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Why is U.S. Military Spending so High?


Raymond He

By

June 7th, 2020


Raymond He is back to shine some light on US military expenditures, paralleled with a discussion of significant war periods


Along with ‘death by reptile’, the U.S. is also the world leader in military spending. In 2019, U.S. military spending grew by 5.3% to $732 billion. While China and Russia, the U.S.’s two closest rivals, have recently increased their military spending by 5.1% and 4.5% respectively, the U.S.’s military spending is still a colossal 38% of the world’s total defence spending. [1]

Source: Obama Whitehouse Archives: Office of Management and Budget

Before World War II, the allocation of resources during peacetime (or when the U.S. Congress does not officially declare war) for the U.S. military was only 1% of GDP. ‘Emergency improvisation’ drove military spending up to 41% in 1943-1944, but it was the Cold War which changed everything. 

During the Korean War, military spending reached a record high of 4.3% in ‘peacetime’, and for the first time in U.S. history, did not fall even when the war concluded. Moreover, it has since never returned to pre-World War II levels despite various economic crises that led to budgetary cutbacks for other federal programs. However, as the anti-Vietnam War protests demonstrate, patriotism is not a bottomless well of pro-war sentiment and cannot explain this continual rise alone. 

Source: Obama Whitehouse Archives: Office of Management and Budget

Defence is very different from other industries. Defence contractors firstly need to manage demand and supply for their products through contract bidding with the Pentagon, the headquarters of the U.S. Department of Defence. Then, they require Congressional approval for everything, which turns out to be a key reason for their success.  

Firstly, defence spending is domestic spending, which creates employment by hundreds of thousands. Irrespective of political affiliation, every politician wants lower unemployment in their state for re-election next term. Defence contractors diversify across the number of states they operate in to maximise the number of legislators incentivised to offer political support, thereby increasing their political influence.  If a politician were to shut a defence project down, then so do hundreds of thousands of local state jobs.

Source: the Boeing Company

Secondly, unemployment from cancelled military projects is also especially painful.  Manufacturing military equipment requires highly specialised skillsets which would not be applicable or transferrable to standard civilian jobs. Human capital would not be efficiently reallocated for a long time. 

Perhaps the most prominent example of all this is Lockheed Martin’s F-35 Lightning II Strike Fighter jet, which has been in development for over 18 years and costed more than $1.5 trillion, which is more expensive than most wars. Yet, the F-35 has suffered embarrassing deficiencies, such as not being able to fly within 40 kilometres of lightening and losing to F-16s in mock dogfights until 2019. [2] [3]

Despite its troubled development, the F-35 has survived multiple budget cuts. [4] That is because Lockheed Martin boasts the F-35 as being responsible for over 254 thousand direct and indirect U.S. jobs across every U.S. state except Alaska, Hawaii, Nebraska and Wyoming. Of those 46 states, the F-35 is attributed to $100 million or more in economic activity in 18 states. [5] [6] By ingraining itself so deeply into the U.S. economy and the U.S politics, the F-35 has become impossible to cancel.

Source: Lockheed Martin

Lastly, military equipment is a crucial export for the U.S. As an established leader in arms manufacturing, most countries buy U.S.-manufactured equipment when their military budget expands. Moreover, the U.S. defence industry also exports projects. 9 countries are involved in the creation of the F-35 alone. [6] Australia has received approximately $1.3 billion in defence contracts to build parts for the F-35. [7] Therefore, large cutbacks would also damage foreign relations with the U.S.’ allies. 

Source: Lockheed Martin

Like Wall Street, U.S. defence contractors have become too big to fail because they have become such an integral part of the U.S. economy and political system that trillion-dollar mistakes are largely overlooked. 

Whether U.S. defence spending should be so high is hotly debated, especially amongst politicians as presidential elections near. However, as both international relations and economic conditions worsen around the world, mature and factual debates that acknowledges the trade-offs involved in reforming spending is needed more than ever. As U.S. President and five-star general Dwight D. Eisenhower said: 

“Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defence with our peaceful methods and goals, so that security and liberty may prosper together”.

[1] Stockholm International Peace Research Institute. Global military expenditure sees largest annual increase in a decade – says SIPRI – reaching $1917 billion in 2019. Retrieved from Stockholm International Peace Research Institute: https://www.sipri.org/media/press-release/2020/global-military-expenditure-sees-largest-annual-increase-decade-says-sipri-reaching-1917-billion

[2] Pierce, P. C. (2017, March 9). The F-35 Finally Met Its Nemesis: Weather. Esquire Magazine. Retrieved from https://www.esquire.com/news-politics/politics/news/a53734/f-35-thunderstorm/

[3] Lockie, A. (2019, January 17). The F-35 was once trounced by F-16s in dogfights, but it just proved it can out-turn older jets. Business Insider Australia. Retrieved from https://www.businessinsider.com.au/f-35-once-beaten-by-f-16s-shows-stunt-turns-older-jets-cant-touch-2019-1

[4] Hoskinson, C. (2011, June 2). Spiralling costs cause F-35 turbulence. Politico. Retrieved from https://www.politico.com/story/2011/06/spiraling-costs-cause-f-35-turbulence-056037

[5] Lockheed Martin. (2008). Powering Job Creation for America and its Allies. Retrieved from https://www.f35.com/about/economic-impact

[6] Bender, J. & Rosen, A. (2014, August 20). This Map Shows Why The F-35 Has Turned Into A Trillion-Dollar Fiasco. Business Insider. Retrieved from https://www.businessinsider.com.au/this-map-explains-the-f-35-fiasco-2014-8

[7] Lockheed Martin. (2008). 5th Generation Capability for Australia. Retrieved from https://www.f35.com/global/participation/australia

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

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