Former Reagan economic advisor says current defense budget is much smaller than during other wars

April 3, 2006 -- The expanding array of threats to U.S. national security contrasts dramatically with the declining share of national resources being devoted to our armed forces, suggests Murray Weidenbaum, former chief economic advisor to President Reagan and the Mallinckrodt Distinguished University Professor at Washington University in St. Louis.

"During the last several years, national defense has taken a rising share of the nation's resources but — a fundamental 'but' — that share remains substantially below the portion of the U.S. economy devoted to national defense in most of the period since the end of World War II," concludes Weidenbaum in a recent article for the Foreign Policy Research Institute.

Although total Department of Defense expenditures grew from $281 billion in 2000 to $471 billion in 2005, Weidenbaum reminds us that current levels of defense spending still represent less than 5 percent of the nation's gross domestic product (GDP). He compares that with military outlays of about 35 percent of GDP at the peak of World War II; 15 percent of GDP for the Korean War; 10 percent for Vietnam and 6 percent for the Gulf War.

"In every way that it can be measured, the military's take of economic activity is a smaller fraction than during the Gulf War — or Vietnam or Korea," he continues. "This relationship holds for the military share of the economy (as measured by gross domestic product) as well as for its portion of the federal budget, capital investment, research and development, and personnel."

While there is intense debate concerning the details of the U.S. military role in Iraq, Weidenbaum's analysis suggests that the nation need not be overly concerned about its ability to shoulder the economic cost of the war.

Murray Weidenbaum

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"These findings by themselves do not provide a justification for increasing — or reducing — the size of the military budget," he cautions, but "it seems clear that the current economic burden of military outlays is sustainable — now and in the foreseeable future."

There's little doubt, says Weidenbaum, that the U.S. can afford to spend whatever it thinks necessary to promote the nation's security. But it's far less certain that lawmakers will take the steps necessary to make sufficient defense funds available. His concern is that percentage declines in military outlays appear to be driven mostly by the realities of domestic politics, by the fact that lawmakers find cutting discretionary military spending to be much easier than slashing cherished entitlement programs, such as Medicare and Social Security.

"The author's personal analysis of the ongoing debates on national security policy leads to the uneasy conclusion that the strategic shift in resources identified here has been made by default rather than by deliberate design," he concludes.