Posts Tagged ‘military spending’

The US military-industrial complex fifty years later

Posted on: January 14th, 2011 by Ernie Regehr

On January 17, 1961 President Dwight Eisenhower famously warned Americans that an emerging “military-industrial complex” would wield unhealthy and unwarranted influence – “economic, political, and even spiritual”—0ver their political life if it was left unchecked.

The warning came in Eisenhower’s extraordinary farewell address to the nation, days before John F. Kennedy entered the White House. He described the unprecedented “conjunction of an immense military establishment and a large arms industry.”^{^[i]}

A half century later it is clear that Eisenhower’s warning was both prescient and ignored. For what was unprecedented then remains unmatched today in the resources it consumes and the policy options it forecloses.

A globalized military-industrial complex now boasts more than 20 million men and women in uniform (another 54 million reservists are available), and with the arms and equipment they use, military forces cost some $1.5 trillion annually – spending that, adjusted for inflation, is now well over the highest levels of the Cold War era.[ii] Military industries, though concentrated in a few countries, are literally spread around the planet and sustained by, and in many cases dependent on, capital budgets of at least $400 billion annually.[iii]

But, as Eisenhower predicted, it is in the United States where this complex is most entrenched. US military spending, including the costs of current wars in Afghanistan and Iraq, is expected to reach at least $712 billion in 2011 – in real term a post-World War II high. If nuclear and other defence-related programs in other departments of government are added, including $122 billion for veterans, US military-related spending will reach $861 billion this year.[iv]

The Pentagon supports a network of suppliers and contractors to the tune of about $300 billion per year, and the industry relies on another $25 to $50 billion annually in export sales to other countries.

One arrangement that helps to assure a continued convergence of military and industrial interests and world view is the high incidence of retiring senior military officials signing on as senior executives of corporations doing mega-business with the Pentagon. Many, while working with Pentagon suppliers, also serve as paid consultants to the Pentagon. A recent major investigation by The Boston Globe elaborates at length on this “revolving-door culture,” pointing out that “from 2004 through 2008, 80 percent of retiring three- and four-star officers went to work as consultants or executives.”[v]

The influence of that melding of military and industrial interests comes most clearly into public focus when, as is currently the case, there are prominent calls for spending to be brought under control and reduced. Eisenhower was not a conspiracy theorist, but he understood that when the gargantuan US military establishment became allied through shared interests to industrial elites, and was then supported by an intellectual army of strategic analysts and a national messianic spirit that understood America as destined to lead, it would have a profound impact on shaping American values and ambitions, and on models for global interaction.

So even though the US can already claim as much military capacity, measured in resources and technology, as all of the rest of the world combined, and even though its top military “rival,” China, spends only a fifth of what the US does on military preparedness, calls for military spending restraints in the US are predictably met with dire warnings of American vulnerability and the loss of American leadership in the world.

Newsweek headed its look at US Defense budget prospects with the heading, “The Risky Rush to Cut Defense Spending” – adding a tagline that “no one has figured out how to make cuts without jeopardizing security.”[vi] Polls show majority American support for defense spending cuts, but any “rush” to act on that has yet to materialize. Even after the recent announcements of cuts by Defense Secretary Robert Gates, spending on the core defence budget will continue to expand, if modestly, over the next few years[vii] — indeed some analysts assume that Gates is using heavily publicized pre-emptive cuts (to the rate of growth) to forestall actual and significant cuts which he said would be “potentially calamitous.”

Much of mainstream commentary in the US continues to lament “pressures across the board to reduce our level of expenditure at precisely a time when our challenges, at the very least, are getting more complicated.” They invoke everything from the dangers of North Korea, to the continuing gap in missile defence, to the political threats from Wikileaks to dramatize US vulnerability. Spending cuts are themselves understood as “attacks” – the Financial Times, speculating on the impact on defence industry stock prices of any cuts (by which they really mean slowed increases), referred to the need for debate on “the why, where, what and (against) whom” of defence spending cuts.[viii]

And when the tabloid press get involved the silliness is boundless. A new York Post column, referring to the Gates restraint package, put it this way: “Call it President Obama’s ‘conditional-surrender Pentagon budget’ – and bad news for the US economy.” And the Post ran it all under the headline, “Don’t let O disarm our military.”[ix]

As to the policy options that the military-industrial complex forecloses, we can again turn to Eisenhower and a speech from the early days of his presidency: “Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. This is not a way of life at all in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron. ^{^[x]}

The truth of that lament is confirmed in the current Republican House “principle” that any new spending must be paid for, not by tax increases or even closing tax loopholes, but by cuts to spending in other government programs. Since security spending is largely exempt from austerity measures, the cuts will be focused on discretionary social programs. Furthermore, any savings in defence spending are to be “reinvested” in other defence programs. The costs of tax cuts, on the other hand, are exempt from this pay-as-you-go rule.[xi]

The cost to other urgent programs is illustrated by the continued impoverishment of climate change programs. Increasingly identified as having serious security implications, US spending on climate change responses is increasing significantly – even so, defence spending dwarfs it at a ratio of 41 to 1.[xii] What the ratio should be is hard to say, but the comparison does have something to say about priorities – or at the very least it confirms that the environment-industrial complex has yet to infiltrate the centres of power in Washington.

Perhaps the most telling comment on priorities comes from New York Times columnist Nicholas D. Kristof. Referring to “a billionaire military and a pauper diplomacy,” he says that “the U.S. military now has more people in its marching bands than the State Department has in its foreign service.”[xiii]

To say that military spending is sacrosanct is simply to acknowledge the truth of Eisenhower’s 1960s confession that the influence of the military-industrial complex is felt in every city, state, and federal government office, not to mention in every Congressional office and in quite a few University and Think Tank research offices.

(A shortened version of the above appeared in The Record of the Waterloo Region, 14 January 2011.)

eregehr@uwaterloo.ca

Notes

[i] Eisenhower’s Farewell Address to the Nation, January 17, 1961. Available at: http://mcadams.posc.mu.edu/ike.htm.

[ii] The Military Balance 2010, The International Institute for Strategic Studies (London, 2010), p. 462f.

[iii] SIPRI Yearbook 2010: Armaments, Disarmament and International Security, p. 268.

[iv] Todd Harrison, “Analysis of the FY 2011 Defense Budget,” Center for Strategic and Budgetary Assessments. http://www.csbaonline.org/4publications/publibrary/r.20100629.analysis_of_the_fy/r.20100629.analysis_of_the_fy.pdf.

[v] Bryan Bender, “From the Pentagon to the private sector,” the Boston Globe, 26 December 2010. http://www.boston.com/news/nation/washington/articles/2010/12/26/defense_firms_lure_retired_generals/?page=full.

[vi] Douglas Schoen, “The Risky Push to Cut Defense Spending,” Newsweek, 8 January 2011. http://www.newsweek.com/2011/01/08/the-risky-rush-to-cut-defense-spending.html.

[vii] Gprdon Adams and Matthew Leatherman, “A Leaner and Meaner Defense,” Foreign Affairs, January/February 2011, available at The Stimson Center. http://www.stimson.org/summaries/a-leaner-and-meaner-defense/.

[viii] John McDermott, “Defence stocks on the defensive against budget cuts,” Financial Times, 10 January 2011. http://ftalphaville.ft.com/blog/2011/01/10/453876/defence-stocks-on-the-defensive-against-budget-cuts/.

[ix] Arther Herman, “Don’t let O disarm our military,” New York Post, 10 January 2011. http://www.nypost.com/p/news/opinion/opedcolumnists/don_let_disarm_our_military_Vg8BTKN1WuODmeW4fCfumL.

[x] Dwight D. Eisenhower, from a speech before the American Society of Newspaper Editors, April 16, 1953. Available at: http://www.quotationspage.com/quotes/Dwight_D._Eisenhower/.

[xi] Robert Greenstein and James R. Horney, “House Republican Rule Changes Pave the Way For Major Deficit-Increasing Tax Cuts, Despite Anti-Deficit Rhetoric,” Center on Budget and Policy Priorities, 5 January 2011. http://www.cbpp.org/cms/index.cfm?fa=view&id=3359.

[xii] Miriam Pemberton, “Military vs. Climate Security: The 2011 Budgets Compared” (Washington, DC: Foreign Policy In Focus, October 25, 2010). http://www.fpif.org/reports/military_vs_climate_security_the_2011_budgets_compared.

[xiii] Nicholas D. Kristof, “The Big (Military) Taboo,” The New York Times,” 25 December 2010. http://www.nytimes.com/2010/12/26/opinion/26kristof.html.

…except in the UK

Posted on: October 20th, 2010 by Ernie Regehr

While global military spending seemed recession proof as it continued its upward climb in 2009 (see previous post), fiscal reality has finally closed in on the UK in 2010 – and the Ministry of Defence will not escape the consequences.

Military spending is to be cut by 8 per cent (well short of the average of a 19 per cent cut across all departments)[i] over the next four years.[ii] All the services – Air Force, Army, and Navy – are to see significant cuts, as will civilian staff. Notably, the final decision on the long-planned renewal of Trident nuclear forces has been put off to 2016, and in the meantime there will be a reduction of nuclear warheads from 160 to 120.

Commentators and analysts have been largely critical of a process that has reduced defence policy making to a budget making exercise, but the Guardian singled out the changes to the nuclear deployments as part of the good news: “CND [the Campaign for Nuclear Disarmament] welcomed [Prime Minister Cameron’s] decision to reduce Britain’s stockpile of nuclear weapons by 25%. The delay in the decision to start construction of new submarines to replace the Vanguard class which carry the Trident nuclear deterrent is also welcome – but only as a precursor to scrapping these weapons, which even Tony Blair now acknowledges can never be used independently.”[iii]

eregehr@uwaterloo.ca

Notes

[i] Thomas Penny and Gonzalo Vina, “Osborne to Slash Jobs, Tax Banks in U.K. Budget Cuts,” Bloomberg, 20 Oct0ber, 2010. http://www.bloomberg.com/news/2010-10-20/osborne-pledges-8-billion-reduction-in-u-k-debt-costs-amid-spending-cuts.html.

[ii] “Defence review at-a-glance,” BBC News, 19 October 2010. http://www.bbc.co.uk/news/uk-politics-11574573. Richard Norton-Taylor, “Strategic defence review means end of Iraq-scale military interventions,” guardian.co.uk, 19 October 2010. http://www.guardian.co.uk/politics/2010/oct/19/strategic-defence-review-military-cuts.

[iii] “Defence and security review: Groping for a strategy,” The Guardian Editorial, guardian.co.uk, 20 October 2010. http://www.guardian.co.uk/commentisfree/2010/oct/20/defence-and-security-review-strategy.

No recession for global military forces

Posted on: October 19th, 2010 by Ernie Regehr

It seems the military is one economic sector that is pretty much recession proof. While global government spending generally fell in 2009 in the wake of the great recession, and while budgetary deficits soared, there was little interruption to the steady post 9-11 growth in global military spending.

Global military spending reached $1.5 trillion in 2009 – a six percent jump over 2008 and 50 percent higher than it was in 2000.[i]

The annual Stockholm International Peace Research (SIPRI) review of arms control and security reports that in 2009 almost two-thirds of all states surveyed had increased their spending on military forces. More than three-quarters of the G-20 states registered an increase. It was mainly in poorer states, those less able to accommodate higher deficits, where military spending fell.

The bulk of military spending is heavily concentrated in a very few states. The US alone accounts for 40 per cent of the world total. The top five (that’s the same five that enjoy permanent membership in the Security Council) account for 60 per cent, and the top 15 military spenders account for 75 per cent – the remaining 177 states account for 25 per cent of global military spending.

Canada reflects the global trend. Both SIPRI and the International Institute for Strategic Studies (IISS) rank Canada within the top 15, as the 13^th highest military spender in the world.[ii] IISS figures, which are in US dollars and and so comparable with other states, show that Canadian military spending (in current dollars) increased from $354 per capita in 2004 to $597 per capita in 2008 – adjusted for inflation it would still be roughly a 40 per cent increase over four years.[iii]

Spending obviously reflects national priorities, and a comparison of military and development assistance spending in OECD donor states offers at least one insight into how a country tries to spread its influence and make an impact on the world beyond its borders.

The Table below looks at Canada’s official development assistance (ODA) relative to military spending, comparing that to the ODA to military spending ratio within the OECD collectively, and to the US and two other NATO partners (Norway and Netherlands, both much smaller than Canada and with a lot less territory to patrol, but arguably with similar values and global objectives).

The Canadian ODA to military spending ratio is generally about 1:4 – that is, Canada spends at least four times as much on military forces as on development assistance (sometimes it is five times as much). In Norway and Netherlands the ratio in both cases is below 1:2 – that is, these two Canadian allies, known for their generally ambitious and effective engagement in international peace and security efforts, spend less than twice as much on their militaries as on development assistance.

To be fair, Canada, with its much larger land mass (which, on the other hand, is certainly now and foreseeably not under any military threat), is still much closer to the Norway/Netherlands model than to the US model or the OECD average. The US spends more than 25 times as much on its military as on development assistance, and within the OECD the average is just under 10 times as much.

Ratios of ODA to Military Spending[iv]

	2001	2005	2006	2007	2008
*Canada*	1:5.6	1:3.4	1:4.1	1:4.4	1:4.1
*Norway*	1:1.9	1:1.7	1:1.7	1:1.6	1:1.5
*Netherlands*	1:2.0	1:1.9	1:1.9	1:1.8	1:1.8
US	1:26.7	1:25.1	1:22.0	1:28.5	1:25.8
*OECD*	1:9.9	1:7.5			1:9.4

With the Cold War long over, and with some post 9-11 attempts to militarily engineer peace and stability having faltered rather dramatically, there is a wide range of voices calling for some serious rebalancing.[v] One simple and modest, yet sensible, suggestion is to shift some of the excessive military spending in OECD countries to ODA (a suggestion that comes with recognition of the need for much improved aid effectiveness).

Obviously, governments don’t make those kinds of direct spending transfers, but the point is to promote a shift in priorities that more credibly recognizes the extent to which peace and stability are built on sustainable conditions of social and economic well-being.

For example, the globally representative interfaith organization, Religions for Peace, currently has a campaign, undertaken through its Youth Program, to “ask all governments to make an official pledge to cut their military budgets by 10% and to re-allocate those funds toward development.”[vi] The Nobel Prize winning International Peace Bureau has issued a similar call for a shift of 10 percent of military spending to poverty reduction.[vii]

Well, if Canada were to implement such a modest shift, its ODA as a percentage of GNI would go from .33 percent (using the 2008 figures) to .46 percent – remaining well short of the official goal of .7 percent. The ratio of ODA to military spending would move from 1:4.1 to 1:2.6 (bringing it a lot closer, but still not equal, to the ratio already reached by Norway and the Netherlands).

More fundamentally, it would be a symbolic and practical recognition that to address insecurity the way most people experience it, there needs to be a whole lot more, and more effective, attention to redressing unmet basic needs, political exclusion, denied rights, social and political disintegration, and the criminal and political violence that invariably attend such conditions of insecurity.

eregehr@uwaterloo.ca

Notes

[i] Sam Perlo-Freeman, Olawale Ismail, and Carina Solmirano, “Military Expenditure,” SIPRI Yearbook 2010: Armaments, Disarmament and International Security, Stockholm International Peace Research Institute and Oxford University Press, 2010, p. 177.

[ii] SIPRI Yearbook 2010, p. 203; and The Military Balance 2010, International Institute for Strategic Studies, pp. 462-468.

[iii] A Conference of Defence Associations analysis of the Defence Budgets for the years 2006 through 2010 shows an increase of 44 per cent over those four years. Brian MacDonald, CDA Commentary 1-2010, 18 February 2010. www.cda-cdai.ca.

[iv] Based on figures (Current US$) from the IISS Military Balance (2010, 2007, and 2004-5 yearbooks) and the OECD database, the ODA by Donors Table (in Current US$). (http://stats.oecd.org/Index.aspx?DataSetCode=CSP2010).

[v] George Hamzo and Ernie Regehr, “Canadian peace and security spending: An update on the 5 Ds,” Ploughshares Monitor, Autumn 2008, volume 29, no. 3. http://www.ploughshares.ca/libraries/monitor/mons08b.pdf

[vi] The Religions for Peace Campaign for Shared Security had by mid-October collected an amazing 20,102,746 signatures http://www.armsdown.net/.

[vii] Provide link to website.

Military spending as “weaponized Keynesianism”

Posted on: September 12th, 2009 by Ernie Regehr

The inimitable Barney Frank had it about right when he allowed that he “would be very happy if there was some way to make it a misdemeanor for people to talk about reducing the budget without including a recommendation that we substantially cut military spending.”[i]

The Massachusetts Congressman’s wishful thinking came to mind when President Barak Obama warned in his health care speech to a joint session of Congress that if nothing is done “to slow [their] skyrocketing costs, we will eventually be spending more on Medicare and Medicaid than every other government program combined. Put simply, our health care problem is our deficit problem. Nothing else even comes close.”[ii]

But, given the “skyrocketing” costs of the US security establishment and its wars in Afghanistan and Iraq, there actually is something that comes close.

At the moment the annual rate of US Defence spending, $726 billion (including costs of the wars in Iraq and Afghanistan), is well ahead of the $687 billion for Medicare and Medicaid, but the President is right inasmuch as federal US health spending is projected to grow at almost four times the rate of defence spending. US Government budgetary projections see defence growth of 25% by 2019, compared with a projected 40% growth over the same period in overall federal government spending and a whopping 95% jump in Medicare and Medicaid spending.[iii]

There seems little doubt that US health care costs require attention, but that ought not to suggest business as usual at the Pentagon. The comparatively modest 25% projected rise in US defence spending over the next 10 years (substantially lower than the rate of overall government spending increases) is misleading because it is calculated on a base year that comes at the end of eight years of extraordinary defence spending increases.

As US defence analyst William Hartung of the New America Foundation put it in testimony to the US House Armed Services Committee:

“The Pentagon’s baseline budget rose by 82% between FY 2002 and FY 2009, after adjusting for inflation. Add to that the costs of the wars, and we are now spending more in real terms than we have spent at any time since World War II – more than at the height of the Vietnam War, more than at the height of the Korean War, and more than at the peak of the Reagan buildup of the 1980s. In light of the current economic crisis and the competing demands to fund health care, alternative energy, civilian infrastructure, more robust diplomacy, and other domestic and foreign policy priorities, these levels of military spending are no longer sustainable.”[iv]

The Stockholm International Peace Research institute also reports and confirms that current US defence spending outstrips all the excesses of the Cold War and is at its highest level (in real terms adjusted for inflation) since World War II.[v] So not only do the next 10 years not promise a retreat from the extreme heights of the Bush global war on terrorism, but the expectation is that the extreme will grow by a quarter.

Of course, the defence lobby, or to use Dwight Eisenhower’s more descriptive phrase, the military-industrial-complex, insists that defence spending ought to be regarded, not as an economic burden but as an economic stimulus. As Barney Frank sums it up, it is a kind of “weaponized Keynesianism that says military spending is important because it provides jobs and boosts the economy.”

In Canada military Keynesiansim has an enthusiastic advocate in Senator Colin Kenny: “If the Harper government wants to create jobs, it would be far better off to invest more in Canadian Forces….By honouring [the] promise [to modernize the Canadian Forces], the government could go a long way toward solving the jobs crisis it is currently faced with”[vi] (emphasis added!).

Happily, more sober voices are available. A 2007 University of Massachusetts paper found that while $1 billion in US defence spending generates 8,555 jobs, the same amount spent on mass transit and education generates 19,795 and 17,687 jobs respectively – in other words, more than twice as many jobs could be created by cutting defence spending and using the money on civilian programs that would return a long-term benefit to society.[vii]

The Massachusetts study[viii] concludes:

“…[T]here is a great deal at stake as policy makers and voters establish public policy spending priorities….[B]y addressing social needs in the areas of health care, education, mass transit, home weatherization and infrastructure repairs, we would…create more jobs and, depending on the specifics of how such a reallocation is pursued, both an overall higher level of compensation for working people in the US and a better average quality of jobs.”

Another study compares spending on environmental cleanup and combating global warming, routinely understood as drains on an economy, with spending on the Iraq war and military spending generally.[ix] The measured conclusion is:

“The long-run effects of increased military spending are likely to have a comparable impact on the economy as similar sized spending increases devoted to environmental purposes. One important difference is that the environmental spending may have the character of investment. For example, if increased insulation leads to reduced demand for energy at some future point, then this will mean that spending on energy will drain less money from the economy. This will free up money to be spent on other purposes, which should mean that the economy will be stronger than would otherwise be the case. There is no comparable economic dividend from military spending. (It is possible that both environmental and military spending will lead to spin-off inventions that could have substantial economic benefits for other sectors, but there is no reason in general to expect more such spin-offs with one type of spending than the other.)”

In the case of Canada, SIPRI’s 2009 Yearbook still ranks this country as the 13^th highest military spender on the planet, and the current level of military spending at about $20 billion is more than 60% higher (after inflation)[x] than it was in 2001. Of course, US military spending is a few, make that many, orders of magnitude beyond Canadian spending, but both the US and Canada face unsustainable budgetary deficits – so here’s hoping that, in both cases, budget reductions will follow a Barney Frank formula rather than that of the military Kenyesians.

eregehr@ploughshares.ca

Notes

[i] Barney Frank, “Cut the Military Budget,” The Nation, 2 March 2009.http://www.thenation.com/doc/20090302/frank.

[ii] Remarks by the President to a joint session of Congress on Health Care. U.S. Capitol, Washington, 9 September 2009. http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-to-a-Joint-Session-of-Congress-on-Health-Care/.

[iii] Updated Summary Tables May 2009. Budget of the US Government, Fiscal Year 2010. Table S-3. Baseline Projection of Current Policy by Category.http://www.gpoaccess.gov/USbudget/fy10/pdf/summary.pdf.

[iv] William D. Hartung, Congressional Testimony, 2 April 2009 (House Armed Services Committee Subcommittee on Terrorism, Unconventional Threats and Capabilities.http://www.newamerica.net/publications/resources/2009/terrorism_and_new_age_irregular_warfare_challenges_and_opportunities.

[v] SIPRI Yearbook 2009: Armaments, Disarmament and International Security, Stockholm International Peace Research Institute and Oxford University Press, 2009), p. 184.

[vi] Colin Kenny, “Don’t touch defence spending,” Canwest, 14 November 2008.http://www.liberalsenateforum.ca/In-The-Senate/Publication/1928_Dont-touch-defence-spending.

[vii] Reported by Winslow T. Wheeler, a longtime security affairs analyst on Capitol Hill, in “Save the Economy by Cutting the Defense Budget,” counterpunch, 27 January 2009.http://www.counterpunch.org/wheeler01272009.html.

[viii] Robert Pollin and Heidi Garrett-Peltier, The U.S. Employment Effects of Military and Domestic Spending Priorities, Department of Economics and Political Economy Research Institute, University of Massachusetts, Amherst, October 2007.http://www.peri.umass.edu/fileadmin/pdf/other_publication_types/PERI_IPS_WAND_study.pdf.

[ix] Dean Baker, The Economic Impact of the Iraq War and Higher Military Spending, Center for Economic and Policy Research, Washington, May 2007.http://www.cepr.net/documents/publications/military_spending_2007_05.pdf.

[x] Government of Canada, Department of Finance, Fiscal Reference Tables. http://www.fin.gc.ca/frt-trf/2008/frt08_e.pdf.