The Six Blind Men and the Elephant: Differing Views on the U.S. Defense Budget
In the Indian parable of “The Blind Men and the Elephant,” six blind men come across an elephant by the side of the road. To learn about the animal, each feels the animal, unknowingly touching a different part. The man who happens to put his hand on the elephant’s side confidently announces, “Well, well! This beast, he is exactly like a wall.” The second, feeling the tusk, declares, “My brother, you are mistaken. He is more like a spear than anything else.” The third, holding the elephant’s trunk, proclaims, “Both of you are wrong. Clearly this animal is like a snake.” The remaining three men express equally divergent assessments — of the exact same animal.
Views on the necessary size of the U.S. defense budget vary similarly. National commentary bounces between the opinion that the defense budget is bloated and wasteful, and the view that Pentagon funding is inadequate. Former Secretaries of Defense James Mattis and Mark Esper both stated the defense budget must grow at a rate of between 3 to 5 percent (above inflation) through 2023 in order to execute the National Defense Strategy (although the administration’s published Future Years Defense Program does not even keep up with inflation). Meanwhile, several members of the Congressional Progressive Caucus introduced proposals earlier this year to cut the defense budget by 10 percent. (These proposals subsequently failed.) The net difference between those two views is well over $150 billion dollars in a single year.
No wonder House Armed Services Chairman Rep. Adam Smith recently predicted, “I see a big fight coming.”
In an ideal world, the defense budget debate would be fact-based and informed. Of course, no one should be under any illusion that final defense budgets spring fully formed from dispassionate strategic analyses. The last word on defense spending always results from the clash of strategic thought and the reigning political environment.
In the United States, such quarrels go back to the birth of the nation. George Washington did not just fight the British. He also constantly fought the Continental Congress for money to support the impoverished colonial army. In 1941, with war approaching, Gen. George Marshall repeatedly quarreled over the need for more money with President Franklin Roosevelt, who was caught between competing political interests. More recently, Defense Secretary Robert Gates battled to establish a floor under defense funding, seeking to make a grand bargain with President Barack Obama, who had other priorities.
Before subjecting the defense budget to the vagaries of political debate, national leaders should first seek an understanding of the facts, needs, and current situation of the military.
That clarity is often elusive. Discussions on the defense budget often include people talking past each other — purposefully or inadvertently — to persuade audiences. For individuals seeking facts, it can be maddening. However, armed with some knowledge, it is possible to arrive at some insights.
Three approaches are available to assess the adequacy of the U.S. defense budget: comparative, affordability, and strategic. Each has advantages and disadvantages. Typically, arguments for either greater or reduced defense budgets employ only one of these methodologies, so it is important to understand the full range of what is available before closing the books on discussion.
Further, to improve the fidelity of these approaches, the U.S. government should standardize routine defense budget comparisons to make them more accessible to, and understandable for, non-experts; provoke more discussion on risk and priorities before budget allocations are established; and improve its ability to conduct strategic assessments.
The comparative method provides insights by examining the relationship between the proposed defense budget and either past U.S. defense spending, the entire U.S. economy, or spending by other countries.
Perhaps the most common metric used to benchmark defense spending is total U.S. defense spending, adjusted for inflation (constant dollars), over time. In 2020, the amount was $732 billion (discretionary and mandatory Department of Defense budget authority in 2021 constant dollars). Starting from $509 billion in 1962 in constant dollars, U.S. defense spending has fluctuated significantly, ranging from a high of $655 billion in 1985 under President Ronald Reagan to a low of $440 billion in 1998 under President Bill Clinton. From there, the budget crested again in 2008 at $843 billion, driven by war spending under President George W. Bush.
Examining U.S. defense spending over time reveals useful trends, but the single largest shortcoming of this approach is the total absence of context. Normally mixed with base budget defense spending is war spending, distorting the numbers. Without an understanding that 1968 and 2008 were peak years for Vietnam and Iraq/Afghanistan war spending, these years appear to be inexplicably large. Similarly, just adjusting for inflation fails to tell the whole story because defense spending growth does not match national inflation rates. Department of Defense operations and maintenance costs per person, for example, have grown at a compound rate of 2.6 percent over inflation (excluding war-related funding). Also left unexplained are the fundamental changes in the way the Department of Defense does business. For example, the shift to an all-volunteer force in 1972 required the Pentagon to start paying competitive wages and bonuses.
The next most commonly used metric for defense budget assessment is the percentage of gross domestic product (GDP) spent on defense. For 2019, the United States devoted 3.4 percent of its GDP to the military — down from 6.1 percent as recently as 1988. Because this metric also helps portray the burden of defense on the U.S. economy, it is also mentioned in the next approach, affordability.
The largest single advantage of this measure is that it is readily available and easily applied, including across different countries. Both the Office of Management and Budget and the Stockholm International Peace Research Institute publish tables tracking this metric. Its widespread availability led the 2014 NATO Wales Summit to set spending 2 percent of GDP on defense as a goal for member countries and published rules so countries know what to include in military expenditures. For example, military pensions count, while spending on national police forces does not.
Despite its general use, the metric has many critics, who highlight that it is remarkably crude. The Center for Strategic and International Studies has pointed out that the measure is “unduly influenced by fluctuations in that county’s economy.” If your economy increases (a good thing), the percentage spent on defense will inexorably go down (a bad thing, in the eyes of NATO) unless a country automatically increases defense spending. Perhaps the best that can be said of this measure is that — as a common metric across countries — it is the least bad.
The percentage of the federal budget devoted to defense spending provides insight as to where the government spends its money over time. The Department of Defense’s budget comprised 15.1 percent of the federal budget in 2019. The percentage was 22.7 percent back in 1976, climbed to a high of 28 percent in 1984, and has steadily declined since. Every year, the Office of Management and Budget publishes this data in historical tables.
Similar to the GDP percentage metric, this measure has only limited utility because it is difficult to discern what changed and why. Did defense spending drop, or did other elements of the federal budget grow? In the case of the last three decades, the large decline in the percentage dedicated to defense has not stemmed so much from defense budget shrinkage but rather the run-away growth of the so-called mandatory elements of the federal budget. (There is some irony in referring to programs such as Social Security or Medicare as “mandatory” when one of the rare constitutionally enumerated functions of the federal government — common defense — is considered “discretionary.” The terms are a function of the different appropriations process each undergoes, versus their relative priority.)
The denominator used for this calculation is critical. Is it the complete federal budget, or just discretionary spending? Restricting the denominator to just discretionary spending (a subset of the federal budget) artificially inflates defense spending to 50 percent, for instance, of the 2019 federal budget.
Another comparison frequently made is U.S. defense spending relative to other countries. Country-by-country data dating back to 1949 are easily accessible in the Stockholm International Peace Research Institute database of military expenditures, or a self-reported database the United Nations maintains. The Stockholm International Peace Research Institute’s data for 2019 pegs U.S. spending at $731 billion, China at $261 billion, and Russia at $65 billion — all in constant 2018 U.S. dollars.
When critics point to what they believe is an overly large defense budget, they will often assert that “the U.S. spends more on defense than the next 10 countries combined,” or something similar. At face value, this may not be wrong. Nevertheless, there are multiple challenges inherent in employing this approach.
Comparing buying power across countries is difficult because published currency exchange rates are poor translators between economies. For example, the Chinese Yuzhao-class landing platform dock costs China approximately $300 million to build. By comparison, the purchase price of the U.S. counterpart, the San Antonio-class landing platform dock, exceeds $1.6 billion, including research and development and procurement costs. Widely differing labor rates, raw material costs, regulations, and environmental laws result in vastly differing costs between countries.
It can also be very difficult to obtain true comparisons and transparency for defense budgets in closed societies. China, for example, reports no defense expenditures on research and development, while, in 2020, the Pentagon spent $104 billion in that account. While China doubtless obtains a lot of its military research from espionage, surely it must spend something on original research. One analysis suggests that China’s real spending on defense is close to $635 billion, rather than its self-reported $261 billion.
Finally and most importantly, straight dollar comparisons between countries omit critical context such as differing treaty obligations, national interests, and geopolitical situations. Consequently, they ignore huge variations in those countries’ fundamental strategic concerns.
All the comparative approaches described above provide a window into the U.S. defense budget. Yet, each typically suffers from a lack of context and is cited without any critical explanation or mention of limitations. They are not without value, but, as the saying goes, caveat emptor.
Viewing the defense budget through an affordability lens places it in the context of the U.S. federal budget as a whole, competing against other national priorities, including the U.S. debt. While the United States has demonstrated an enormous ability and proclivity to issue debt, that capacity is not unlimited, nor is unlimited debt spending in the country’s interest. The size of the recent COVID-19 recovery bill has further increased public concern about the U.S. debt, but it is not clear whether it has pushed the United States to an inflection point. Indeed, the percentage of Americans who consider the federal budget deficit “a very big problem” actually fell eight points from fall 2018 to June 2020.
Obviously, if the United States were a state like Wyoming (which does not allow deficit spending), it would be bankrupt, unable to afford any national defense spending whatsoever. Put bluntly, when you are $27 trillion in debt, you cannot actually afford anything. However, viewed another way, as former Secretary of Defense James Mattis famously stated, “America can afford survival.”
For those countries unable or unwilling to take on significant debt, affordability is often the dominating factor in defense budget levels. Countries often forgo arms purchases for affordability. In recent years, relatively wealthy countries such as the United Kingdom, Canada, and Germany have deferred arms purchases for this very reason.
One commonly used metric for assessing debt is the ratio of publicly held debt to GDP. Countries with a large GDP can service and afford more debt. The U.S. federal debt held by the public is expected to reach 98 percent of GDP for 2020 (up from just 35 percent in 2007). It is projected to hit a record high of 107 percent in 2023. Is it significant when the publicly held debt exceeds the entire output of the country for the year? Is that a tipping point? Opinions vary, but most agree the United States is on an unsustainable financial path.
Another more nuanced metric compares the annual deficit to the GDP. If the annual deficit is growing faster than GDP, then the country is on an unsustainable path because the deficit will eventually exceed the entire economic output. The deficit to GDP ratio was 16 percent in 2020, the largest since 1945. The projection for 2021 is 8.6 percent, still historically very high.
Described earlier, the percentage of GDP spent on defense is also an affordability metric. Clearly, there is a level at which spending excessive amounts on defense harms the U.S. economy. The Soviet Union was probably in that situation late in the Cold War with experts estimating its defense burden anywhere from 8 to above 20 percent. Conversely, the United States demonstrated during the Cold War that it could sustain defense spending equal to 5 to 10 percent of its GDP with no harm to its economy.
High-level decisions on the size of the annual federal budget and defense’s share often result from agreements between the executive branch and Congress. The Balanced Budget and Emergency Deficit Control Act of 1985, the Budget Enforcement Act of 1990, and the Budget Control Act of 2011 each codified efforts to control deficit spending with varying degrees of success.
Comparing the proposed defense budget with whatever prudent spending targets have been established helps promote the understanding — occasionally lacking — that defense spending, even for a superpower, must be bounded and that hard choices must be made. The single biggest challenge with this approach is to decide where to draw the “affordability line.”
Strategic budget assessments evaluate programmed forces (built and maintained by assumed defense spending levels) against the requirements of the country’s national security, defense, and military strategies and assess risk. This is the most difficult type of assessment to conduct, but, done even moderately well, it is the most informative.
The most useful of these analyses are both demand-based (deriving requirements from established objectives) and threat-based (rooted in potential future adversaries). The alternatives are supply and capability-based assessments, which are more ill-defined.
In any case, the starting point for these assessments is a defense planning scenario, featuring a “high-level description of a plausible threat, the strategic approach to address it and the guiding assumptions.” Normally, accompanying the scenario would be an approved concept of operations and a “detailed view” with numbers and types of units needed to support the concept of operations.
A group in the Defense Department referred to as “Tri-chairs” — consisting of the under secretary of defense for policy, the Joint Staff, and the Office of Cost Assessment and Program Evaluation — is responsible for these products, although, in March 2019, the General Accountability Office found several of these foundational elements out of date or missing. Not surprisingly, the bipartisan National Defense Strategy Commission reported in November 2018 that the “[Department of Defense] struggled to link objectives to operational concepts to capabilities to programs and resources.”
Despite the difficulties and challenges, when the Department of Defense’s programmed force faces off against potential adversaries in approved scenarios, the resulting assessments represent the closest approximation of risk available. The Office of the Secretary of Defense, the Joint Staff, service headquarters, and combatant commands all routinely perform such assessments. American think tanks also conduct assessments, often under contract with the Department of Defense.
Recent assessments done at the Office of the Secretary of Defense include those previewed in former Defense Secretary Mark Esper’s recommendations for the Navy’s Battle Force 2045, suggesting a need for a Navy of over 500 ships.
The Joint Staff’s strategic assessment is captured in a yearly “Chairman’s Risk Assessment.” Always classified, it is delivered to both Congress and the secretary of defense and presents the chairman’s assessment of “strategic risks to national interests and military risks in executing the National Military Strategy.”
The Air Force’s 2018 report titled The Air Force We Need is a good example of a service assessment. It assessed that the Air Force needs 386 operational squadrons (compared to an inventory of 312) to execute its portion of the defense strategy.
Think tanks, such as the RAND Corporation, frequently make important assessments, such as its recent examination of a potential conflict on NATO’s eastern flank. RAND made news last year when one of its senior researchers, David Ochmanek, ominously reported “in our games, when we fight Russia and China, blue gets its ass handed to it.”
Department of Defense strategic assessments usually assume as their starting point the correctness of its operational plans. Occasionally, outside experts will constructively challenge the underlying plans, arguing they are imperfect and that better results can be achieved at lower cost and/or risk. Chris Brose’s book Kill Chain or P.W. Singer and August Cole’s novel Ghost Fleet are among such contributions and can help refine Department of Defense thinking.
There are some disadvantages to strategic assessments. They are wickedly hard to get right. Performing them requires a substantial investment in analysis capabilities and products, which the Pentagon has markedly cut in the last decade. Complex joint wargames, which ask for decisions such as whether to strike a target with an Air Force aircraft or a Navy missile, require considerable expertise to conduct. Further, strategic assessments live and die by their assumptions, and individuals must press to understand what has been “baked into” the analysis. To acquire confidence in a strategic assessment requires either implicitly trusting the organization conducting the analysis or investing the time to understand the conditions under which it was conducted.
No single approach is adequate to identify a realistically optimal defense budget. A proper analysis should incorporate elements of all three perspectives, with a bias toward the strategic assessment. Leaders and national security professionals should arm themselves with as many data points as possible, giving particular weight to the results of well-conducted wargaming and analyses of the adequacy of a proposed Defense Department force to execute the national defense strategy.
It is worth noting a fourth method often employed to support a case for a defense plus-up or cut: the anecdotal method. The mention of a scandalously priced Air Force coffee cup, the news account of marines scavenging for aircraft parts in museums, or the Pentagon’s failure to pass a financial audit are too often treated as prima facie evidence of an either over- or under-resourced Pentagon. Despite the entertainment value, this is not a serious approach. Individuals seeking insights should be on guard against being swayed by these arguments.
There are some ways the U.S. government can help lay people and national security experts alike better assess the adequacy of the defense budget.
First, it can make data more accessible and understandable. It currently takes an expert level of knowledge to track, for example, U.S. defense spending over time. Defense budget data come in a variety of obscure categories such as “050” or “051,” “mandatory” versus “discretionary,” and “budget authority” versus “outlays.” Grab the wrong column or table for your analysis and you look foolish. Congress, in the Senate version of the 2021 National Defense Authorization Act, grasped this and included two well-considered new requirements for the Department of Defense to submit reports on military spending by allies and between the United States, China, and Russia. The requirement for spending comparisons for Russia and China is particularly well crafted, including the need to consider purchasing power parity and omitted spending categories. The executive branch can also make this all easier by including standard budget comparison data in its yearly defense budget briefing.
Second, Congress should provide more transparency to the federal budget process. As the country emerges from the seven years spent under the Budget Control Act of 2011, Congress’ budget allocation decisions will once again lack a ready benchmark for comparison. Congress’ yearly budget resolution (referred to as the “302(a)” allocation) should be the occasion for discussion of risk and adequacy, but, more often than not, it is finalized in the classic smoke-filled room without accompanying explanation.
The final, and most important, improvement the administration can make is to rebuild the Department of Defense’s analytic capability, which has been cut or atrophied. Last year, the Government Accountability Office found that the Department of Defense has not kept relevant analysis products, such as concepts of operation, up to date, and thus, relevant assessments have suffered. The Government Accountability Office suggested that a telltale sign of this inadequacy is that Department of Defense analysis rarely deviates from those conducted by the services, suggesting that the Office of the Secretary of Defense has been co-opted. Perhaps because of these deficiencies, outside think tanks, rather than the Department of Defense, have performed many strategic assessments of late. The Department of Defense should take the opportunity to deliberately reconstitute a world-class analytic capability run by qualified analysts and leaders.
The starting point for deciding how much money the nation should spend on defense is to first form an informed opinion on what is necessary. After completing that assessment, analysts can then turn to speculating whether the current political environment will support the necessary amount of funding. In the “Alice in Wonderland” world of Washington, D.C., that sequence is often reversed. The frequent refrain that “defense budgets are projected to be flat or declining for the next few years” is a political prediction, not informed defense analysis.
In the parable of “The Blind Men and the Elephant,” after the elephant moved on, the six men proceeded to sit by the roadside for the remainder of the day and quarrel about their different perceptions. Each called the other hard names because they did not agree with him. The United States, however, is not in a position to endlessly debate. American lives depend on leaders making their best assessments and acting on them accordingly.
Thomas Spoehr is a retired Army lieutenant general who serves as the Heritage Foundation’s director for national defense research. While in uniform, he held a number of assignments related to the defense budget, including the Army’s director for Program Analysis and Evaluation; and director, Force Development. He has published extensively on matters of the defense budget, strategy, and reform.