Whether America spends enough on defence depends on who you ask. A large section of its opinion makers are worried over “insufficient funding” for defence, and President Donald Trump has promised to make up for it. An alternative viewpoint with limited support from lawmakers is about how national wealth is being diverted to war preparations, at huge human cost.
But indisputable are the following facts. The U.S. accounts for 36% of the world’s total defence spending, nearly three times China’s share, which at 13% is the second biggest spender. In 2016, the U.S. spent $611 billion, which is more than the next eight spenders combined. China, Russia, Saudi Arabia, India, France, the U.K., Japan and Germany together spent $595 billion in 2016. It is also a fact that the proposed increases in Pentagon contracts since the election of Mr. Trump have already resulted in massive appreciation of the stocks of defence companies. A fund comprising defence stocks grew by 40% in 2017, the highest for any particular sector in the first year of the presidency.
Mr. Trump has announced a policy of enhancing America’s hard power and curtailing investment in soft power — which in policy means cuts in foreign aid and diplomacy and hikes in the allocation for Pentagon. The 2018 National Defense Authorization Act, or NDAA, authorises about $700 billion for the Defence Department and $66 billion for the war budget. These figures will be finalised when Congress gives final approvals for 2018 spending in the coming weeks.
With 800 military bases in more than 70 countries and territories — Russia, Britain and France combined have 30 bases — America maintains the world’s most expansive and expensive military. There are about 1.3 million active-duty soldiers in the U.S. military, of which 15% are deployed abroad. War and war preparations are a huge expense for the country, but it is also an economic stimulus. The Brown University Watson Institute’s Costs of War Project estimates that all wars that followed the September 11 attacks have gobbled up $5.6 trillion till date.
New threat perceptions
The 2016 presidential campaign had several candidates pledging an increase in defence spending. An array of new threat perceptions has also emerged. The North Korean nuclear threat has breathed fresh life into the controversial missile defence system, which is set to get enhanced funding in the coming years. Alleged Russian cyberattacks have added a new rationale for more money for the cyber-command. The Barack Obama administration had set in motion a programme for revamping the country’s nuclear arsenal, and now Mr. Trump, who repeatedly accuses his predecessor of undermining the military, has promised to better it.
The U.S. currently spends around 3% of GDP, which is below the 6% figure attained during the Reagan era, at the peak of the Cold War. Long-term trend studies say as a proportion of the GDP, it has been coming down. In the 1950s, America spent up to 9% on defence. This decline is global and is related to declining costs, according to some experts, rather than austerity measures.
The current push for increasing defence spending is happening along with the tax cuts legislated by Congress recently. The exchequer will forgo nearly a trillion dollars over the next decade due to the tax cuts even as it ramps up spending on military. Many Democrats fear the axe will fall on finances available for welfare programmes for the poor.
