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.