allies and the total is US$35.6 trillion, or three-quarters of the world's economic strength.

Most of the other nations are friendly. One has to strain to find adversaries: Cuba, Iran, Venezuela.

Even if China and Russia become hostile, their neighbors are well able to respond without US assistance. The EU has more than 14 times the economic strength of Russia. In Asia several countries, including Japan, South Korea and Australia, have an incentive to moderate China's rise.

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