U.S. Military Overview

The U.S. Military: A Giant, still growing. It’s big, but it’s never big enough.
By Richard Van Slyke

The Giant Figures :

Bases, bases, bases…
The U.S. has over 700 military bases spread all around the world, and maybe up to 1000 according to some estimates.
In terms of international impact, it’s a giant. But within the U.S. budget, it’s an ogre.
For 2008, the official budget is projected to be close to $500 Billion, not counting the cost of wars (around $40 Billion).
In comparison, China’s budget for 2007, the second largest military budget in the world (2008 projections are not known yet), is estimated to be around $140 Billion (officially $65 Billion), leaving England, the third largest budget at less than $70 Billion way behind, and making all other countries feel like midgets.
However, the military budget of the U.S., like for many other countries, is only a rough estimate because of the many other defense-related expenses that are not officially included in it.

Defense spending can be divided into several categories:

- The official Defense Department budget included in the global U.S. budget (the $ 500 Billion amount).

- The cost of wars, which is not included in the Defense budget and is funded through supplementary bills. That money comes mainly from amounts accumulated in trust funds such as Social Security. These trust funds are also not included in the General Funds, so it’s easy to dig into them without the general public being aware of it. The costs of the Afghanistan and Iraq wars, year after year, start with an initial request based on estimates, followed later on in the year by a supplemental request.

- Other departments not officially within the Department of Defense but that have a role in defense, such as the Nuclear Arms part of the Department of Energy and also small but not negligible amounts in agencies like NASA and the CDC. Over $1 Billion in bioterrorism research might seem like a small amount compared to the overall defense budget, but for other departments it would be significant.

- The Black Budget, of an amount undisclosed for security reasons. A low estimate for it is over $40 Billion a year. The source of these funds is kept secret.

- The Department of Homeland Security also has a separate budget. In 2007, it was $44 Billion.

- The Veteran’s Affairs Department also is not counted as a cost of the Department of Defense. The 2008 budget recommendation is for $41 Billion.

When all defense related expenses are added-up, the whole amount is estimated to be close to $1 Trillion.

To some, it’s not enough.

Not enough? On what grounds?

Some proponents of defense spending, such as the Heritage Foundation, argue that we don’t spend enough money on defense, and that we should not go under 4% of our GDP (Gross Domestic Product). Why use the GDP as a measure of the defense spending?
The Gross Domestic product is the market value of all goods and services produced in a country in a year. It is usually used to evaluate the size of an economy. It is usually also a good indicator of the wealth of a country. However, using it as an index to decide on government spending can be very misleading, mainly when it relates to the U.S. economy.
If we use the 2006 figures for the six richest countries in the world (U.S., Japan, Germany, France, U.K. and China), and we take compare GDPs, government’s revenues, and military spending, we can see some striking differences between the U.S. and other countries.
First, the U.S. is the only one to be at 4% of the GDP for military spending. All other countries are much below that percentage.

Next is something that is something that is usually not talked about by economists, and came up while compiling these figures:
The percentage of GDP that actually materializes in government revenue is much lower in the U.S. than it is in the other countries. The obvious reason being that a large portion of the GDP in the U.S. is created by large corporations that do not pay taxes, or very little.
The following figures are taken both from Wikipedia and the CIA World Factbook.
They are only estimates, as these types of figures always vary depending upon who does the adding, mainly in the case of China, where military expenditures are very difficult to estimate (in both U.S. and China, the real figures are almost double these official figures). But they do represent a reliable average of various estimates for comparison purpose.
The figures are in billions of dollars (B).

Military Spending of the Five Richest Countries in the World

 One thing worth noticing is that each and every one of these countries spends more money than what they have in their budget.
Now, if we take the above figures and compare the military spending of each country as a percentage of GDP and percentage of revenues, we can see that the size of the U.S. military is not due to the size of the economy only, but also to a much higher percentage of the country’s revenues being allocated to the military. This despite the fact that the figure used for the U.S. military is a very conservative one and doesn’t include many military-related expenses.

Military Spending in Percentage of Revenue and GDP

The U.S. Military is by far the biggest spender in the world. Its budget is bigger than the revenues of the three largest corporations in the world (Exxon Mobil, General Electric, and Microsoft) combined.
Unfortunately, it is also, according to any account (including the Government Accounting Office’s reports), managed in a way that would not allow a regular corporation to survive. Waste is at unimaginable proportions, and no one seems to ever be accountable for it.
One might think that a thousand-dollar bribe to a local elected official to influence the outcome of a bill is a terrible thing. And it is. But in terms of the U.S. military budget, it could just be the price of a hammer.
When a small company in South Carolina bills the military for $20.5 million over the course of six years for shipping $68,000 of supplies, it seems hard to believe that they didn’t get caught until they twice charged $998,798 to ship two 19-cent washers. Being that they are a small company they will be pursued and someone will most likely go to jail.
In the case of larger companies and larger amounts of money, this seldom happens.
A typical example is KBR, the former subsidiary of Halliburton that has been caught many times for overbilling the military for huge amounts of money. KBR keeps receiving government contracts after paying only small fines that can be viewed as the “cost of doing business”. And surely there is no talk of anyone ever going to jail.

Being a military contractor is the best possible type of business.

- You have only one customer, the U.S. Military, with a budget larger than any corporation in the world and in fact larger than most countries’ GDP.
- There is no accountability for mismanagement.
- For many large projects, cost overrun seems to be the norm.
- Over-billing often goes unnoticed.
- For the largest, established contractors, penalties for fraudulent activities usually result in fines that do not affect overall profits or future contracts.
- The marketing department, an important part of any corporation, is replaced by lobbying and political campaign contributions to a few individuals, at a much lower expense than the regular cost of marketing.
- Because of the nature of the military, a large portion of the budget falls under “national security” guidelines. Vast amounts of money are exempt from any kind of scrutiny, even from members of Congress.
- And most importantly, profits do not need to be reinvested for Research and Development. That part is usually included in the next taxpayer-supported funding. Military contractors can just take the profits and run.

For these reasons and many others, most major corporations want a share of that pie.
The business of the military spans the whole spectrum of the economy, from basic needs like food and clothing to high-tech equipment necessary for missile technology or intelligence. And many corporations not officially listed as military contractors such as Microsoft also have a share of their business dependent on the biggest bulk purchaser in the world. The amounts of money are so huge that it affects the whole U.S. economy.
But there is something very special about the way a military economy works. It is, of course, all based on taxpayer’s money. On the global level (in which the U.S. is an important player), one of the most important factors in economy is the trade balance. That is, in layman’s terms, how much a country buys from other countries, and how much it sells to them. As a simple example, let’s consider our situation with China. We have a huge trade deficit. We buy much more from China than they buy from us. They are also building up their military, and at a faster pace than we are. But their economy is sustained by the influx of money from American consumers, thus increasing their tax-based income. In other words, we are helping them build-up their military. In contrast, the U.S. military is mostly supported by U.S. citizens, both as consumers and taxpayers.

The influence of military economy is so prevalent in our overall economy that the profits made by military contractors are an important part of the figures used by analysts when judging the wealth of our economy. This is wealth that is not healthy. Corporate profits (labeled as the “U.S. Economy”) rely too much on the U.S. taxpayer and not enough on profits from trade.

Wartime, of course is the most profitable. And not just for military contractors. When the price of gasoline went up at the pump for reasons of “instability in the Middle-East”, companies like Exxon (and a few other major oil companies) made the biggest profits ever in the history of the world. But the bill was paid by the American consumer, their favorite “involuntary profit-maker”. And it reinforced the boasting of “the U.S. Economy is doing great” message. Doing great for who?
Since 2001, the median family in the U.S. has been constantly going down; mortgage delinquency and foreclosure rates are increasing. But the “economy” is doing great.

It’s the freedom, stupid!

It’s easy to understand that for a military contractor, the enemy is not the rogue countries of the world. The real enemy is peace.
This is the reason for the permanent search for an enemy that can be witnessed in the U.S media.
The amount of funding that major U.S. corporations dedicate to pro-war messages is hard to sum-up, because it is usually embedded with the support for other causes. But it can be felt in everything that influences opinion and decision-making in the U.S.
A concerted effort has been made over several decades to polarize opinions in two opposed views labeled as “conservative” and “liberal”. The conservative point of view has then been associated with patriotism and patriotism with “strong defense”.
A typical Heritage Foundation message is “Freedom has no price!”.
Thousands of foundations were funded all over the U.S. to create and exacerbate ideologies.
Talk shows are heavily funded to pump-up these ideologies, with a recurring message in the background: strong defense. In the media, advertisers with the strongest budgets, usually large corporations, invest only in conduits that put out content that will not interfere with their profits. The result is what supposedly is self-editing by reporters. But in fact advertising is not the only pressure exerted on the media. Most major media are themselves part of conglomerates with interests intertwined with the ones of their advertisers; so self-editing is not only influenced by advertisers but also by the desire to not interfere with the interest of the media corporate owners. This is most obvious when it comes to politics.
During election campaigning, any candidate who doesn’t support war becomes virtually non-existent in the media. They are also the least likely to receive campaign donations from large corporations. This in turn makes them look like less viable candidates, destined to be excluded from major debates.
When the largest corporations in the world decide to collude to promote their interest, it makes for a very powerful organization. However, the sheer size of these corporations all vying for Americans supporting them either as consumers or as taxpayers is what creates a conundrum. Past, present and futures generations have already all been suckered to a point that could potentially already be above their limit. Of the total amount of the U.S national debt that has accumulated over many generations, over half is estimated to be due to the cost of wars. The present-times national debt is close to ten trillion dollars. But if we add to it the sums due for future payments of Social Security, Medicare and Medicaid, the real debt is approximately 60 Trillion dollars.

Blame it on someone else.

Knowing that a disaster is looming, the defenders of defense spending are of course already placing the blame: Social Security, Medicare and Medicaid will bankrupt the system. They of course ignore the fact that the effect of the aging of the U.S. population was planned for and that since 1983, taxes on these items were raised to accumulate a surplus to be used for future payments. However that surplus was raided every year by being converted into defense spending. And at the exact present times when there is full awareness of the disasters to come, Social Security and Medicare are still bringing in surplus money every year and it is, every year, being spent on wars.
In the near future, the situation will no doubt become dire. The consequences are already known. Retirees will see their benefits reduced (both living expenses and health benefits), and the younger generations will have their taxes increased. Will the defense spending pie decrease? Probably not! If any one has any doubt, let us remember that the westernized version of this country was created in large part by impoverished Europeans fleeing heavy taxations imposed by their warring monarchs.
Unfortunately, it appears that all continents on this earth have now been discovered and we have nowhere to run.

==================================

For reference sources of this article, go to the U.S Defense Budget Links page:
http://www.organizedpolitics.com/node/32

U.S. Defense Budget - Links

Reference articles on the U.S Military Overview
Organized by Topics

The basics on the Budget:

737 U.S. Military bases = Global Empire
http://www.alternet.org/story/47998

The Independent Institute.
The Trillion-Dollar Defense Budget Is Already Here.
http://www.independent.org/newsroom/article.asp?id=1941

About.com: U.S. 2008 Military Budget.
Compares figures with the two previous years.
http://useconomy.about.com/od/fiscalpolicy/p/2008_defense.htm

China Daily: the 2008 U.S. Defense Budget is $716.5 Billion.
http://www.chinadaily.com.cn/world/2007-02/06/content_802007.htm

Wikipedia. U.S. 2007 Military Budget.
http://en.wikipedia.org/wiki/Military_budget_of_the_United_States

U.S. 2006 Military Budget (Los Alamos Study Group).
http://www.lasg.org/USMilitarySpending.pdf

IDSA. Institute for Defence Studies and Analyses (Indian Think Tank – New Dehli).).
The U.S. Defence Budget for 2008.
http://www.idsa.in/publications/stratcomments/LaxmanBehera210207.htm

The second most expensive war in U.S. history, by Eric Margolis.
http://www.lewrockwell.com/margolis/margolis68.html

Wikipedia. Black Budget.
http://en.wikipedia.org/wiki/Black_budget

The CIA Black Budget. A summary of Michael Salla’s report.
http://www.arcticbeacon.citymaker.com/articles/article/1518131/24982.htm

Michael Salla’s original report on the CIA Black Budget.
http://www.american.edu/salla/Articles/BB-CIA.htm

The Center for Arms Control and Non-Proliferation.
Defense Budget Process.
http://www.armscontrolcenter.org/policy/securityspending/articles/defens...

National Defense Industry Association. The coming challenge for Defense (2006).
Since September 2001, the Defense Budget has increased by 70%.
http://www.ndia.org/Content/NavigationMenu/Resources1/Presidents_Corner2...

2007 Homeland Security Budget $40.6 Billion.
http://www.govexec.com/story_page.cfm?articleid=37591&dcn=todays_most_po...

Congressional Budget Office.
Federal Funding for Homeland Security, 2001 to 2005.
http://www.cbo.gov/ftpdoc.cfm?index=5414&type=0

The Department of Homeland Security, $44 Billion Budget in 2007.
http://en.wikipedia.org/wiki/United_States_Department_of_Homeland_Security

House Committee on Veteran’s Affairs 2008 Budget proposal.
Final figures are on page 23. Recommendation is for $41 Billion.
http://veterans.house.gov/about/comdocs/110/Viewsandestimates110.pdf

The “We don’t spend enough” side of the story.

An analysis of the 2008 Defense Budget by the Heritage Foundation.
Increasing Defense spending is one of the main goals of the Heritage Foundation.
http://www.heritage.org/Research/Budget/bg2012.cfm

The ”We spend too much” side of the story.

An analysis of the Defense Budget by Anti-War.com.
http://www.antiwar.com/bandow/?articleid=10525

U.S Military compared to other countries.

U.S. Military Spending vs. the World.
Includes tabs with U.S.-specific statistics.
http://www.armscontrolcenter.org/archives/002279.html

Wikipedia.
List of countries by military expenditures.
http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures

Washington Post, March 2007.
China Boosts Military Spending.
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/04/AR200703...

Wikipedia.
Definition of GDP.
http://en.wikipedia.org/wiki/Gross_domestic_product

List of countries by GDP (Gross Domestic Product).
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

Wikipedia. Measures of national income and output.
http://en.wikipedia.org/wiki/GNP

Economic Indicator: Gross Domestic Product (GDP)
http://www.cftech.com/BrainBank/FINANCE/GDP.html

CIA Factbook.
List of National Budgets by Country.
Revenues vs Expenditures.
https://www.cia.gov/library/publications/the-world-factbook/fields/2056....

Corporations Compared to the Size of the military:

Revenues of the largest corporations in the world.
http://en.wikipedia.org/wiki/List_of_corporations_by_market_capitalization

The Military Budget Waste:

Pentagon waste has been going on for decades without accountability.
http://www.cbsnews.com/stories/2002/01/29/eveningnews/main325985.shtml

Pentagon waste in 2003.
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2003/05/18/MN251738.DTL

GAO (Government Accounting Office) labels Pentagon’s accounting as a mess.
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/12/13/MNG96MUHPF1.DTL

The American Conservative.
Money for Nothing. Waste under Iraq’s CPA (and after).
http://www.amconmag.com/2005/2005_10_24/cover.html

Cato institute.
Corporate Welfare for Weapons Makers.
http://cato.org/pubs/pas/pa-350es.html

Classified bills can be refuge for mischief (USA Today).
How Randy Cunningham used “black” budgets.
http://www.usatoday.com/news/washington/2006-07-23-black-budgets_x.htm

Military pays $998,798 to ship 19-cent washers.
http://www.freep.com/apps/pbcs.dll/article?AID=/20070817/NEWS07/70817039...

PilotOnline (February 20, 2007).
Pentagon investigates Blackwater’s expense tab.
http://content.hamptonroads.com/story.cfm?story=119795&ran=143615

Subsidiary of Halliburton overbilling.
It seems to be common practice with Halliburton.
http://www.smh.com.au/articles/2004/05/20/1085028468241.html

Washington Post, November 30, 2006.
Halliburton Unit To Pay $8Million for Overbilling.
http://www.washingtonpost.com/wp-dyn/content/article/2006/11/29/AR200611...

Navy Times, August 10, 2007.
Lockheed overbilled Pentagon for $265 Million and no one noticed.
http://www.navytimes.com/news/2007/08/defense_jsfrefund_070809w/

The Center for Public Integrity.
Windfalls of War.
Various articles on military contractors.
http://www.publicintegrity.org/wow/

CBS News: Top U.S. Official Eyed For Blocking Probes.
http://www.cbsnews.com/stories/2007/09/18/national/main3271931.shtml?sou...

House oversight Committee:
Probe of the conduct of the State Department Inspector General.
http://oversight.house.gov/story.asp?ID=1482

Foreign sales by U.S Arms Makers Doubled in a year.
http://www.commondreams.org/headlines06/1111-02.htm

Wikipedia. List of United States defense contractors.
http://en.wikipedia.org/wiki/List_of_US_defense_contractors

Wikipedia. Private Military contractors.
http://en.wikipedia.org/wiki/Private_military_contractor

Privatization of war.
http://www.publicintegrity.org/wow/

World Policy Institute;
Arms Trade Resource Center.
A good resource site on arms trade.
http://www.worldpolicy.org/projects/arms/reports.html