- The Washington Times - Sunday, February 4, 2007

In a recent editorial, we noted that nominal military outlays exceeded $500 billion for the first time last year and that real (i.e., inflation-adjusted) defense spending had increased an average of 7.4 percent per year during the five years since September 11. Despite those increases, U.S. military spending still commanded only about 4 percent of gross domestic product (GDP) in 2006 and less than 20 percent of total federal budget outlays. Neither measurement this year remotely approaches average post-World War II ratios or comparable percentages during the Korean and Vietnam wars.

Since World War II, among all national sectors competing for federal funds, defense spending clearly commanded by far the largest share of the federal budget throughout the 1950s and 1960s — during both peacetime and wartime. Since the early 1970s, however, federal spending on human resources has exceeded military outlays. The 2008 blueprint being released today breaks down federal spending from 1940 through 2012 according to five superfunctions: national defense; human resources (education, health, Medicare, income security and Social Security); physical resources (energy, natural resources/environment, commerce, transportation and community development); other functions (international affairs, agriculture, general science/space/technology, administration of justice and general government); and net interest.

We have reviewed the spending trends among these superfunctions over the past 50 years, consolidated and averaged the superfunction spending patterns for four-year cycles that approximate presidential terms and examined the trends in superfunction spending as both a percent of the federal budget and a percent of GDP. Here are our findings:

m For the 1958-1961 peacetime budget period (President Eisenhower’s second term), defense spending averaged 53 percent of budget outlays and 10 percent of GDP. Spending on human resources averaged 28 percent of budget outlays and 5 percent of GDP.

m During the 1966-69 wartime budget period (President Johnson’s term), military spending commanded 45 percent of the budget and 9 percent of GDP. Human-resource spending climbed to 34 percent of outlays and 7 percent of GDP.

m For the 1974-77 peacetime period (the Nixon/Ford term), defense spending declined to 26 percent of budget outlays, while spending on human resources soared to 53 percent. During the 1982-85 period, which included the Reagan military buildup, defense spending still averaged only 26 percent of outlays. Human-resource spending totaled 51 percent. By President Clinton’s second term (the 1998-2001 budget period), human-resource spending (63 percent of outlays and 12 percent of GDP) was about four times the level of defense spending (16 percent of outlays and 3 percent of GDP).

m During the four years after September 11 (the 2002-05 budget period), defense spending only increased to 19 percent of outlays and 3.8 percent of GDP, while human-resource spending continued its ascent, averaging 65 percent of outlays and 13 percent of GDP.

These trends demonstrate that defense spending has not been a major source of the fiscal problem confronting America during much of the past four decades.



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