The most serious impediments to a serious discussion of defense spending are the myths that surround it. Until these myths are cleared away, no rational debate regarding what the United States and its allies around the world should do to secure their interests is possible. The most urgent need, therefore, is for politicians and the public to know how much the United States and other powers spend, to place these expenditures and their trends in historical context, to weigh the dangers of both excessive and insufficient defense spending, to understand why the US and the world's democracies maintain armed forces, and why the United States spends so much relative to its potential adversaries. Absent this knowledge, the political process that shapes defense spending in democracies will not work effectively, and their defense will suffer.
The Current Level of US Defense Spending
The first myth is the belief that the current level of US defense spending consumes an unknowable but sizable part of its GDP. In March 2007, a Gallup poll showed that a plurality of Americans (43 percent) believes that the United States spends too much on defense. In dollar terms, the US defense budget is indeed large. For 2008, President George W. Bush requested US$482 billion for the Department of Defense (DOD), plus an additional US$188 billion in emergency and supplemental funding, for a total request of US$670 billion.
This total does not include non-DOD costs of homeland security (US$36.4 billion) or the budget of the Veterans' Administration (US$84.4 billion). But neither of these costs belong in the defense budget: much homeland security is the responsibility of law enforcement, not the armed forces, and the Veterans' Administration's obligations are the result of previous commitments and have no connection to today's defense budget. Critics occasionally allege that US defense spending is systemically manipulated to hide expenditures. This is a paranoid conspiracy theory that makes debate impossible.
The US defense budget, stated in dollar terms, needs to be placed in context. The value of the dollar has declined over time, so total spending is higher today, in part, because each dollar buys less than it used to. The United States also has a larger economy today than it did a generation ago, and the amount it spends on all goods has necessarily grown as a result. Critics who argue that the United States should spend the same amount on defense even as the economy and the population grow should ask themselves if they would make the same argument for spending on infrastructure. In an economy that inflates and expands over time, freezing spending on anything would mean buying steadily less of it.
Because comparing dollar figures over time is deceptive, and because analysts often want to compare US defense expenditures with those of other states, the commonly used measure is to assess US defense spending as a percentage of its Gross Domestic Product, the total of all goods and services produced in the nation. By this measure, there is no serious disagreement between responsible authorities about how much the United States spends on defense. NATO annually publishes an analysis of spending by its members and by Russia: for the calendar year 2008, its preliminary estimate is that the United States spent 3.9 percent of its GDP on defense. Analysts at the Heritage Foundation place the figure at 4.0 percent. For fiscal 2007, the Congressional Budget Office has concluded it was 4.0 percent. Arguments about what expenditures should be counted as part of the defense budget are of marginal importance compared to this overwhelming consensus.
The Declining Level of US Defense Spending
The second myth is the belief that the current level of US defense spending is unprecedentedly high. The fact that the United States today spends 4 percent of its GDP on defense is as meaningless, stated in isolation, as the size of the Pentagon's budget. …