In the cover article for National Review on March 5,
Heritage Foundation Distinguished Fellow and former Senator James
Talent (R-MO) urged the United States to commit 4 percent of its
economic output or gross domestic product (GDP) to defense. Senator
Talent is concerned that inadequate U.S. funding for defense will
lead to a "hollow force" that lacks the manpower, training,
operational capabilities, and/or modern weapons necessary to
prevail decisively on the battlefield.
A policy of sustaining defense spending at 4 percent of GDP
raises the same question from both ends of the ideological
spectrum: Why 4 percent? Liberals may argue that this level of
commitment is too high. Conservatives may question whether it is
sufficient. The answer is that 4 percent would meet the military's
requirements to protect the nation while allowing sustained
long-term economic growth. The figure is based on separate
arguments about why less than 4 percent is too little and why 4
percent is adequate in the context of robust economic growth.
Less Than 4 Percent Is Too Little. The argument
against spending significantly less than 4 percent of GDP on
defense is simple and straightforward. Even with robust economic
growth, spending significantly less than 4 percent on defense will
shortchange the military, producing a hollow force with some
combination of the following attributes:
Too Small. The Department of Defense is already
increasing manpower levels for U.S. ground forces by 92,000 by
2012. Manpower, however, is expensive, and spending less than 4
percent will make completing the proposed increases extremely
difficult. It could also raise pressures to reinstate the draft,
which would reduce the quality of manpower because draftees
would likely be poorly motivated and inadequately prepared for
Unable to Sustain Operations in the War on Terrorism.
The war against Islamic terrorists will be a long war. While the
operational tempo of the U.S. military during this war will vary,
in general terms the conflict will require an elevated tempo.
Spending less than 4 percent may place the President in the
position of needing to undertake a sizeable operation to meet
a threat without the resources to sustain that operation.
Low Readiness. Training military personnel for
prospective operations is expensive, but cutting back on training
will result in units that are not ready for combat.
Aging Weapons and Equipment. During the 1990s, the
Clinton Administration and Congress sharply reduced funding for
developing and acquiring new weapons. Because of this "procurement
holiday," the military's inventory of weapons and equipment is
aging. Replacing these worn-out or obsolete weapons will require a
significant investment. Failing to make this investment risks
losing U.S. forces' technological advantage on the battlefield.
Strong Economic Growth Is Essential. The case
for the argument that spending 4 percent of GDP is adequate to
provide for national security is somewhat more complicated than the
case for the argument that spending significantly less than 4
percent is too little. The crux of the argument is that the actual
defense budget is a dollar amount, not a specific percentage of
GDP. In a robust economy, this dollar figure (equal to 4 percent of
GDP) will be relatively high because the economy will be larger. If
the economy grows at the rate currently projected by the Bush
Administration, 4 percent of GDP would mean a defense budget of
$711.4 billion in fiscal year (FY) 2012. However, if the economy
stagnates between now and 2012 and Congress allocates 5
percent of GDP to defense, the military would receive $688.5
billion in FY 2012.
The argument can be made that Congress should establish
dollar-based budget targets for defense and stick to those
regardless of the overall economy's performance. The argument
is logically sound but impractical. There is no way around the fact
that the defense budget will be a casualty of a stagnant or
shrinking economy. Not even the Soviet Union with its command
economy could buffer its strongly pro-military budget against the
forces of economic decline in the 1980s. The lesson for the defense
sector is that economic growth must come first.
Providing for Defense by Following Pro-Growth
Policies. Because meeting the resource needs of the
Department of Defense depends on a growing economy, both Congress
and the public need to focus on furthering pro-growth economic
policies. The critical elements of these policies are:
- Restraining federal spending. The primary
federal budget problem is the projected growth in spending on
Social Security, Medicare, and Medicaid-the three major
entitlement programs. Entitlement spending is forecast to increase
dramatically in the coming decades and, unless these programs
are reformed, will crowd out defense spending in the federal budget
and hobble economic growth, ultimately depriving the federal
government of the resources made available by a growing
- Keeping federal taxes low. High tax rates will
discourage Americans from working, saving, and investing. The
perverse incentives created by high tax rates will be a drag on
economic growth, and the defense budget will become a
- Maintaining a prudent monetary policy.
Economic growth is encouraged by a monetary policy that
balances the need to combat inflation with the need to increase the
money supply to permit access to credit. In general terms, the
Federal Reserve has been effective in finding this balance.
However, demographic trends-specifically, the retirement of
the baby-boom generation-will make this task more
Conclusion. Senator Talent's recommendation to
allocate 4 percent of GDP to meeting the national security needs of
the United States is designed to drive long-term trends, not to
establish a precise requirement for any specific year. In some
years, the defense budget can and should exceed 4 percent of GDP.
In other years, it may fall just shy of the target.
Regrettably, current forecasts are pointing in the wrong
direction. The Bush Administration's current budget proposal shows
the defense budget declining to just 3.2 percent of GDP by
2012. Even with robust levels of economic growth, this level of
funding is too small to meet the nation's defense needs. The
Bush Administration and Congress need to do better by
simultaneously working to keep overall federal spending and taxes
low and allocating the resources generated from the resulting
higher levels of economic growth to provide adequately for national
Baker Spring is
F. M. Kirby Research Fellow in National Security Policy in the
Douglas and Sarah Allison Center for Foreign Policy Studies, a
division of the Kathryn and Shelby Cullom Davis Institute for
International Studies, at The Heritage Foundation.