01 January 2013

No "fiscal cliff" for defense contractors

The Pentagon now spends more money than it did confronting the Soviets under Reagan or at the peak of fighting in Vietnam. Yep, those are real inflation-adjusted dollars.
How much does the U.S. spend relative to rest of the world?... The below chart looks at worldwide Defense spending per country in 2011, data is from the Stockholm International Peace Research Institute (SIPRI) who graciously allowed its use.

Where does the money go?  Not for active duty military pay:

"...the figures are in constant 2013 dollars for an honest comparison."
Where does the money go?  Figure it out (or read the links).


  1. What's more, look at who some of the other big spenders are. Our close allies. Will the US be involved in a shooting war, in the forseeable future, with any of Canada (!?!?), the UK, France, Germany, Spain? South Korea? Japan? Several others?
    Of course, what we have is a kind of randomly arrived at "industrial policy" that favors jet fighters and the like.

    1. Just don't call it socialism.

  2. "The lesson of September 11 is indisputable: government had not only failed to act as a guardian of security and protection but had actually been the primary agent in creating insecurity and exposure to risk, and, moreover, did not achieve secure justice once the crime had been committed.

    "However, this was not the lesson that was drawn from the affair. Instead, the political elite successfully exploited public fears to vastly increase government spending, central credit inflation, bureaucratic management, citizen surveillance, regulation of transportation, and generally wage an all out attack on liberty and property.

    "Meanwhile, US foreign policy pursued in the aftermath became more aggressively interventionist, violent, and threatening (the US refused even to rule out the employment of nuclear weapons against enemy regimes) than it had been before, thereby increasing the number of recruits into the ranks of people who are willing to use extreme violence as a means of retribution.

    "In the same way that government intervention in times of peace can generate perverse consequences in markets that do not tend toward clearing, in times of war, military intervention can thus have the effect of harming the prospects for peace and security and bringing about a permanent state of violence and political control. Truly, the political affairs of our time cry out for a complete rethinking of the issues of defense and security and the respective roles of government, the market, and society in providing them."

    - Hans Hoppe, "Myth of National Defense, The: Essays on the Theory and History of Security Production"

  3. Hmm... there are a couple of things to note with this -- some of the data appears to be misleading. And if you trace the data and analysis back, it was originally used in highly political commentaries, not straight analyses. If you're going to reference this, you really ought to go back to the original opinion piece which used this -- which was not Andrew Sullivan, but an unnamed commentator (nicknamed "simple serf") at the Daily Kos (http://www.dailykos.com/story/2012/12/26/1173842/-Put-defense-spending-back-on-the-table-and-let-s-start-trimming#)

    First of all, let's look at the 2nd graph -- salary for "active duty military" pay, yet it's labeled essentially "does the money go to the soldiers?" Well, that graph does not include money spent on military in inactive duty, such as retired, medical benefits for military personnel, etc, and does not include money spent by the military on housing, living expenses, uniforms, active duty medical expenses, etc. I would argue that if you want to look to see how much of the money is actually "spent on the soldiers", you ought to include those.

    Secondly, if you go dig into "Simple Serf's" analysis, you can't recreate it. I'm not saying its wrong -- but his "table 6-11" is not simply found,which is the underlying basis for his argument I'm not sure where it is it -- his reference is to something that has like 12 different documents, each of 2-10 MB each, and containing hundredes of pages. Without being able to follow his logic from a source document, I can't say his argument is right OR wrong. A better argument would to be look at the US DoD budget, and then break down down where the money is being spent.. which he didn't do.

    As it is -- this is a poorly referenced, badly argued political commentary which is put into TYWKIWDBI without any critical review. At best it's misleading and badly argued. Poor quality from TYWKIWDBI -- your track record is usually MUCH better than this.

    Post script -- as a follow up to this, if you look at http://www.washingtonpost.com/blogs/wonkblog/wp/2012/08/28/defense-spending-in-the-u-s-in-four-charts/
    and compare the first chart in that article, which is also the US DoD budget in 2013 dollars, the numbers are quite different. For example, the Washington Post numbers for 1960 are under $300 B, whereas the Daily Kos numbers are $400 B. That's a 25% difference!

    I haven't gone to go chase why there is a difference, but its an indication the numbers quoted in Daily Kos are even more questionable.

    1. Your point on my labeling of the second chart is well taken; the phrase was my own, not the original author's, and I have changed the lead-in to the chart to read "not for active duty military pay."

      As far as how much may be expended on soldiers not on active duty, I would note that the total for active duty pay is ~80 billion, while the overall defense spending is over 700 billion. I devoted over 30 years of my life to working in the Veterans Administration, and I feel confident that that gap was not expended in that arena!

    2. Hmm.. is the Veteran's Adminstration budget included under the DoD? I thought it was carried separately? If so, then I would also feel confidence the $125 B or so which is the VA budget is NOT included in the current DoD budget of approximately $700 B

      A good reference might be http://www.fas.org/sgp/crs/misc/RS22897.pdf

  4. The more I keep looking at the analysis by Simple Serf, it looks to be bogus.

    Just as a check, I went into the referenced FY2013 budget documents. If you open up the Financial Tables file (warning: 350 page, multi-megabyte PDF file) http://comptroller.defense.gov/defbudget/fy2013/FY2013_Financial_Summary_Tables.pdf, and look on Page 9 you find a table of "FY 2013 DEPARTMENT OF DEFENSE BUDGET, FY 2011 Actual Base and OCO, FY 2012 Appropriated Base and OCO, FY 2013 Base Request" First couple of lines are the amount to be paid for Active Forces and Reserve Forces in FY 2011, 2012, and 2013. Since we're looking to compare 2013 $, let's look at the 2013 expenditure. That's $113.312 Billion. (This does not include housing, retirement, equipment procurement, housing, operations and maintenance costs, etc.)

    That's quite a bit of difference from the Daily Kos $80 Billion -- about 40% higher. And again, the Daily Kos data appears to not be traceable to published data.

  5. https://www.google.com/search?q=us+military+budget+compared+to+rest+of+world&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a

  6. What I don't understand is the huge expenditure for jets, aircraft carriers, etc. if our "enemy" is a bunch of terrorists from many different countries acting independently. It seems to me that it's only corporate welfare.

    At the same time, it appears that our injured veterans are not getting all the help they need. What does this say about our priorities?

  7. OREOS and Armaments...



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