Monday, August 23, 2010

An economist looks at Defense Spending graphs

CSBA has been looking at the 2011 Defense budget ... let's join them.

Our spending on national defense is "unsustainable" and "our of control?" Really? Really?

No, it just isn't a priority for some. It is that simple. Just a simple graph answers all your questions. All else is political spin and posturing.


Oh, and the economist in me says, "With lower-highs and lower-lows - you are heading to about 2.2% GDP on National Defense by 2022-24."

I call them the "Terrible 20s" for a reason.

22 comments:

蒲亮奇 said...

在你一無所有的時候 是誰在陪伴你 他便是你最重要的人......................................................................

The Usual Suspect said...

The primary charge of any government is to provide for the defense of its citizens.  In order to smooth out the cyclical nature of defense spending that results in a pattern of having to dig ourselves out of a hole every other decade, we should dedicate, via legislation, that no less than 5% of GDP should be spent on defense each year.  That gives the United States a predictable and sustainable stream of funding for defense.  It ebbs and flows with the economic cycles and leaves the option for an increase in times of war.  Such a policy, if adhered to, would result in adequate funding for manpower, maintenance, and materiel.  Now that would make good sense.

ewok40k said...

Having more $$ spent on defence than rest of the world combined - and it being not enough - is meaning that either you are spending wastefully , or you have set yourself wrong goals. Probably both.

ShawnP said...

We have been sliding problems to the right for almost 2 decades. Well the gig is up soon and either we as a nation want to be a maritime nation or not. It's black and white with no grey material to hide in for politicians and stars.

ShawnP said...

We have been sliding problems to the right for almost 2 decades. Well the gig is up soon and either we as a nation want to be a maritime nation or not. It's black and white with no grey material to hide in for politicians and stars.

UltimaRatioRegis said...

Or supporting a number of nations who refused, and refuse still, to do for themselves.  Like most of Western Europe.  Who used the money they saved under America's protective umbrella to build an entirely unsustainable socialist paradise that is now on the verge of economic collapse. 

ewok40k said...

Dont make me laugh, you have been paying for that until 1989, by now its 20 years of lack of military danger for Western Europe.   And the most socialized, namely Scandinavian, economies are the most stable here. Most liberal economies, namely Ireland or UK were amongst worst hit by crisis.
For a single carrier built you can buy 20 simple frigates/corvettes to hunt pirates, show the flag, hunt subs in the wartime, and have commanding officers trained. Just not LCS... Ah yes, and supercarrier needs air wing, escorts, and so on... and when you have finally someone trying to rivalise with you on sea (PLAN), they build missiles bypassing most of those defences. 
AF - the same - how many A-10s can you build instead one B-2? And the AF is doing its best to rid of those unsexy gunships that grunts on the ground love to have overhead.
Imagune Mogadishu battle with squadron of A-10s in support.
Add to this the idea of war without casualties and general risk-aversion culture and you have colossus on legs of clay.
And dont shoot me, I am just being honest friend. Truth may hurt but is better than polite flattery.

Southern Air Pirate said...

Listen every time through out the world's history as the economy starts to stumble in a nation the first thing to take a hit is the defense budget. Just scroll yourself back about 40 yrs (has it really been that long?) to the end of the Vietnam conflict, we started to hit high unemployment and double digit inflation, the defense budget was scaled back seriously. Under Ike the defense budget was scaled back cause of the economy being unable to sustain the final change over from the war time enviroment it had sustained during the previous decade (remember we started a rebound post ww2 only to be sucked in to high expenses due to Korea), the great depression and war games being played with Model T's having signs saying "tank" on them, Classes of ships that were out right freeze smaller and more evoultionary. Post ACW (American Civil War) no technological advancement and outright freeze on promotions and unit sizes. The British were totally cash strapped following both of the Napolenic wars. Yet every time the world power starts to cut back some upstart begins an new conflict, and the promises from the politicos is "never again"

YNSN said...

The USAF has a term.  HDLD.  High Demand, Low Density.  That is what the A-10 is. 
There is waste, lots and lots of waste.   Still, we're spending for probably around 15 countries in our defense budget.

Guest said...

The defense budget is going to take a hit, and it probably should.  There's tons of pork floating in that $700+ request, and Congress knows it, otherwise we wouldn't be buying more C-17s or extra JSF engines (just to name a few easy targets).  And everyone likes to quote a nice number like we should be spending 4% of GDP on defense.....but in reality we should be needs based.  What do we really need vs how great it is having 12 CVNs, a slew of B-2 bombers, or having 500 flag officers.

UltimaRatioRegis said...

<span>Not saying we aren't buying the wrong things with our defense dollars.  But the year you should be referring to is 1991, and the dollars spent before that do indeed count in the equation.  And that isn't counting Asia (Japan and South Korea).  During that time there was much spent on subsidy of NATO's military capabilities. Massive totals, in fact, that would make great inroads into current US debt if figured in 2010 dollars.  But I am not laughing.  Neither are the Georgians, the Estonians, nor the Ukrainians.  Nor, really, should you.
</span>

ewok40k said...

Georgians really did get not much support when Russians did invade them... As for me I am not sure anyone in the US would be ready to die for Danzig. Nothing new under the sun, anyway.
Thats why I am really happy to see some good buys for Polish armed forces lately, from Israeli ATGMs to the new F-16s. It's good to have friendly cop, but even better to have shotgun at home. Gosh, by local standards I think and talk like American :P
Ukrainians by comparison seeked reconciliation with Russia seeing they wont get NATO entry  soon.

Southern Air Pirate said...

There is also tons of waste, fraud, and abuse in nearly of the other bureacratic process of the government. I mean looking just at what the US Media reports from time to time as the economic crunch comes along, you see things such as millions of dollars spent for building unneeded or new paths of transportation and none for upkeep, millions wasted on criminals abusing social support services (such as welfare, government run medical insurance, government worker insurance, etc) and then for every big bust there are millions just trolling just underneath the big numbers but when look at on the whole they still eat up millions of dollars, the waste just in maintaining some of the layers of red tape to make sure that everyone is doing thier job properly. However that is the inherent nature of a bureacracy, is there is corruption, fraud, waste, and abuse.

You talk about what we need vs our wants. However that question is more complex then that. It should be needs vs wants along with what our ultimate role is supposed to be with relations to the greater world poltic. Are we supposed to be the world's police? If not then are we suppose to just leave our treaty partners hanging when they need something? If we do leave them then what happens when quid pro quo comes alone on our side? What about supposedly modern belief that, at least in my mind, seems to be a re-imagined version of the early 20th century white man's burden. That is we need to help bring the standard of living in some countries up by our engagement with them (see the previous posting here about soft power)? If we do retreat to Fortress America where do we draw the line in the sand? How do we make other nations take up the burden to even be regional powers just in thier own backyard? Some of these are ultimately are conflicting with each other, but you need to have a good counter point then "just cause" otherwise any arguement you make is null and void cause you are unwilling to look beyond the immedate future and unwilling to engage in debate.

Steeljaw said...

"but in reality we should be needs based.  What do we really need vs how great it is having 12 CVNs, a slew of B-2 bombers,..."

...so how's that crystal ball working out?

Southern Air Pirate said...

E40K,

The why NATO or even the EU get involved in the Russian-Georgian conflict only goes to the debate about the win in Iraq. The reasons of going against Iraq versus some place like NORK. The idea of who the ultimate players are/were in a conflict and the classic La Costa Nostra (Mafia) line of who benefits at the end of the action. The world is ultimately very complex with regards to the politicking and it seems at times we have some players who studied Bismarck's playbook while others seem to have studied Chamberlin's playbook.

S said...

This analysis is totally falacious. First of all you are examining the the wrong metric. FDefense spending as a percentage of productive GDP (or call it real real GDP).  Net the debt off GDp and take a stab at where GDP might be without excess leverage. Take yourself back to pre bubble GDP post Tech $10T - at that level you are neang peak cold war or Vietnam era levels. it is the economic not defense analysis that is flawed here.

Grandpa Bluewater said...

SAP:


The major problem is the ones who never read any playbook. If you prefer the impersonal, the lack of mature strategic thought. 

They just hit it lucky on looks, diction, and finding an organization to create slavish admirers in return for not reading what they are voting for, approving, or knowing who they are appointing.

Because the only long term good is their advancement, or their clique's advancement.

Their mantra...Want loyalty: buy a dog.

Maybe you heard of the archetype: Ozmandias.

UltimaRatioRegis said...

"<span>Take yourself back to pre bubble GDP post Tech $10T - at that level you are neang peak cold war or Vietnam era levels."</span>

Pre-bubble post-tech?  So why wouldn't one take the $740 billion and express that in "pre-bubble" dollars?

If you want to find how we got behind the 8-ball, go to the 1993-99 Clinton defense budgets and the "acquisition holidays" that came as the supposed "peace dividend" but was pumped directly into social spending.  Which now constitutes more than 66% of the budget and more than THREE TIMES that of defense spending.

Salty Gator said...

Isn't it interesting...
When talking about the buildup of the chinese military, we talk about percentage of GDP
When talking about "runaway defense spending," we use inflation figures

When talking about the progress in Iraq / Afghanistan teaching the host nation military, we get figures and statistics (units ready for combat)
When talking about the return on investment of US Navy Theater Security Operations (TSC), we get pictures and certificates. 

UltimaRatioRegis said...

You done said a mouthful, Salty.

Salty Gator said...

we can say that but it's not true.  CNO is making a lot of policy.  Additionally, when he briefs the rise of China, or when Gates briefs the rise of china, they talk GDP.  When he and Gates talk about cutbacks, it is inflationary figures.  Etc.  When it came to the surge, the leaders made a decision about standing up for it or not standing up for it.  Why cannot the same thing happen with the budget.

Gates is making us defend our programs.  Some cannot be defended.  Those will go away.  And I'm glad about that.  Hard times make us cut the fat.  We are firing people left right and center here who should have been fired years ago.  But you don't throw the baby out with the bath water, and that is what we are in danger of doing.

Navigating near shoal water requires constant fixes.  SECDEF is up to the task, he just needs to execute.  I'm not sure that we have a course yet worked out.

ewok40k said...

the economy runs bad because of bad production base and export/import gap, not because of how the budget cake is being distrubuted...