Military Spending by Country

With outstanding U.S. debt fast approaching 100% of GDP and budget deficits continuing to yawn stubbornly wide, the next president and congress will have some unpleasant decisions to make.  Spending will have to be cut.  But from where?

Social Security and Medicare will come under debate, as will most discretionary spending.  But the elephant in the room that no one wants to acknowledge is the U.S. military (see figure).

Top 10 Countries by Military Spending, 2011

Country

Spending, $bn

World Share, %

United States

739.3

45.7

China

89.8

5.5

Britain

62.7

3.9

France

58.8

3.6

Japan

58.4

3.6

Russia

52.7

3.3

Saudi Arabia

46.2

2.9

Germany

44.2

2.7

India

37.3

2.3

Brazil

36.6

2.3

Source: The Economist, April 7, 2012

The United States currently accounts for nearly half of all world military spending. Its military budget is more than eight times that of China and fourteen that of Russia.

The United States requires a large, muscular military to defend its economic and diplomatic  interests abroad.  Having a powerful army and (more importantly) navy is essential to maintaining credibility.  But during times of economic austerity, unpopular questions of “how big is enough” will start to be asked.

The automatic spending cuts that were part of the grand bargain between Barack Obama’s White House and the Republican-controlled House hit the military budget hard.  In an election year, neither party will want to see them implemented.

But once the election is over, even the most hawkish of republicans will have to accept that sacred cows like the military will have to be touched if the United States is to get its finances under control.  And with a smaller military, expect a more modest foreign policy.  It’s a whole new world, dear reader.

 



Disclaimer: This site is for informational purposes only and should not be considered specific investment advice or as a solicitation to buy or sell any securities.

This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities.