Month: August 2009

How Much Should the US Spend on Defense?

In this time of fiscal constraints and global insecurity, how much should the United States spend on national defense? US defense spending hit $710 Billion in 2008 when foreign wars are included [1], amounting to roughly half of all worldwide defense spending [2]. The table below compares US defense spending with US GDP, with our adversaries’ defense budgets, and with the rest of the world.

Category Amount (2008 USD) Comparison
US Defense Spending $710B 4.98% of 2008 US GDP [3]
World Defense Spending $1470B US share is 48.3% of world defense spending [2]
US Adversaries’ Defense Spending – China, Russia, Iran, Myanmar, Venezuela, Cuba, North Korea $217B US Defense spending is 3.3 times that of our adversaries [4]
World Minus NATO $442B US Spends 1.6 times the World minus NATO [5]
World Minus Major US Allies – UK, France, Japan, Germany, Italy, South Korea, Australia, Canada, Israel $473.3B US Spends 1.5 times the World minus major allies [6]

Defense hawks have advocated that the US spend at minimum 4% of GDP on defense annually. This would equate to a defense budget of roughly $570 Billion in 2010, roughly in line with President Obama’s FY10 budget. But aligning defense spending with GDP is somewhat arbitrary, as US defense spending as a percentage of GDP has varied significantly over time.

A more rigorous approach would involve comparing US defense spending to world defense spending, and to its adversaries’ defense spending. The US could match the defense spending of the entire non-NATO world for roughly $450 Billion. With NATO members as long standing allies, the US could match the defense spending of all its theoretical adversaries combined for 37% less than it spends today. The combined defense spending of credible adversaries (China, Russia, North Korea, Iran, and some Arab nations) would still amount to less than half of America’s defense budget!

As the US begins to contemplate fiscal discipline (as lenders slowly run out), cutting the military budget will be unavoidable. Gradually cutting $200B annually from the US defense budget would make a huge impact on the deficit. Thankfully, it appears that cuts of this size can be made without jeopardizing the defense of America itself.

[1] From the US DOD Green Book, FY2009 defense spending appropriations total $709.58 Billion – see pdf page 14 (page 6 as marked on the document) for the FY2009 constant dollars figure.

[2] There are a number of estimates of total worldwide military expenditure. The Center for Arms Control and Non-Proliferation and SIPRI both estimate that total worldwide defense spending equaled roughly $1.47 Trillion in 2008. US spending of $710B equals 48.3% of this total. The Center for Arms Control’s numbers match the US DOD numbers and NATO numbers, lending credibility to these estimates.

[3] The US BEA provides its estimate of 2008 US GDP on page 8 here – $14.264 Trillion.

[4] This estimate includes all potential US adversaries that spent more than $1B on defense in 2008, per the Center for Arms Control. The 2007 estimate for North Korea was used.

[5] NATO countries excluding the US spent $318 Billion on defense in 2007 (see page 4 of the pdf). This number was not inflation adjusted, making it a very conservative estimate for 2008.

[6] All US allies with defense budgets greater than $10B are included here, per the 2008 Center for Arms Control estimates. Saudi Arabia, Turkey, Brazil, and Spain are not counted as major allies here, making this a conservative list of major allies. All countries included on this list are secular democracies with almost no likelihood of engaging in future conflict with the US. Collectively, the UK, France, Japan, Germany, Italy, South Korea, Australia, Canada, and Israel spent $287 Billion on defense in 2008.

Posted on by praveenghanta 6

List of Countries with Universal Healthcare

Update 1/21/2013: With the Supreme Court’s decision to uphold the ACA (aka Obamacare), and President Obama’s inauguration to a second term today, the US will have universal health care in 2014 using an insurance mandate system.

Thirty-two of the thirty-three developed nations have universal health care, with the United States being the lone exception [1]. The following list, compiled from WHO sources where possible, shows the start date and type of  system used to implement universal health care in each developed country [2]. Note that universal health care does not imply government-only health care, as many countries implementing a universal health care plan continue to have both public and private insurance and medical providers.

Country Start Date of Universal Health Care System Type
Click links for more source material on each country’s health care system.
Norway 1912 Single Payer
New Zealand 1938 Two Tier
Japan 1938 Single Payer
Germany 1941 Insurance Mandate
Belgium 1945 Insurance Mandate
United Kingdom 1948 Single Payer
Kuwait 1950 Single Payer
Sweden 1955 Single Payer
Bahrain 1957 Single Payer
Brunei 1958 Single Payer
Canada 1966 Single Payer
Netherlands 1966 Two-Tier
Austria 1967 Insurance Mandate
United Arab Emirates 1971 Single Payer
Finland 1972 Single Payer
Slovenia 1972 Single Payer
Denmark 1973 Two-Tier
Luxembourg 1973 Insurance Mandate
France 1974 Two-Tier
Australia 1975 Two Tier
Ireland 1977 Two-Tier
Italy 1978 Single Payer
Portugal 1979 Single Payer
Cyprus 1980 Single Payer
Greece 1983 Insurance Mandate
Spain 1986 Single Payer
South Korea 1988 Insurance Mandate
Iceland 1990 Single Payer
Hong Kong 1993 Two-Tier
Singapore 1993 Two-Tier
Switzerland 1994 Insurance Mandate
Israel 1995 Two-Tier
United States 2014? Insurance Mandate

Will the United States join this list in 2014?

[1] Roughly 15% of Americans lack health insurance coverage, so the US clearly has not yet achieved universal health care. There is no universal definition of developed or industrialized nations. For this list, those countries with UN Human Development Index scores above 0.9 on a 0 to 1 scale are considered developed.

[2] The dates given are estimates, since universal health care arrived gradually in many countries. In Germany for instance, government insurance programs began in 1883, but did not reach universality until 1941. Typically the date provided is the date of passage or enactment for a national health care Act mandating insurance or establishing universal health insurance.

System Types:

Single Payer: The government provides insurance for all residents (or citizens) and pays all health care expenses except for co-pays and coinsurance. Providers may be public, private, or a combination of both.

Two-Tier: The government provides or mandates catastrophic or minimum insurance coverage for all residents (or citizens), while allowing the purchase of additional voluntary insurance or fee-for service care when desired. In Singapore all residents receive a catastrophic policy from the government coupled with a health savings account that they use to pay for routine care. In other countries like Ireland and Israel, the government provides a core policy which the majority of the population supplement with private insurance.

Insurance Mandate: The government mandates that all citizens purchase insurance, whether from private, public, or non-profit insurers. In some cases the insurer list is quite restrictive, while in others a healthy private market for insurance is simply regulated and standardized by the government. In this kind of system insurers are barred from rejecting sick individuals, and individuals are required to purchase insurance, in order to prevent typical health care market failures from arising.

Posted on by praveenghanta 506