Posts Tagged ‘Budget’

US and Allies Dominate Group of Top Military Spenders

Project on Defense Alternatives, 29 June 2012.

How much is enough spending for the Pentagon? By various measures, the United States has outspent the next nine, 14, or 21 countries combined. What is perhaps more telling is that most of those other countries are staunch US allies.

* International Institute for Strategic Studies
** Stockholm International Peace Research Institute
*** PPP = Purchasing Power Parity, a measure that facilitates international budget comparisons by adjusting exchange rates to reflect the relative domestic buying power of national currencies.

Notes: The IISS column presents officially reported spending in USD at 2010 exchange rates, with two exceptions: China and Russia. For these, the number is an estimate of actual spending. The second column is SIPRI’s estimate of actual expenditures, also shown in USD at 2010 exchange rates. The PPP column converts estimates of actual expenditures into approximate purchasing power, mostly drawn from SIPRI data. For China and Russia, it also shows an IISS estimate of purchasing power, thus producing a range. Purchasing power calculations improve on estimates that use exchange rates alone. However, PPP ratios are based on comparisons between national economies as a whole, not the defense sectors specifically. This can overstate military purchasing power when a nation’s military sector is much more advanced than its economy overall or when a nation depends heavily on international arms purchases.

Comments: The biggest spenders of concern to the United States are Russia and China, although neither are considered US adversaries today.
• America and its top spending allies outpace these two countries taken together by margins exceeding three-to-one.
• America alone spent more than twice as much as these two countries in 2010, by some measures. By other measures, it outspent them combined by nearly four-to-one.
The review draws on data compiled by the International Institute for Strategic Studies (IISS) in London and the Stockholm International Peace Research Institute (SIPRI), both regarded as world leaders in the field of defense assessment.

Neither IISS nor SIPRI accept Chinese or Russian official defense budget numbers at face value. Their estimates seek to capture unreported military expenditure from other parts of the Chinese and Russian economy. Both also offer alternative estimates that aim to correct for exchange rate distortions when comparing nations at very different levels of economic development – although these corrections may somewhat over state the “purchasing power” of military budgets.

Differences in the IISS and SIPRI methods, and the difference between corrected and uncorrected exchange rate estimates, account for the range given in number of countries whose combined budgets equal that of the United States. The answer ranges from nine to 21 countries — and all but a few of these are US allies.

Sources: International Institute for Strategic Studies, The Military Balance 2012 (London, 2012); Stockholm International Peace Research Institute, SIPRI Yearbook 2011 (Oxford, 2011).

HTML version of this table www.comw.org/pda/120618-Military-Spending-Comparison.html

The Pentagon Jobs Machine Is A Bust

A Project on Defense Alternatives Commentary, 26 June 2012.

After years of touting the necessity of guns over butter, the defense establishment has changed its tune. With the official US unemployment rate stuck at over 8 percent, Pentagon flaks are now boldly declaring that “guns are butter.” The Department of Defense as a social program? It’s a cynical ploy as William Hartung and Stephen Miles point out in this article.

Here are the Pros and Cons on the story:
• A National Association of Manufacturers study released last week says Pentagon cuts will mean substantial jobs loss in the defense sector.
• At the same time, cutting defense spending may be among the least painful ways to trim the Federal deficit. This two minute video by Chris Hellman of the National Priorities Project explains why. His data is from a study by the Political Economy Research Institute at UMass.
• A $1 billion cut from the education sector will result in more than twice as many jobs lost as a $1 billion cut from the defense sector.
• We could cut $50 billion from the defense budget next year, put $25 billion to deficit reduction and put $25 billion into education and have a net increase of more than 20,000 jobs. That’s a win-win fiscal deal.

For more on Pentagon spending and jobs see this background compilation: The Pentagon Budget and Jobs.

Time to get U.S. nukes out of Europe

Stephen M. Walt. Foreign Policy, 18 April 2012.
http://defensealt.org/Ifat2Q

Excerpt:

There’s an overwhelming case for removing these archaic and unnecessary weapons from the European continent. Ideally, we would do this as part of a bilateral deal with Russia, but we ought to do it even if Russia isn’t interested.

Editor’s Comment:

Couldn’t agree more!

The Politics of Fleet Constitution

Galrahn. Information Dissemination, 27 March 2012.
http://defensealt.org/GY5CjA

Excerpt:

The Navy has put 7 cruisers up for early retirement. Keep in mind that all 7 cruisers put up for early retirement in FY13 and FY14 are capable of being modernized for ballistic missile defense…It is fairly obvious to this observer that the Navy put these cruisers on the chopping block precisely because they expected Congress to swoop in and save the 6 cruisers the Navy wants to save, and allow the Navy to dump the amphibious ships and no one will care. Cruisers are shiny toys that represent power projection, and these specific cruisers have a significant future ahead of them if the money was to be found and made available for the US Navy to keep them.

Throwing Money at the Pentagon: A Lesson in Republican Math

William Hartung. Foreign Policy in Focus, 26 March 2012.
http://defensealt.org/HsgyYJ

Excerpt:

Romney’s proposal implies that the Pentagon is essentially an entitlement program that should receive a set share of our total economic resources regardless of what’s happening here at home or elsewhere on the planet. In Romney World, the Pentagon’s only role would be to engorge itself. If the GDP were to drop, it’s unlikely that, as president, he would reduce Pentagon spending accordingly.

Pentagon Base Budget to Get Bigger Share in 2013

Carl Conetta. PDA Briefing Memo #54, 23 March 2012.
http://defensealt.org/GTaHbL

On 13 February 2013, President Obama put down the administration’s marker in the budget debate for 2013. The President’s request proposes a budget pie about as large as the one adopted in 2008. However, comparing the 2013 request to the sum appropriated in 2008 shows that the Pentagon is being offered a bigger slice this time around.

• The administration’s budget request for FY 2013 rolls discretionary spending back to the level of 2008 in nominal terms.
• War spending is slated to decline substantially from the 2008 level. However, much of the savings is cycled back into peacetime security spending, which increases.
• Comparing 2008 and 2013 shows the budget plan to increase the proportion of non-war discretionary dollars devoted to National Defense – up from 50% to 52%.

Comparison of Discretionary Spending Allocation – 2008 vs 2013 Request
(billions of nominal dollars)
Photobucket Sources: See “Notes” at end.

“Security basket” gains ground

How does the President’s new budget reshape federal priorities?

This is best understood by comparing it to the 2008 budget, which was the last budget fully enacted before President Obama took office. Also, the 2013 budget request approximately rolls back discretionary spending to the 2008 level in nominal terms. (If we take inflation into account, there’s a real reduction; still, the nominal similarity of the two budgets helps us to discern the change in priorities, if any).

The table shows the differences in budget allocation between the 2008 budget and President Obama’s 2013 budget request. For there to be “real” (inflation-corrected growth) sums must rise by at least 8% from 2008 levels.

What do we see comparing the 2013 request with the 2008 appropriation?

• Discretionary spending declines, but this is due largely to the reduction in war spending. In fact, the decline in discretionary is not as great as the decline in war spending. Take war out of the picture and the result is that discretionary spending increases in nominal terms. (However, it does not increase as much as inflation for the 2008-2013 period, which is 8%.)

• Looking at the discretionary “Security Basket” as initially defined by the Budget Control
Act to include National Defense, International Affairs, Veterans, and Homeland Security, we see it growing by 12% – which exceeds the rate of inflation.

• Within the “Security Basket,” National Defense (mostly the Pentagon plus some weapons spending in the Department of Energy) grows by 10.3% – slightly more than the rate of inflation.

• By contrast, the “Non-security Basket” (which is everything else) declines by 3.2% in nominal terms – and by considerably more in “real” or inflation-adjusted terms

• As a result of these changes in allocation, “Security Basket” spending would grow as a proportion of all discretionary spending. National Defense spending, a subset of “Security,” would also grow proportionately.

In the President’s 2013 request, three members of the “Security Basket” get bigger shares than in 2008 and one sees its share decline. The winners are National Defense, International Affairs, and especially Veteran Affairs. The loser is Homeland Security.

A hypothetical alternative

What might have the FY 2013 budget looked like if the proportion devoted to defense and security had been held to their 2008 percentages?

• Using 2008 proportions, the 2013 “Security Basket” would be set at $677.4 billion, which is $35.9 billion less than actually requested.

• Using 2008 proportions, National Defense spending would be set at $532.4 billion – which is $18.4 billion less than planned. The Pentagon base budget is part of this and would be set at $508 billion, which is $17.5 billion less than actually requested.

• Had the “Non-security Basket” been held at its 2008 proportion, it would receive $381.1 billion, which is $35.9 billion more than requested in the administration’s budget. This amount has been moved from non-security to security funding.

Two provisos

There are two provisos to the above analysis:

First, the analysis assumes that war spending for 2013 will not rise before the fiscal year ends; and

Second, the analysis does not take into account the undue migration of approximately $4 billion in personnel costs from the base budget to the Overseas Contingency Operations (OCO) fund. If we disallow this shift of base budget costs to the OCO account, the 2013 Pentagon request is not $525.4 billion, but $529.4 billion. And this implies a greater growth in the Pentagon’s budget slice than reported above.

Notes

Historical Tables, Budget of the United States Government – Fiscal Year 2013 (Washington DC: White House Office of Management and the Budget, 2013), Table 5.4 Discretionary Budget Authority by Agency 1976-2017

Analytical Perspectives, Budget of the United States Government – Fiscal Year 2013 (Washington DC: White House Office of Management and the Budget, 2013), Table 32-1 Policy Budget Authority and Outlays by Function, Category and Program.

Analytical Perspectives, Budget of the United States Government – Fiscal Year 2010 (Washington DC: White House Office of Management and the Budget, 2010), Table 26-1 Policy Budget Authority and Outlays by Function, Category and Program.

Pentagon Base Budget to Get Bigger Share in 2013

Carl Conetta. Project on Defense Alternatives Briefing Memo #54, 23 March 2012. A comparison of discretionary spending in 2008 and 2013 shows an increased tilt toward the “Security Basket” and National Defense. http://defensealt.org/GTaHbL

The Military Imbalance: How The U.S. Outspends The World

Winslow Wheeler. AOL Defense, 16 March 2012.
http://defensealt.org/AxrAFS

from the International Institute of Strategic Studies

Excerpt:

The US defense budget is not just dominant; it is operating at a level completely independent of the perceived threat…America’s defense budget strategists declare it will be “doomsday” if we size to anything less than five times China and Russia combined.