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.