Our most peaceful age? Trends in U.S. military spending

March 1, 2020

Photo credit: Johnny Silvercloud

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On February 10, President Trump's administration revealed its proposed budget for the Department of Defense. The total budget came in at $740.5 billion, an increase over its $738 billion budget in fiscal year 2020. Excluding national security projects, the earmarked Department of Defense budget clocked in at $704.5 billion.

Describing this budget, White House press release highlighted its aims of improving and modernizing a more lethal force, strengthening alliances, improving performance and accountability, and supporting service members and their families. The annual budget preparation, led by the Secretary of Defense, focused on reorienting the U.S. miltary for combat with China and Russia and a "higher end-fight against an adversary that will have a higher capability."

This proposed budget, which Congressional Democrats decried as "dead on arrival" and "a political stunt", is as much about politics as policy-making. To some, the presidential budget proposal is a "chance to dominate several news cycles, no matter how unrealistic its agenda might be," and Mr. Trump's is no different, recycling several budget cuts and proposals that have been rejected throughout Mr. Trump's time in office.

Yet understanding the U.S. government's spending (or proposed spending) on its military is an important tool for understanding an administration's foreign policy ambitions. The Trump administration has weathered and escalated a number of international crises, each raising alarms about new military engagements. President Trump has cajoled North Korean leader Kim Jong-un into high-profile international summits, before threatening him with "fire and fury like the world has never seen," while boasting about his "nuclear button." To Iranian President Hassan Rouhani, Trump warned in an all-caps missive that Iran should never threaten the United States or risk suffering "CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE SUFFERED BEFORE."

To better understand the Trump administration's budget proposal, we took a historical and comparative look at the U.S. military budget. How does this president's proposal compare with prior spending? How does it compare to what other countries spend? And, finally, what does it mean for peace and stability in the world?

How much does the U.S. spend on its military?

The U.S. Department of Defense's (DoD) budgets are publicly available on the DoD Comptroller's website. To permit better international comparisons, we used budget data published by the World Bank. These data are created by the Stockholm International Peace Research Institute, and include metrics on both military budgets in current US dollars and as a percent of national gross domestic product (GDP). An assessment of 2018 data indicates that figures from the two sources differed by less than 2%.

According to the World Bank, the U.S. military budget has increased by 1,330% in the last six decades, rising from $45 billion in 1960 to $649 billion in 2018. The majority of this increase happened in two periods. The first was in the 1980s, during the presidency of Ronald Reagan, when the budget increased from $138 billion in 1980 to $304 billion in 1989 (120%). The second period of growth, under George W. Bush, was considerably greater, with military spending increasing from $302 billion in 2000 to $698 billion in 2010, an increase of 131%. These periods of growth align closely with the Cold War era and the global war on terrorism, respectively.

U.S. military budget, 1960-2018

Source: Military expenditure as percent of GDP and in current US$ are from the World Bank (2018).

Despite large numeric increases in the military budget, this growth in spending has not kept pace with the U.S. GDP. Military budget, when measured as a percentage of GDP, has experienced an overall decline in this time period, dropping from 8.6% in 1960 to 3.2% in 2018. During the 1980s and 2000s, when the military budget experienced periods of large growth, this trend was temporarily reversed; however, growth in spending has not tracked with the large growth in GDP from 1960 to 2018 (from $543 billion to $20.5 trillion, in today's dollars).

How does U.S. spending compare to other countries?

In total dollar amounts, the U.S. military spending dwarfs any other country on earth. At $649 billion, the U.S. spent 2.6-fold more than did China, the second largest spender (at $250 billion). The third largest spender, Saudi Arabia, trailed well behind at $68 billion.

Regionally, with the U.S. and China removed, the Western Pacific region spent the most on military budgets ($12.1 billion per country, on average), driven by Japan and the Republic of Korea. This was followed by the South-East Asia region, which spent an average of $11.1 billion per country. On the other end of the spectrum, the Pan-American region spent an average $4.3 billion per country, while African countries spent just $685 million.

When measured as a proportion of country GDP, countries in the Middle East and North Africa spend an average of 3.7% of their GDP on military budgets. This figure is well above the Western Pacific (1.8%), Europe (1.7%), or Africa (1.6%). Saudi Arabia and Oman are significant outliers, each spending more than 8% of their GDP on defense. The U.S., at 3.2%, is well below several Middle Eastern and African countries, although considerably above most European countries.

Military spending (2018) and world peace index (2019)

Source: Military expenditure as percent of GDP is from the World Bank (2018). Bubble size indicates total military spending in current USD (World Bank). Peace index taken from the World Peace Index (2019). Regional categorization for coloring taken from the World Health Organization. Countries without a peace index are excluded (Brunei, Luxembourg, Cabo Verde, Seychelles, Belize, Fiji, and Malta). Somalia excluded due to missing military spending data.

But what does all that mean for war and peace? To understand this, we compared countries' military spending with the World Peace Index. This metric is produced by the Institute for Economics & Peace, a think tank headquartered in Australia, and ranks 163 countries on their peacefulness, using 23 quantitative and qualitative indicators measuring violence or the fear of violence.

Peacefulness is measured across three axes: ongoing domestic and international conflict (number of, and deaths from, internal and external conflicts), societal safety and security (refugees, terrorism, violent crime, jailed persons), and militarisation (imports and exports of weapons, nuclear capabilities, and contributions to UN peacekeeping missions). Notably, military expenditure as a percent of GDP is one of these 23 metrics.

The world peace index in 2019 ranged from 1.072 (Iceland, the most peaceful country) to 3.574 (Afghanistan, the least peaceful country). The average ranking was 1.99, with the Western Pacific and European regions being the most peaceful (average of 1.73 and 1.74, respectively) and the Middle East and North Africa being the least peaceful (2.57, on average).

Overall, more peaceful countries spend less on their military as a percent of GDP, although this is not a statistically significant trend. The countries with the largest spending on military (the U.S., China, and Saudi Arabia) were less peaceful than the global average, but none were outliers. Using the global peace index as an indicator of conflict (both domestic and international), we do not find a strong association between the peacefulness of societies and their military spending.

What is the impact of increased military spending?

What impact does a 1,330% increase in military spending have on the U.S. military? To understand this, we looked at the number of active military personnel reported by the DoD from 1974 to the present.

Strikingly, we find that the number of active duty troops has declined by 42% over this timeframe, from 1.85 million in 1974 to 1.07 million in 2019. In the 1980s and 2000s, the two periods with the largest increases in military spending, the number of active duty troops remained mostly flat. By contrast, the number of active duty forces dropped considerably during the Clinton administration, in the 1990s.

What about casualties? To calculate this, we went to the DoD's Defense Casualty Analysis System, which provides data on the number of military deaths. This data system provides annual data for the years 1980-2010, but for more recent years data are only available grouped by official military engagement. As such, we supplemented these data with Wikipedia's dataset of U.S. military casualties of war to incorporate other military engagements. Where annual data were not available, the total number was averaged across the period of the military engagement.

We find three main peaks of military casualties in this period: around 1980-1985 (mostly from deployments to Beirut), 1990-1992 (Persian Gulf War, Somalia, and Haiti), and 2000-2016 (multiple operations as part of the global war on terrorism).

Casualties since 2000 are considerably higher than any time period in the last two four decades, although notably lower than the more than 40,000 killed in Viet Nam or the more than 405,000 killed in World War II. Nonetheless, these data reveal around 7,000 U.S. military casualties in the years since 2001. This does not include another 7,800 U.S. contractor deaths (as reported by Brown University's Costs of War project).

U.S. military personnel and casualties, 1974-2019

Source: Military personnel are taken from the Population Representation in the Military Services (FY17). Office of the Under Secretary of Defense, Personnel and Readiness. (Table D-11). Total military casualties are taken from the Defense Casualty Analysis System for the Vietnam War, Persian Gulf War, Operation Iraqi Freedom, Operation New Dawn, Operation Enduring Freedom, Operation Inherent Resolve, Operation Freedom's Sentinel. Additional casualty data for other conflicts are taken from Wikipedia.

Putting it all together

The U.S. accounts for 36% of the global military budget, "spending almost as much as the next eight countries combined," with a budget that has increased by 1,330% since 1960. This budget constitutes a large proportion of total government spending, in most years accounting for at least half of all discretionary spending.

In response to concerns about the federal deficit, the Budget Control Act of 2011 put in place caps on discretionary spending (both military and non-military) from 2012-2021. However, this act has not been successful in reducing military spending, since the Congress has repeatedly raised these caps for military spending. Furthermore, the DoD's Oversease Contingency Operations Fund, through which much of the global war on terrorism is funded, is exempt from these caps.

Calls for continued increases in military spending to "rebuild our military" come at the same time as reports of $125 billion in bureaucratic waste in the DoD, more than $6 trillion in accounting errors in Pentagon budgets, and Congress appropriating more money than the Pentagon has even asked for.

Are we living in such dangerous times that U.S. military growth is needed to counterbalance a growing threat from China, Russia, and terrorism? We are reminded of president Eisenhower's 1961 speech on what he called the 'military industrial complex':

"This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society."

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