U.S. Defence Funding: Guns vs Butter... vs Tea?

Matthew Hill is an intern with the Global Issues Program at the Lowy Institute for International Policy

Since 2001, U.S. defence spending has expanded as inexorably as America’s military commitments. Even as America’s presence in Iraq is wound down, the latest Quadrennial Defense Review foresees an ongoing commitment to counter-insurgency support on a global scale. Simultaneously, concerns regarding a Chinese challenge to U.S. power projection in East Asia have sparked calls for extensive, and competing, capability investments in naval and airpower.

photo by Flickr user Barack ObamaYet Washington must increasingly consider the cost of meeting means to strategic ends. America faces dual domestic threats to its martial power arising from economic stringency and political paralysis. The financial crisis hit America’s balance book hard. As of 2010 the U.S. public debt stood at US$ 9 trillion, driven by a US$1.4 trillion budget deficit. Excluding mandatory entitlement payments, the cost of sustaining the U.S. military represents the largest discretionary item in the budget, at twenty-three percent of total federal spending. Washington has in the past run significant deficits while funding massive strategic commitments, most notably in the 1980s. However, the politics has changed in two crucial respects.

Firstly, there is currently no political champion of national security expenditure. As has been noted in a previous post, Democrats remain leery of increased defence commitments, while the Republican Party is today divided between muscular neo-conservatives and libertarian neo-isolationists. Traditional defence interests have been slow off the mark in the 2010 campaign, partially due to the fact that crucial destinations for defence dollars, such as Virginia and Texas, are not up grabs in the Senate.

Secondly, the U.S. can no longer rely on external partners to subsidize its global strategic influence. In the past, Washington’s deficits were funded by its German and Japanese partners, who tolerated negative returns in exchange for the presence of American security guarantees. Post-Cold War, Tokyo and Berlin are increasingly dubious of the need for U.S. carrier battle groups, air wings, or armoured divisions on-call; they themselves are also facing significant internal and regional financial challenges. Decisively, the pivotal contemporary purchaser of U.S. debt is the PRC, the very state which Washington perceives as a future threat.

How will these dynamics play out? In the short term, U.S. military spending will probably be saved by political incoherence. Democrats will retain more than enough power to block entitlement cuts after the mid-terms; equally, an increased Republican presence will scotch the chances of increasing taxes. Politically, even in the absence of concerted defence lobbying, neither party will wish to expose itself as being unpatriotic or weak on national security by cutting support to “America’s fighting men and women”.

In the long term, difficult questions can’t be avoided. Absent the possibility of exporting the costs of its strategic posture to other states, Washington will be forced to balance its global objectives to the fiscal means at its disposal. Ideally, this would occur within the context of a clear-headed reassessment of U.S. international interests, and the price the American people are willing to pay to achieve them. The worst case scenario, however, is if political dynamics from 2010 forward block concerted efforts to strategically engage with these questions until fiscal realities bite. Budget cuts will follow the political path of least resistance. Reduced political support for defence - relative to the popularity of entitlements - renders military expenditures vulnerable to rapid and steep reductions. This scenario is already playing out across the Atlantic in London. The strategic consequences of similar drastic cutbacks by the world’s sole superpower would be profoundly disturbing.