Hard Times

Nov. 1, 2008

“The world may be heading for its worst recession in a quarter of a century—if it’s lucky,” read an Oct. 13 Bloomberg dispatch.

In that article, experts expressed a belief the new slump would rival the big one that hit the US in 1982. There was hope, stated a former Treasury official, “that it won’t become the worst … since the Great Depression.”

If history is a guide, this means trouble for the military. The features of a big recession—slack revenues, heavy social needs—always put pressure on defense.

Already, Rep. John Murtha (D-Pa.), a powerful House defense appropriator, has declared, “The next President is going to be forced to decrease defense spending in order to respond to neglected domestic priorities.”

The US military will suffer a setback if that dubious proposition gains too much momentum.

The underlying notion here is that the US military has been burning tax dollars at an unaffordable rate. One popular view of the situation imagines that shooting wars—especially the war in Iraq—has imposed crushing costs on the taxpayer. Another is that the expense of simply maintaining today’s 1.4-million-strong US force has gotten wildly out of hand.

Those visions are flawed, as we hope Mr. Murtha and others realize before they get too far along with their prospective cut drills. We would remind them of a simple but frequently ignored truth: Pentagon spending didn’t cause today’s economic crisis, and drastic cuts will not end it, either.

In this matter, we direct everyone’s attention to a July 24 Congressional Research Service report giving a historical view of the costs of the nation’s 12 major wars, expressed (as best as can be done) in terms of constant 2008 dollars.

A review of the relevant data, reprinted on this page, is instructive. Some things are well-known. For instance, the table affirms the widely understood fact that World War II was a vast national crusade, consuming in its peak year nearly 36 percent of America’s Gross Domestic Product. We see that the cost of the Civil War dwarfed all other 19th century American wars, as expected.

However, it contains surprises, too. Yes, the Iraq War has cost plenty: $648 billion to date. The shocking fact is that, even in its peak year—2008—the war consumed just one percent of the nation’s GDP, an inordinately small share. That is because the US economy is enormous.

So let’s be honest about it; the Iraq War has not bankrupted America or pushed its economy into a recession. The war, whatever else one may think of it, has been affordable. Indeed, its cost doesn’t even rise to the standard of the Spanish-American War (1.1 percent of GDP), much less that of Korea or Vietnam—wars of similar scope and duration.

Conflict

War Cost Billions of 2008 $

War Cost

% GDP

(High Yr)

Mil Cost

% GDP

(High Yr)

Revolution

$1.8

War of 1812

$1.2

2.2

2.7

Mexican War

$1.8

1.4

1.9

Civil War-US

$45.2

11.3

11.7

Span-Am War

$6.8

1.1

1.5

World War I

$253.0

13.6

14.1

World War II

$4,114.0

35.8

37.5

Korean War

$320.0

4.2

13.2

Vietnam War

$686.0

2.3

9.5

Gulf War

$96.0

0.3

4.6

Afghan War

$171.0

0.3

4.0

Iraq War

$648.0

1.0

4.2

What about the “burden” of overall defense expenditures? Hasn’t that risen to unprecedented levels?

Raw numbers, unquestionably, are great—a total of about $607 billion this year for all US defense functions.

However, that is only part of the story. The table makes a more important point: In the Iraq War’s peak year of 2008, total national defense spending—war costs, Energy Department nuclear weapons programs, and the works—claimed 4.2 percent of the economy.

As can be seen, that burden is smaller—in most cases, much smaller—than that which was borne by Americans in the peak years of all of the wars of the 20th century. Yet in each case, the American economy came through intact.

When one analyzes other data, the story is much the same: Defense spending isn’t the overwhelming economic factor many think it is.

Take, for example, the composition of the federal budget, which once was, but no longer is, dominated by defense spending. In 2008, military functions accounted for only 20 percent of federal outlays, according to the Office of Management and Budget.

The real money-burners are the three big federal entitlement programs—Social Security, Medicare, and Medicaid. Together, they generated fully 52 percent of this year’s outlays. They consume some 11 percent of US GDP, and are still growing.

None of this should be taken as an argument for profligate military spending. To the contrary, it should be evident to all that, right now, caution is more vital than ever. We are headed for hard times. We should not spend on defense one dime more than is necessary.

This, however, is a critical moment for America’s military. The services, weakened by an ill-advised “procurement holiday” in the 1990s and worn down by seven years of post-9/11 warfare, will require steady funding to replace worn-out gear, fund advanced weapon systems, and attract and retain high-caliber troops.

The Army and Marine Corps are in the midst of major force buildups. The Air Force budget already is $20 billion short of its annual requirement. The Navy is in similar straits.

With two wars under way and other crises on the horizon, the nation cannot afford an orgy of defense cutting, even if it would make a difference in the health of the economy. The fact that it would do nothing of the sort makes the idea all the more foolhardy.