February 29, 2016 | Issue Brief on Defense Spending and Budgeting
President Obama recently outlined his proposal for the federal government’s fiscal year (FY) 2017 budget. Congress is now debating what their 2017 budget should be, and one of the central questions is the appropriate level of defense spending.
A diverse array of threats over the past year has intensified the debate about national defense spending, making the question of what the correct amount of spending should be all the more pressing. The best way to approach this question is by examining America’s vital interests and the threats against them, and then determining what investments ought to be made to secure those interests.
America’s vital interests have been outlined in various strategic documents, and there is room for some disagreement, but three vital interests are fairly consistent over time and have bipartisan support. The first vital interest is the protection of America’s people and homeland. Threats against America’s people and homeland are rising, including from North Korean nuclear weapons and long-range missiles, the prospect of a nuclear-armed Iran, attacks—direct and indirect—from ISIS, and nation-state sponsored cyber-attacks. Each of these requires a different set of responses, but all threaten the American people and homeland.
The second vital interest is the prevention of serious conflict in key regions of Europe, the Middle East, and Asia, and to be able to win in war should a conflict arise in spite of preventive efforts. Threats in these regions are rising. Russia continues to threaten European stability. The Middle East faces a range of security threats. China and North Korea both pose threats in Asia. Preventing serious conflict in these regions, besides the obvious humanitarian reasons, is a major concern for the U.S. because major conflict in these regions has negative security and economic consequences for America.
The third vital interest is the protection of access to the global commons of sea, air, and space. The protection of these commons enables Americans, along with everyone else, to freely trade and transport goods and resources. The threat to the global commons is most easily seen at sea. A significant portion of global trade transits through key chokepoints like the Strait of Hormuz. Conflict in the South China Sea could pose a risk to the 25 percent of global trade that travels through that region. A threat to the global commons would cause significant economic damage and impact American citizens.
American vital interests face growing challenges, but what does that mean for the national defense budget? A strong military is not possible without strong funding, but funding should not be added recklessly. Every dollar spent on defense should be spent carefully. To ensure this, Congress should continue to exercise strong oversight.
The U.S. military is charged with defending America’s vital interests, but according to the 2016 Index of U.S. Military Strength, it is having an increasingly more difficult time doing this. Sustained budget cuts and continued demand for forces have stretched the military thin. The U.S. can dissuade many of the threats it faces with other instrument of national power (e.g., diplomatic engagement or economic initiatives) and a credible ability to project military power. The current budget trajectory, however, is leading to a smaller and less capable military. In short, the U.S. will have less ability to deter potential adversaries or defeat them in battle should deterrence fail. Potential threats to U.S. vital interests are likely to become realities.
The size of the U.S. military is one of the primary drivers of the defense budget. Over the past few decades, a series of reviews have looked at how big the military should be and concluded that the U.S. military should be big enough to handle two major regional conflicts simultaneously. Whether two such conflicts are likely to occur at the same time or not, the ability to handle one while having sufficient power left to handle another deters potential enemies from trying to exploit a situation where the U.S. is deeply engaged in a key region. It also reflects the size of force needed to defend U.S. security interests around the world against a disparate array of challenges that aggregate to the same scale of challenge seen during the Cold War. The size of a military needed for adequate defense has not appreciably changed since the 1950s, but recent budget cuts have led to a smaller military nonetheless.
The goal, then, is to build a military that is stronger, larger, and more prepared than today’s military. This will not be accomplished overnight; it will require years of strong funding and focus from the White House and Congress.
For FY 2017, as proposed in the “Blueprint for Balance,” Congress should fund the base national defense budget at no less than $600 billion. This level would be 9 percent higher than President Obama’s FY 2017 request of $551 billion and 5 percent higher than the level proposed for 2017 in the last Congressional budget. However, this is still well below the $649 billion for 2017 proposed by former Secretary of Defense Robert Gates and endorsed by the bipartisan National Defense Panel.
When Overseas Contingency Operations (OCO) funding is added, the national defense budget should be no less than $661 billion for FY 2017. This is a significant amount of money, but still well below historical levels as a percent of gross domestic product (GDP) or as a percent of total federal spending. If President Obama’s budget is enacted, defense will represent the smallest portion of the government’s budget since before World War II, and the smallest percent of GDP since 9/11. As seen in Chart 1, Presidents as diverse as Clinton, Reagan, and Carter all spent proportionally more on defense. President Jimmy Carter spent an average of 4.7 percent of GDP on national defense. In 2017, 4.7 percent of GDP would be over $900 billion. President Ronald Reagan spent an average of 5.8 percent of GDP on national defense. For 2017, that would represent $1.1 trillion on national defense. In short, as a percent of the government spending or total economy, the U.S. has not spent so little on national defense since the end of World War II.
As outlined in the “Blueprint for Balance,” the defense budget should be increased in a fiscally responsible manner. National defense is a clear constitutional priority and should be funded before other programs and agencies. Non-defense discretionary spending should be cut in order to increase national defense without increasing the deficit. Balancing the federal budget in a reasonable time frame, reforming entitlement programs, and increasing the defense budget can be done. The choices are not easy, but making them is important for the sake of our country.
Instead of accepting the lower defense budget level proposed by President Obama, Congress should:
The U.S. faces growing security threats and a weakening military. Congress should take the constitutional responsibility of providing for the common defense seriously, and the first step is to increase funding for national defense in FY 2017.—Justin T. Johnson is Senior Policy Analyst for Defense Budgeting Policy in the Douglas and Sarah Allison Center for Foreign Policy, of the Kathryn and Shelby Cullom Davis Institute for National Security and Foreign Policy, at The Heritage Foundation.
 See President Barack Obama, 2015 National Security Strategy, February 2015, https://www.whitehouse.gov/sites/default/files/docs/2015_national_security_strategy.pdf (accessed February 25, 2016), and National Defense Panel, Ensuring a Strong U.S. Defense for the Future: The National Defense Panel Review of the 2014 Quadrennial Defense Review, July 31, 2014, http://www.usip.org/sites/default/files/Ensuring-a-Strong-U.S.-Defense-for-the-Future-NDP-Review-of-the-QDR_0.pdf (accessed February 25, 2016).
 Justin T. Johnson, “Defense Reform Bill Is Biggest in Decades, But More Remains to Be Done,” Heritage Foundation Issue Brief No. 4498, December 15, 2015, http://www.heritage.org/research/reports/2015/12/defense-reform-bill-is-biggest-in-decades-but-more-remains-to-be-done.
 Dakota L. Wood, ed., 2016 Index of U.S. Military Strength (Washington, DC: The Heritage Foundation, 2016), http://index.heritage.org/military/2016/assessments/us-military-power/us-navy/.
 The Heritage Foundation, “Blueprint for Balance: A Federal Budget for 2017,” February 23, 2016, http://www.heritage.org/research/reports/2016/02/a-blueprint-for-balance-a-federal-budget-for-2017. For the purposes of this paper, national security spending is defined as Office of Management and Budget budget function 050, which includes the Department of Defense, the nuclear weapons portions of the Department of Energy, the intelligence community, roughly half of the FBI’s budget, and a few other defense-related budget lines. Department of Defense spending is defined as budget subfunction 051.
 U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2012: Analytical Perspectives (Washington, DC: U.S. Government Publishing Office, 2011), Table 32-1, https://www.gpo.gov/fdsys/pkg/BUDGET-2012-PER/pdf/BUDGET-2012-PER-1-7-1.pdf (accessed February 25, 2016).
 OCO funding level based on FY 2016 House-passed budget.