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Defense Spending approaching Cold War high

As real spending goes, the Pentagon's budgets are now approaching the high-mark of the Reagan era, when the United States was squaring off against a superpower in the height of the Cold War.
By Pamela Hess
UPI Pentagon Correspondent
Washington (UPI) Feb 08, 2006
As U.S. Defense Secretary Donald Rumsfeld shops his $439 billion, 2007 Pentagon budget request on Capitol Hill this week -- not including about $100 billion in war costs -- he is circumventing sticker shock by pointing to this measure: As a percentage of the economy, the defense budget is at historic lows.

What he does not say is this: As real spending goes, the Pentagon's budgets are now approaching the high-mark of the Reagan era, when the United States was squaring off against a superpower in the height of the Cold War.

Rumsfeld compares defense budgets as a percentage of gross domestic product; that is, the total value of all the goods and services produced by the country in a given year. Rumsfeld was teed up to discuss these numbers by Sen. James Inhofe, R-Okla.

"When I came to Washington in 1957 and served in the '60s in the Congress, the Kennedy and Eisenhower period, it was 10 percent of GDP," Rumsfeld told the Senate Armed Services Committee Tuesday. "When I was secretary of Defense 30 years ago, it was about 5 percent. And today it's about 3.6 or 3.7 percent. So it's not a large fraction of the gross domestic product. And certainly this country is perfectly capable of spending whatever it is we need to provide for the security of the American people."

On Wednesday, House Armed Services Committee Chairman Duncan Hunter, R-Calif., did the honors of introducing the GDP metric.

"I think that our nation needs to understand that even with all of the publicity that's been attendant, our military spending and the fact that the war-fighting theaters are on the TV every day, we are spending about 3.9 percent of gross national product on defense. Under the John Kennedy administration, we spent 9 percent of GDP on defense, and under the Reagan administration we spent 6 percent of GDP on defense," Hunter said. "So 3.9 percent of GDP on defense is not too much. It's much less than we did under previous administrations. And I think that we need to look seriously at raising that top line."

In 1963, the height of spending under the Kennedy administration, the Defense Department had a $53.5 billion budget, according to the Center for Strategic and Budgetary Assessments in Washington. Expressed in fiscal year 2006 money, that is $392 billion, or about 9 percent of the GDP, which was about $4.1 trillion.

President Ronald Reagan's defense budget in 1982 was $185.3 billion, $373.6 billion in FY-06 dollars, or 5.7 percent of the $3.2 trillion GDP. By 1987, the Reagan defense budget had risen to $471.3 billion in FY-06 dollars, or 6.1 percent of a $4.6 trillion economy.

Defense budgets fell through the 1990s after the Cold War ended under the senior Bush and then Clinton administrations. But at the same time the gross domestic product nearly doubled. By 1998, the defense budget was $325.4 billion in FY-06 dollars, 3.1 percent of an $8.6 trillion GDP.

In 2002, the first complete Bush administration defense budget was $386.2 billion in FY-06 dollars, or 3.4 percent of a $10.3 trillion GDP.

In 2003, the defense budget increased to $438.8 billion, 3.7 percent of the $10.9 billion economy.

In 2006, the defense budget hit $428.5 billion, according to Pentagon numbers, 3.3 percent of the $12.8 trillion economy. CSBA calculates the defense budget as somewhat higher -- $447.4 billion.

The numbers from 2003 and on, do not include the supplemental appropriations to pay for the wars in Iraq and Afghanistan, which are nearing a total of $400 billion.

That is nearly the amount of money the United States spent on defense during the height of the Cold War, when there was a peer competitor in the Soviet Union, said CSBA's director for budgetary studies Steven Kosiak. Reagan is credited with winning the Cold War and causing the disintegration, in part by forcing huge defense budgets on the weak Soviet economy as Moscow tried to keep up.

Christopher Hellman, a defense analyst with the Center for Arms Control and Non-Proliferation rejects Rumsfeld's use of the GDP as a point of reference.

"The GDP argument is the last refuge of scoundrels," Hellman told UPI Wednesday.

"Comparing (the defense budget) to GDP is a measure of the program's burden on the U.S. economy. Spending levels are a (measure of a) program's burden on the American taxpayer.

"It's a fallacious argument," he said. "Tying our level of spending to defense to the number of cheeseburgers consumed by Americans is not a good way to measure our strategic requirement."

Hellman offered the counter-argument: What if gross domestic product decreases?

"If you are going to decide what is an appropriate defense budget based GDP, what happens if the economy tanks? Are you going to cut it in half?" he said. "They only want to tie it to GDP when GDP is going up, not when it's going down."

Source: United Press International

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