Friday , December 14 2018
Home / Mises Institute USA / Trump Signs an Enormous New Military Spending Bill

Trump Signs an Enormous New Military Spending Bill

Summary:
Last Thursday, Donald Trump signed into law a massive new military budget for fiscal year 2019, which began on Monday. The 2019 National Defense Authorization Act, or NDAA, includes 6.9 billion for the Pentagon's base budget, billion for overseas contingency operations funding and .9 billion for nuclear weapons programs under the Energy Department. The ...

Topics:
Ryan McMaken considers the following as important:

This could be interesting, too:

Tyler Durden writes May Leaves Brussels Emptyhanded After Contentious Talks

Tyler Durden writes China To Roll Back Retaliatory Auto Tariffs For 3 Months; Stocks Pare Losses

Tyler Durden writes Alhambra Questions The “Curious Rush To Combine German Banks”

Tyler Durden writes BMW And Porsche Lap Tesla In Race For 3 Minute Charge

Last Thursday, Donald Trump signed into law a massive new military budget for fiscal year 2019, which began on Monday.

The 2019 National Defense Authorization Act, or NDAA, includes $616.9 billion for the Pentagon's base budget, $69 billion for overseas contingency operations funding and $21.9 billion for nuclear weapons programs under the Energy Department. The NDAA is only half the process, since Congress must still pass a spending bill to fund specific priorities with the Defense Department.

"The National Defense Authorization Act is the most significant investment in our military and our war fighters in modern history," Trump said Monday in front of a U.S. Army Apache helicopter. "We are going to strengthen our military like never ever before and that's what we did."

President Trump has long claimed that the US military has been somehow underfunded or neglected in recent years, although military spending — only looking specifically at Dept of Defense spending — has been at or above Reagan-Era Cold-War levels for nine of the past ten years.

Calculated in 2017 dollars, Cold War Pentagon spending peaked in 1986 at 593 billion dollars. It went into decline after the collapse of the Soviet Union, but had returned to peak levels by 2005.

Pentagon spending then hit an all-time high in 2010 of 749 billion dollars. Since then, Pentagon spending has nonetheless only dipped significantly below the Cold-War peak in 2016 and 2016. And even then, it only fell to a "low" of about 25 billion below the peak.

And that's just spending specifically on the Department of Defense — which does not include all spending core to national-security spending. We ought also include other forms of national-security spending, which, as Robert Higgs noted, require an accounting of all spending that  "represent[s] the current cost of defense goods and services obtained in the past."

Trump Signs an Enormous New Military Spending Bill

Source: Table 4.1, Office of Management and Budget

This means we must include spending on veterans. This spending is a direct result of Pentagon hiring practices and employment agreements. The Pentagon relies on advertising promised Veterans benefits to meet its hiring quotas and to staff the military. Thus, it would make little sense to exclude those costs. The fact that VA spending is on military activities performed in the past is of little importance. The fact is these are expenditures on military activities.

Moreover, the Department of Homeland Security, which is just the domestic and civilian branch of the national-security apparatus, must be included as well.

If all of this is included, we find that defense spending in 2017 dollars is well above Cold War levels, and is quickly returning to its all-time peak.

Note also that we haven't even included spending on nuclear weapons that is allotted to the Department of Energy. In the new 2019 budget alone, that amounts to $21.9 billion.

But military spending doesn't even stop there. We must also include the payments on the public debt that are partially due to past spending on defense.

In the next graph, I've included interest payments calculated as the fraction of interest paid equal to the fraction of federal outlays that go to the Pentagon, to Homeland Security, and to the VA:

Trump Signs an Enormous New Military Spending Bill

In each year, I've calculated the percentage of defense spending in relation to total federal outlays in each year (it's usually around 20 percent in recent years), and then added that same percentage of overall interest spending. It's fairly crude, but provides us with a sense of how much of the federal debt load must be services to cover defense spending. In the past decade, this has ranged from 47 to 59 billion dollars.

By themselves, one year's worth of these interest payments could cover the entire state budget of the state of Virginia ($49 billion in 2018) and be more than enough to cover the budget of the US State Department ($30 billion in 2017).

Taken all together, defense spending in Fiscal Year 2019 is estimated to total more than $876 billion not counting the interest-payment component.

That's equal to the state budget of Texas seven times over.

Compared to other nation states, of course, the US military budget is immense, and Reuters reported in May that the Russian military spending "fell by a fifth last year" totaling the comparatively small amount of $66 billion.

Trump Signs an Enormous New Military Spending Bill

The surge in spending will no doubt please defense-contractor CEO like those at Lockheed-Martin and Boeing, who are among the largest recipients of taxpayer money. But other beneficiaries include owners of contract mercenary firms like those of Erik Prince who proposes to take over the Afghanistan operation for what by comparison looks like a paltry sum of $5 billion.

Ryan McMaken
Ryan W. McMaken is the editor of Mises Daily and The Austrian. He has degrees in economics and political science from the University of Colorado, and was the economist for the Colorado Division of Housing from 2009 to 2014.

Leave a Reply

Your email address will not be published. Required fields are marked *