The 4% Doctrine

by Eric Martin

As discussed in a prior post, there is a showdown looming on the horizon between an Obama administration that will be faced with the stark fiscal realities of the post-Bush era, and a Pentagon maneuvering to ensure that its outsized share of the federal budget remains intact and untouched - expanded even.  The Pentagon is readying its battle plan, and has begun market-testing a catchy new slogan: Four Percent for Freedom - as in, defense spending should be fixed at 4% of GDP in perpetuity. 

If that number seems arbitrary and detached from the applicable context, that's because it is - at least in terms of assessing the need to spend the amount prescribed.  Optimally, and logically, defense spending should be based on a rational assessment of risks, needs and exigencies. By relying on a fixed percentage, rather than a review of needs, the Pentagon can obviate the risks of cuts brought about by a peace dividend, or the need for a cash-strapped country to make fiscal trade-offs. 

The 4% approach also has its advantages from a marketing perspective, and the number chosen serves multiple purposes.  For one, its proponents will claim that the US is currently spending under 4%, and that, therefore, we must increase defense spending to reach the magic ratio.  That calculation is misleading, however.  As Cernig points out, while Four-Percenters claim that our current spending is a mere 3.43% of GDP, that calculation ignores supplemental spending on Iraq and Afghanistan which, when added in, pushes spending to 4.73% of GDP.  But even if you remove Iraq and Afghanistan from the equation, as those spending items will be eventually (sooner the better), could anyone really argue that the US would be spending too little on defense if the percentage hovers around 3-3.5%?  Actually, some would:

Taking their cue from this groundswell of Pentagon support and nongovernmental advocacy, Senator Elizabeth Dole (R-N.C.) and Representative Trent Franks (R-Ariz.) introduced a joint resolution in December 2007 stating that the United States should “commit a minimum of four percent of the nation’s gross domestic product to the base defense budget.” In explaining the legislation, Franks said it was “the only way we can stop the inexorable slide of national defense.”

The inexorable slide?  Really?  Any fair accounting of US defense spending compared to the rest of the world, or any other relevant metric, would not describe the trend in recent decades, years or months as an inexorable slide.  Perhaps an inexorable drag, but that's something quite different.

The other argument will be historical in nature: pointing to past eras in which US defense spending was much higher than 4%.  Even then, however, pegging defense spending to GDP in such a manner elides the actual dollar amounts being spent due to the fact that GDP has increased so dramatically over our nation's history.  As Travis Sharp explains:

[T]he United States will spend significantly more, in inflation-adjusted dollars, for defense in FY 2009 than it did during the peak years of the Korean War (1953; $545 billion), the Vietnam War (1968; $550 billion), or the 1980s Reagan-era buildup (1989; $522 billion). The United States is also projected to spend more on defense in FY 2009 than the next 45 highest spending countries combined, including 5.8 times more than China (second highest), 10.2 times more than Russia (third highest), and 98.6 times more than Iran (22d highest). Indeed, the United States is expected to account for 48 percent of the world’s total military spending in FY 2009.

Further, as Sharp points out, there is money to be saved and, where not cut entirely, redirected to more efficient uses*:

Our current armed forces have more than sufficient budget and manpower to deal with the current threat and [fourth-generation warfare] threats. However, they must be reorganized to fight the enemy as he is rather than remaining organized to fight the enemy of the past. The United States could take some current funding away from expensive high-tech weaponry, which may be useless in future Iraq-style conflicts, and redirect it toward enhanced intelligence, diplomacy, counterinsurgency training, language competency, humanitarian assistance, and nuclear nonproliferation programs.

Bruce Falconer highlights just how difficult it is to rein in spending on the expensive - and often underperforming - big ticket items:

"The last I heard, Al Qaeda doesn't have an air force," says Winslow Wheeler, director of the Straus Military Reform Project at Washington's Center for Defense Information and the editor of the forthcoming book America's Defense Meltdown: Pentagon Reform for President Obama and the New Congress**. The F-22, which he describes as a "dog" on performance (more fragile and less maneuverable than Vietnam-era fighters), "is ridiculously expensive, and its huge cost prevents you from buying a respectable inventory of them."

But focusing on individual boondoggles like the F-22 is not the solution, says Wheeler. Instead, if Obama hopes to switch things up, he and his aides must understand that cost overruns and development delays at the Pentagon are not the exception but the rule. "I'm all for getting rid of the garbage, but if we simply trot out a cut list, we're going to get killed," Wheeler says. "The advocates [for each weapons program] inside the Pentagon will go on full alert. They'll activate their porker friends inside Congress, and that will be the end of it." Rather, he suggests, change rests on getting decision makers the real, unvarnished information they need to grapple with structural problems inherent in the defense acquisitions system.

Getting that information is not as easy as it might seem. According to retired Marine Lt. Colonel John Sayen, a former Pentagon analyst, the Defense Department's procurement bureaucracy is practiced at pushing its wish list through Congress "by downplaying costs and/or exaggerating benefits" and "quickly building a support network of vested interests to lock in a front-loaded decision before its true costs or performance become apparent." In other words, military procurement is an institutionalized scam. Even when problems surface, Congress rarely interferes. Assembly of the F-22 alone involves spending in 44 states, says Wheeler, and "people on Capitol Hill are leaving drool trails in the hallways to buy more."

The only way that we, as a nation, can continue to dedicate such a large share of our treasury to defense spending is if we either continue to grow our already enormous deficits, or severely curtail spending on all other priorities: from infrastructure, education and environmental protection, to health care, social security and other safety net initiatives.  Not to mention other unforeseen, cough, crises that might require bail outs and other spending.

Ironically, our out-of-balance spending on defense runs the risk of making us less secure as a nation if we continue to ignore our more pressing needs and sink deeper into debt.

(*I shall discuss spending priorities in a subsequent post)

(**I hope to review America's Defense Meltdown at some point in the near future)

Comments

[AIMAI]

The catchy "4 percent of GDP" hides another absurdity--GDP isn't identical to actual Government assets or wealth such as *the tax base.* If the military wants to agitate for a permanent 4 percent cut of all tax revenue they have my good leave. I'll take ten percent for health care, five percent for education, and etc....

aimai

[d'd'd'dave]

I'd happily peg defense to a percent of gdp if I could also peg all other govt spending to a percent of gdp.

[Bernard Yomtov]

The very first question that the 4% advocates need to answer is why defense spending ought to be based on GDP at all. Sure, GDP is a constraint, but there's no reason I can see for making defense spending a percentage of GDP.

When you get a raise, do you run out and buy more locks for your doors?

[Free Lunch]

How about capping it at 200% of the second largest defense budget in the world, with a guaranteed 125%.

[JanieM]

Also, what does "in perpetuity" mean? Since when can the current legislature bind future legislatures? Are they asking for a Constitutional amendment or something?

Sheesh.

[Ugh]

And we see that, once again, the Pentagon exists to serve itself, and not to defend the nation.

[Hartmut]

The wimpy British had a 2 power standard. the manly US has of course to have an all power standard (including potential alien invasions*).
Even Reagan was "moderate" enough to just demand the ability to conduct two (regional) wars at the same time (the situation now, if meddling-below-war-treshold in other countries is ignored).
The ideal solution would be to go through the Pentagon books line by line and to cut everything that cannot be provided with a reasonable un-weaselly explanation/justification instantly.

*iirc there was recently a Pentagon study on that

[Ginger Yellow]

"As Cernig points out that while Four-Percenters claim that our current spending is a mere 3.43% of GDP, that calculation ignores supplemental spending on Iraq and Afghanistan which, when added in, pushes spending to 4.73% of GDP"

Ah yes, that old trick. "If you ignore the two main missions that the Pentagon is actually engaged in, it hardly spends anything at all!" By this standard, we should be comparing current expenditure to Vietnam era expenditure by excluding the cost of the Vietnam war.

[OCSteve]

The last I heard, Al Qaeda doesn't have an air force

The last I heard, you don’t get a new air superiority fighter overnight when you do encounter a situation where you need air superiority. I’d have no problem scrapping this program if someone could guarantee me we’d never be in a situation again where air superiority wouldn’t matter. I don’t believe anyone can do that however.

The F-22, which he describes as a "dog" on performance (more fragile and less maneuverable than Vietnam-era fighters),

Huh? That’s pure nonsense. And making such a sweeping and plainly incorrect statement shreds whatever credibility this guy (Wheeler) may have had.

During Exercise Northern Edge in Alaska in June 2006, 12 F-22s of the 94th FS downed 108 adversaries with no losses in simulated combat exercises.[3] In two weeks of exercises, the Raptor-led Blue Force amassed 241 kills against two losses in air-to-air combat, and neither Blue Force loss was an F-22.

This was followed with the Raptor's first participation in a Red Flag exercise. 14 F-22s of the 94th FS supported attacking Blue Force strike packages as well as engaging in close air support sorties themselves in Red Flag 07-1 between 3 February and 16 February 2007. Against designed superior numbers of Red Force Aggressor F-15s and F-16s, it established air dominance using eight aircraft during day missions and six at night, reportedly defeating the Aggressors quickly and efficiently, even though the exercise rules of engagement allowed for four to five Red Force regenerations of losses but none to Blue Force. Further, no sorties were missed because of maintenance or other failures, and only one Raptor was adjudged lost against the virtual annihilation of the defending force.

…the Defense Department's procurement bureaucracy is practiced at pushing its wish list through Congress

And vice-versa. (Yes I know those were Republicans.)

Look, there’s a ton of savings to be had by reforming the procurement process. It really needs to be reformed from top to bottom. A lot of that is on the DoD side, but Congress needs to stop using the defense budget as a jobs program for their districts as well. I doubt that anyone in the Pentagon would make the case that F-22 assembly needs to happen spread over 44/50 states.

I’m all for any serious evaluation of which systems are needed and which are not. When you say “Optimally, and logically, defense spending should be based on a rational assessment of risks, needs and exigencies” I agree completely. But your cites (Sharp and Wheeler) are less than clue-full IMO.

[Trollhattan]

Whatever happened to President Bush's "peace dividend"?

Oh yeah, that was the smart Bush. Whatever happened to him, and that?

[Eric Martin]

I think you're wrong about Wheeler. He is well-respected and considered exceedingly knowledgable.

If you look at the book he's editing, America's Defense Meltdown, it is based on contributions from over a dozen experts.

While you cite Wiki, it should be noted that the F-22 has had a history of running over cost and sub-par performance.

If they have, at last, worked out its kinks, that doesn't change the basic point.

Take the F-22. The Air Force, which began developing the fighter in 1986, originally intended to buy more than 700 of them to replace its aging fleet of F-15s and F-16s. By 2000, cost overruns led the Pentagon to halve its order to 346. But in 2005, almost 20 years and $40 billion later, the request was lowered again to just 180 aircraft, the consequence of lengthy delays and unanticipated development costs that had pushed the price per airplane from an earlier projection of $184 million to $355 million. To fill the void in inventory, the Air Force has now begun developing the F-35 Joint Strike Fighter, which critics say promises a repeat of the F-22 fiasco.

[ThatLeftTurnInABQ]

The absurdity of spending a fixed percentage of GDP on defense regardless of circumstances is revealed as soon as you stop thinking of military strength as an absolute measure (for X dollars spent we get a Y percent increase in security) and realise that an even moderately informed reading of military history shows that security is always relative (to the competition) rather than absolute.

Say we spend 4% of GDP, and our GDP is 3 times that of China. Which means that to match our level of spending the Chinese would have to spend 12% of their GDP.

So what do we do when they suddenly boost their spending to 25% of GDP? Surrender? Or boost our spending to match the threat?

And if the answer is: boost our spending, then does that gear turn in only one direction, or do we reduce our spending when the threat subsides?

Do these people know anything about history?

[Slartibartfast]

Wheeler may have been reliably informed in the past, but as regards the F-22's performance, he's dead wrong.

[LFC]

According to the CBO, tax revenues came out to 17.7% of GDP in 2008. A full 6.3% of that was social insurance. That leaves revenues of 11.4% of GDP (unless you advocate using Social Security surpluses to pay for defense).

Roughly speaking, that means the military wants over 1/3 of all non-social insurance income. And this doesn't even take into account the fact that revenue in 2008 is nowhere close to covering expenses. Of course, those who are pushing this won't have the guts to ask for a tax increase to, you know, actually PAY for it. Man, I'm glad Elizabeth Dole got her ass kicked out of Congress. To quote "Ruthless People":

Kid: "Bitchin'! Hey, what's it fucking cost?"

Ken Kessler: "That's the bitchin' part about it! It don't matter! If you can't afford it, F***ING FINANCE IT!"

[togolosh]

Do these people know anything about history?

They most certainly do: They know that Adolf Hitler was a liberal Islamist who murdered Jews so he could give their money to cadillac driving welfare queens while destroying families by making everyone get gay married to a box turtle.

[hairshirthedonist]

I’d have no problem scrapping this program if someone could guarantee me we’d never be in a situation again where air superiority wouldn’t matter. I don’t believe anyone can do that however.

Which makes it an odd pre-condition. And is "this program" the only way to air superiority? How superior? How much would it have to matter? Would there be no other priorities considered in utilizing limited resources, or is air superiority mattering to some degree more important than anything else?

[Eric Martin]

Wheeler may have been reliably informed in the past, but as regards the F-22's performance, he's dead wrong.

Do you have a link to support that Slarti?

[nick]

I am not sure exactly where this particular question fits into this discussion, but one detail that always bugs me in these discussions is the ratio of budget apportioned to the different branches of the service.

Would someone please tell me why it is politically impossible to say "Not only no, but FUCK NO!" to a defense contractor or Pentagon procurement officer?

[LFC]

Here's a link on the problems and unsuitability of the F-22 for combat.

I'm not saying this is the end all, be all, but it makes a stark contrast to the Wikipedia entry. And it certainly sounds like the two persons quoted are long-term experts, one with very real life experience in air warfare.

[Slartibartfast]

Do you have a link to support that Slarti?

No more than he has a link to support his claim, Eric.

[J. Michael Neal]

OCSteve,

Be very careful about claiming the effectiveness of a piece of military hardware based upon the results of simulations. These are the same people who keep insisting on the need for a missile defense system that only works when the tests are rigged. They go into their simulations with the result they want in mind.

[Slartibartfast]

Be very careful about claiming the effectiveness of a piece of military hardware based upon the results of simulations.

simulated combat exercises != simulations

The "simulated" part involves only that there weren't any smoking craters afterward.

[Eric Martin]

No more than he has a link to support his claim, Eric.

Well, considering that he works in the defense policy area, and is editing a book on Pentagon spending and the procurement process, I would assume that he has links. Unfortunately, he's not here to provide them, but his credentials do lend a bit more heft to his statements regarding this subject area than would mine or yours.

The "simulated" part involves only that there weren't any smoking craters afterward.

The point being Slarti, that the people running the exercises often have a vested interest in finding positive results.

This has been a familiar pattern.

[radish]

TLT got there first, so "what (s?)he said."

This is an open invitation to the capture-and-ratchet scenario.

[radish]

Would someone please tell me...

Well if it's a procurement officer you should probably say "SIR, @^%#$ NO, SIR!!!"

[Slartibartfast]

Unfortunately, he's not here to provide them, but his credentials do lend a bit more heft to his statements regarding this subject area than would mine or yours.

Eric, I've worked in the defense industry, directly, for 25 years. Wheeler has worked as a Senate staffer whose work occasionally examines Defense spending, for Senators who haven't occupied important Defense Appropriation subcommittee seats, for 31 years. Which of us is credible?

Neither, to my way of thinking. I'd tend to wait until someone whose opinion in these matters is both informed and regardable.

The point being Slarti, that the people running the exercises often have a vested interest in finding positive results.

The folks who evaluate the airplane aren't the same folks who are acquiring it. I thought everyone knew this. Do you think the people evaluating the F-22 want it to succeed, if it's a dog?