U.S. defence spending: What’s the real figure?

Financial Times
Posted on Monday, May 28, 2012 11:58AM EDT

From the FT’s Lex blog

The day after Memorial Day in the US is not a bad one to ask how much money the country spends on national defence. It is a simple enough question and, given the state of public finances, certainly an important one. But bureaucratic obfuscation, impenetrable accounting and a dose of serial denial make getting an answer difficult.

The number the Pentagon prefers to advertise is the base budget, which funds salaries, maintenance and equipment purchases. Officials also divulge the costs of waging ongoing wars. For the 2012 fiscal year the U.S. has set aside $531-billion for the base budget and $115-billion for overseas contingency operations. But as defence analyst Winslow Wheeler points out, to protect its citizens the U.S. spends a lot more than that. Dig through the budget and you will find spending by the departments of energy, state and others, to pay for border security, to support key allies, to assist veterans, and to maintain the nuclear arsenal.

After adjusting for double counting and offsetting receipts, in 2012 the U.S. will spend: $125-billion on 22 million veterans, $49-billion for separate retirement funds and sundry activities, $42-billion on homeland security, $22-billion for foreign military sales and aid, and $18-billion broadly on nuclear programs. Throw in $58-billion to cover a fair share of the government’s interest costs and the total hits $960-billion. The consequences are profound. U.S. spending on national defence jumps from about 3 per cent to 6 per cent of forecast GDP and rises from about 14 per cent to about 26 per cent of total federal spending.

Perhaps the U.S. needs all of that security, but voters should be given more data to help decide. A recent report found that how the scale of defence spending is presented has a significant impact on the public’s willingness to cut the relevant budgets. A little information about a lot of money goes a long way.



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