The editors of the Wall Street Journal caution us that one of the implications of Russia’s invasion of Ukraine is that we will need to start spending a lot more on defense:
Vladimir Putin’s assault on Ukraine has caused Germany to revolutionize its defense policy in less than a week. Will the Biden Administration have a similar awakening about defending Americans with dictators on the march?
Progressives complain the Pentagon budget is larger than any other nation’s, but the truth is that defense spending is at historic lows. It’s heading to under 3% of the economy. Defense spending reached a postwar high of 9.1% in 1968 but never fell below 4.5% even in the 1970s, reaching a high of 6% in 1986 at the height of the Reagan buildup that helped win the Cold War.
American military power in the last two decades has been burned up in counterterrorism operations, and the current force may be too small and geriatric to crush a peer military, let alone aggression on two fronts.
No matter, some say: Europe can deal with Russia, and Taiwan is in China’s sphere of influence. But authoritarians have little incentive to stop gobbling territory if they pay no price, and the U.S. is bound to defend treaty allies in NATO or Japan if they’re next on the menu, not to mention the U.S. territory of Guam.
One reason the U.S. is struggling to deter bad behavior is that adversaries know American military power is in retreat. Controlling the skies is indispensable to American warfighting in any theater, but the U.S. Air Force fighter inventory has fallen to about 2,000 from 4,000 aircraft in 1991 and the average age is 29 years old, up from 11.5 then.
The Air Force has cannibalized readiness to buy more capable equipment, which it also needs to stay competitive. President Trump’s Air Force Secretary, Heather Wilson, was right that to deal with “the world as it is†the U.S. needs 386 squadrons by 2030, up from 312—especially more bomber and tanker squadrons to cope with distance in the Pacific.
The Navy is working at the same clip as the Cold War with half as many ships, and the fleet is smaller and older than China’s navy. The sea service needs and wants many more attack submarines—a potent defense against China—but the Navy lacks the maintenance yards to keep up with even current inventory. Carriers need attack aircraft with longer range.
The Marines are the only branch adapting fast for the future. But the price is a shrinking force, including three fewer infantry battalions and tanks the country may miss if land battles make a comeback. The Army’s brief should be Europe, though the land force’s budget is down nearly 11% since 2018 in real terms, as analyst Thomas Spoehr calculates, including cuts to exercises and procuring less of everything from helicopters to ammunition.
Any conflict would require enormous amounts of munitions, and on current plans U.S. forces could run out of some of the most lethal and important stuff in weeks. The Pentagon needs to ramp up planned purchases of long-range antiship and joint air-to-surface standoff missiles—now. But it can’t afford to stop working on hypersonics or offensive cyber, which means spending will have to increase.
The Biden team has been pushing a “divest to invest†strategy that skimps on weapons to develop technology for the 2030s, a plan that now belongs in a Pentagon paper shredder.
while in an op-ed also at WSJ Glenn Hubbard discusses ways and means:
Paying for higher levels of defense spending will force most governments either to raise taxes or cut spending. Tax increases raise risks to growth. The larger non-U.S. NATO economies are already taxed to the hilt. Tax revenue relative to the size of the economy in France (45%), Germany (38%), Canada (34%) and the U.K. (32%) doesn’t leave much room to tax more without depressing economic activity. The U.S. has a lower tax share of GDP—about 17.5% at the federal level and 25.5% in total—but its patchwork quilt of income and payroll taxes makes tax increases more costly by distorting household and business decisions about consumption and investment.
A significant tax increase in the U.S. would need to be accompanied by fundamental tax reform, dialing back income taxes (as with the 2017 reduction in corporate tax rates) and increasing reliance on consumption taxes. A broad-based consumption tax could be implemented by imposing a tax at the business level on revenue minus purchases from other firms (a “subtraction method†value-added tax). Alternatively, the tax system could impose a broad-based wage and business cash-flow tax, with a progressive wage surtax on high earners. These consumption-tax alternatives would be efficient and equitable in a revenue-neutral tax reform. And they are crucial in avoiding decreases in savings, investment and entrepreneurship that accompany a tax increase.
Since the 1960s, spending on Social Security, Medicare and Medicaid has come to dominate the federal budget. Outlays for these programs have almost doubled since then as a share of GDP to 10.2% today, and the Congressional Budget Office projects they will consume about another 5% of GDP annually by 2040. Spending offsets to accommodate higher defense spending would surely require slowing the growth in social-insurance spending. As with tax increases, there are trade-offs. It is possible to slow the growth of this spending while preserving access to such support for lower-income Americans. Accomplishing that will require focusing net taxpayer subsidies on lower-income Americans, along with undertaking market-oriented health reforms. Such changes require serious attention.
I’m not sure where to start. Neither the editors nor Dr. Hubbard mention moral hazard. The reason that the U. S. had military spending as high as it did was because not only were we carrying the freight for our own defense we were carrying it for our European allies as well. That was because both our political leadership and our military leaders preferred it that way. I disagreed with that strategy then and I disagree with it now. If we stand up they will stand down. The more we spend the less they will need to spend.
I think that the U. S. needs to be able to contribute to a land war in Europe but it does not need and should not have the ability to wage such a war on its own. Our European allies have an aggregate GDP about equal to our own with twice our population. They are completely capable of defending themselves. They just don’t wanna and who can blame them? Not spending on munitions and training enables them to spend on other priorities.
Similarly with Asia. I do not see how the ability to wage a land war in Asia furthers our security. Quite the opposite.
I’m more interested in right-sizing our military, refurbishing it and upgrading it to deal with the security issues of the 21st century. And for goodness sake can we stop invading and occupying other countries, trying to convert the natives? I do not see any way in which that increases our security or stands up for our principles.
As far as ways and means go, while I support a major overhaul in our tax system, Dr. Hubbard does not address the havoc that any form of consumption tax would wreak on state budgets which tend to be heavily dependent on sales taxes. And the implication of his notions on social spending would require means-testing Social Security and Medicare. That is DOA. A non-starter.
What I think we really need to do is to get more bang for our government spending buck. We spend more on our defense, roads, bridges, healthcare, and education systems than any other country without getting outcomes better than those in other countries. Indeed, in many of those areas our outcomes are worse. Just to cite one example over the last 30 years we have tripled our real spending on education without greatly improving students’ test scores or on-time graduation rates.
I recognize the difficulty of the problem. I just see no way around it.
Catching on to what I commented several days ago.
Here’s a question, why would 6% of GDP (based on data from the 1980’s) on the military be sufficient?
In the 1980’s; China / US were strategic partners while USSR was the one facing strategic threats on two fronts. The USSR was an economic basket case.
Whatever you may think of the Russian/Chinese economies; they aren’t basket cases. China’s industrial base by most measures is larger then the US and is not technologically backwards. Throwing off Soviet ideology; by most measures Russia is much stronger now then it was then — its debt/GDP ratio, imports/exports were one of the best in the world prior to the war.
If military might is ultimately based on economic strength; there’s a real case that military spending should be 8-10% of GDP. But spending that much on the military is dangerous for economic health (see 1980’s USSR).
I’ve already given my opinion: military strength is downstream from economic strength. Want to build our military strength up? Increase our economic strength.
That is also much more politically possible than other proposals.
How do we build our economic strength? The first step is by not increasing taxes on businesses. The second is stable policies. Continually changing policies produces uncertainty and uncertainty is hard on the economy.
The third is by onshoring more of our manufacturing. That may require rationalizing environmental policies, subsidies, and other steps that will be politically difficult.
That’s a good example of how propagandized we are I’ve been writing about. You would not get that impression by reading the NYT or WaPo or listening to CBS News.
I will state frankly about this (probably will get labeled as a traitor).
The US doesn’t have the means to achieve the ends. Its not possible to simultaneously deal with record debt, high inflation, rebuild an industrial base, increase spending to the military, win a land war in Eurasia, win a naval war in the Pacific, and have a generous social welfare program.
Policy makers must make difficult choices. Figure out true bottom lines and prepare to negotiate the rest.
Since a strong economy leads to strength in foreign relations — I prioritize dealing with the debt, inflation, and the industrial base first. Then social welfare (for domestic stability). Then military spending. I would negotiate a modus vivendi with Russia / China / India — it would probably be humiliating; but less risky way to achieve US bottom lines then an attempt to win “Cold War II”.
How does a policy aimed at hurting Russia without materially helping the Ukrainians advance that approach or make it easier?
Additionally, it’s unclear to me how we can avoid aggravating the Chinese and rebuilding our industrial base at the same time.
WRT social spending, we need to get a better bang for the buck and, frankly, I don’t think we can do that without limiting illegal immigration.
“The reason that the U. S. had military spending as high as it did was because not only were we carrying the freight for our own defense we were carrying it for our European allies as well. That was because both our political leadership and our military leaders preferred it that way.”
Positively Trumpian.
“What I think we really need to do is to get more bang for our government spending buck.”
Good luck. Politicians and their cronies get rich in the current system. It starts with the voter. Hence the chord Trump struck with some meant he had to be destroyed.
For others, they are not serious people, more interested in the latest reality TV show and professing support for the poor, who generally get squat, and various pronoun conscious groups. Not a formula for your goal.
Looking at push back on school boards the bear may have been awakened.