- The Washington Times - Saturday, February 3, 2007

This editorial begins a series that will argue for an increase in defense spending. First, however, we want our readers to understand current spending levels in the context of historical trends.

Annual military spending passed two important milestones in fiscal 2006. First, nominal defense spending exceeded half a trillion dollars for the first time in history. Second, when measured in constant dollars (a statistical technique that adjusts for inflation and relates every year’s spending to the purchasing power of a base year), defense spending also exceeded military outlays in every single year during the post-World War II era, including the spending peaks during the Korean and Vietnam wars and the arms buildup undertaken by President Reagan, which resulted in the de facto bankruptcy and consequential implosion of the Soviet Union.

Official data will not be available until the administration releases its fiscal 2008 budget tomorrow, but back-of-the-envelope calculations indicate that defense spending hit an estimated $520 billion in 2006. Five years earlier, the spending totaled $305 billion. Measured in constant dollars calibrated to the base year of 2000, the defense budget totaled about $425 billion in 2006. Defense outlays in 2006 represented an inflation-adjusted increase of 43 percent since 2001. Thus, while the economy grew at an average annual rate of 2.75 percent between fiscal years 2001 and 2006, military spending over the same period increased at an average annual rate of 7.4 percent.

Despite the steady, sizable annual increases in real defense spending since 2001 and despite the post-World War II record level of national-defense outlays that was established last year, military spending in fiscal 2006 still accounted for only about 4 percent of gross domestic product. Defense spending totaled an estimated 19.6 percent of the entire fiscal 2006 federal budget.

Compared to an estimated $425 billion (measured in constant 2000 dollars) defense budget in 2006, U.S. military spending during the Korean War peaked at $416 billion (also measured in constant 2000 dollars) in fiscal 1953. However, military spending in 1953 represented 14.2 percent of GDP, which was about 3.5 times the share of GDP commanded by 2006 defense spending. During the Vietnam War, military spending peaked in fiscal 1968 at $420 billion (measured in constant 2000 dollars. Defense spending that year was 9.5 percent of GDP and 46 percent of total federal budget outlays. Real defense spending during the Reagan buildup peaked at $399 billion in fiscal 1989, 6.2 percent of GDP in 1986 and 28.1 percent of total budget outlays in 1987.

In another editorial, we shall examine how federal spending on defense has changed during the postwar period compared to changes in federal outlays for: education, health and Social Security; energy, the environment and transportation; international affairs, science and agriculture; and net interest payments.

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