Hollow Growth in Defense Spending

There’s an old adage that says there never was such a thing as a shrinking government program. Things go as projected at first, but an often uncontrollable expansion in every direction soon becomes apparent.

In this sense, the defense budget is just like any other government program. Via Jason Ukman at the Washington Post, a new analysis from Todd Harrison, from the Center for Strategic and Budgetary Assessments, says that while the source of growth in annual defense budgets since 2001 has been mostly (54%) due to the wars in Iraq and Afghanistan “19 percent is due to increases in military pay and benefits; 16 percent is due to increases in funding for modernization and replacement of weapon systems; and 10 percent is due to growth in peacetime operating costs [the daily affairs, training, etc.].” Expenses like these expand independent of whether or not we’re engaged in an all out war (or six!).

Harrison calls this “hollow growth”:

Overall, nearly half of the growth in defense spending over the past decade is unrelated to the wars in Afghanistan and Iraq—personnel costs grew while end strength remained relatively flat, the cost of peacetime operations grew while the pace of peacetime operations declined, and acquisition costs increased while the inventory of equipment grew smaller and older. The base budget now sup- ports a force with essentially the same size, force structure, and capabilities as in FY 2001 but at a 35 percent higher cost. The Department is spending more but not getting more.

These are signs that defense will continue to suck increasing amounts of money out of productive sectors of the economy, and take a greater share of each year’s budget, whether we are engaged in “hostilities” or not. FY 2012 is a nice example: direct spending on Iraq and Afghanistan is 27 percent less than FY2011, despite the base defense budget increasing by 3 percent in real terms, right on schedule.

Of course, there are signs that the Obama administration “intentionally low-balled its requests for war funding” for political reasons, as a final decision on contingent forces in Iraq has not yet come to pass, the Afghanistan drawdown is by no means assured, and the war in Libya is already much more expensive than expected and may require ground troops in the near future. Either way, it seems the DoD budgets have built-in expansion mechanisms (never mind the waste) that are unlikely to be tamed even with a drastic, Ron-Paul-style change in foreign policy.

Update: More here on waste.