Robert J. Samuelson: Defense spending is less than you think — here’s why

Whenever I or someone else suggests that we need higher defense spending, there is an incredulous response from critics: U.S. military spending equals the outlays of the next eight countries combined; how can we possibly be spending too little when we spend so much more than any conceivable adversary? The answer is that, while technically accurate, this argument is so distorted that it becomes a fiction.

Global comparisons of military spending mislead for several reasons. One is secrecy. “What they report is not what they spend,” says Todd Harrison of the Center for Strategic & International Studies. A second reason is that, since World War II, the United States has assumed strategic responsibility for ensuring stability in Europe, Asia and the Middle East; neither China nor Russia has yet embraced similarly sweeping goals.

This boosts our spending and restrains theirs, says Harrison. Hence, we have 10 full-sized aircraft carriers to project our power abroad; no other country comes close. Moving all those troops, tanks, ships and planes around the globe is expensive. In fiscal 2017, the U.S military consumed 98 million barrels of oil, costing $8.8 billion.

But there’s another reason Chinese and Russian spending is understated. Put simply, their soldiers and sailors cost less; ours cost more. We are a rich country with a volunteer military. Given the personal sacrifices that service members make, their wages and fringe benefits must be competitive to attract the needed recruits. China and Russia have lower costs and can buy more for less.

“Due to differences in purchasing power across economies, … two countries could hypothetically field the same size and quality force at dramatically different spending levels,” said a 2017 report from the Center for National Defense at the Heritage Foundation, a conservative think tank.

Precisely. Let’s see how this works in practice. Using 2016 figures, the Heritage report put U.S. defense spending at $606 billion. The next eight countries also totaled $606 billion, led by China at $226 billion, Russia at $70 billion and Saudi Arabia at $61 billion; the other countries were France, $56 billion; India, $56 billion; the United Kingdom, $54 billion; Japan, $42 billion; and Germany, $41 billion.

This is the conventional wisdom, based on estimates compiled by the respected Stockholm International Peace Research Institute. It collects data on defense spending in local currencies and converts them into dollars at prevailing exchange rates. But there’s another way to make the conversion from local currencies to dollars, called purchasing power parity, or PPP. It assumes that things of equal value in different countries should have equal prices. Two comparable jet fighters in different countries should have the same price.

When the Heritage experts made a crude PPP adjustment, total defense spending of the eight countries nearly doubled from $606 billion to $1.1 trillion. China’s spending rose 66 percent to $376 billion; Russia’s increased 150 percent to $176 billion.

The idea that we’re outspending our potential enemies by about 7- or 8-to-1 is preposterous. If that were so, you’d expect the U.S. military to be many times larger than any rival. This is not the case. Glance at the table above. It gives some common indicators of military strength (tanks, combat aircraft and the like).

The idea here is not to prescribe precisely what our defense policy should be. The object is more modest: to discredit the false – and dangerous – notion, promoted by many, that our military dominance is so overwhelming that we can afford further cuts and can take refuge in our superior technology. The truth is that any advantage in size has shrunk dramatically, and, if experts are to be believed, we lag in some critical new technologies, including cyberwarfare and artificial intelligence.

Defense no longer dominates the federal budget, as it once did. That distinction has fallen to health and retirement benefits. During the Cold War – from 1950 to 1990 – military outlays averaged 40 percent of federal spending and 7.4 percent of the economy’s output (gross domestic product). Now those figures are 15 percent and 3.13 percent, respectively, according to a recent CSIS report co-authored by Harrison and Seamus Daniels.

It’s also true, as we’ve learned in Iraq and Afghanistan, that military power has its limits. We can’t spend our way to victory; but we can probably skimp our way to defeat.