Christopher Preble

Earlier this week, Harvard economist Robert Barro and Veronique de Rugy of the Mercatus Center published a short paper assessing the economic effects of defense spending. Their findings are consistent with those of other studies, including one that Cato published last year by Benjamin Zycher. To wit, from Barro and de Rugy’s abstract:

How much does the United States spend on the military relative to our allies? A lot.

Chuck Hagel’s first major speech as secretary of defense is receiving the sort of attention thatone would expect. But the real news will be made when the Obama administration’s budget hits the streets, reportedly on April 10th. As the saying goes, “show me the budget, and I’ll show you your priorities.”

“The budget hawks have defeated the defense hawks.” So read one analyst’s verdict last Friday on the news that, despite months of dire warnings from the Obama administration and the Pentagon’s allies on Capitol Hill, automatic budget cuts to the U.S. Defense Department would go into effect after all. Bill Kristol, the influential editor of the Weekly Standard, was despondent, writing, “the Republican party has, at first reluctantly, then enthusiastically, joined the president on the road to irresponsibility.” But have fiscal scolds really vanquished their neoconservative rivals within the GOP?

Military spending will remain at roughly 2006 levels—$603 billion, higher than peak U.S. spending during the Cold War. Meanwhile, we live in a safer world. The Soviet Union has been dead for more than two decades; no other nation, or combination of nations, has emerged since that can pose a comparable threat. We should have a defense budget that reflects this reality.

If the Senate confirms Chuck Hagel as secretary of defense, he will confront a set of challenges similar to those faced by Charles E. Wilson in 1953, James Schlesinger in 1973 and Dick Cheney in 1991. In each of those cases, recent long and costly wars were drawing to a close, and traditional enemies were disappearing or being replaced.

The fiscal cliff is looming and Washington is scrambling to reach a deal to avoid a Thelma and Louise ending in January. To start, policymakers need to identify spending cuts, and they could begin with Senator Tom Coburn’s (R-OK) just-released report on wasteful and duplicative spending in the Pentagon. The report identifies savings totaling at least $67.9 billion over the next decade in the Department of Defense.

Today is a federal holiday in observance of Veterans Day and we should all pause a moment to reflect on the sacrifices our veterans have made. But today is also an opportunity to reflect on the current state of civil-military relations. In today’s New York Times, Tom Ricks addresses this and notes:

It is no surprise that the defense contractors want to protect their profits by getting taxpayers to pony up more money.

Two months ago, Cato published a study by economist Benjamin Zycher, a senior fellow at the Pacific Research Institute, that showed that military spending contributes very little to GDP growth, and concludes that cuts would have very little long-term impact on GDP. On the contrary, Zycher estimates that cuts on the order of $100 billion a year would reduce costs in the wider economy by $135 billion per year. I wrote about that study when it was published here.