Table of Military Spending

Table 1. U.S. Military spending, 2007 (in billions of dollars)

For 2007 in billions of dollars

National defense                                662.2

Space (50%)                                           9.1

Grants to foreign Governments (80%)   29

Military Medical payments                   12.1

Interest atributed to military               250.1

Total                                                 1002.5

     Percent of GDP                                 7.3

a) Grants to foreign governments are conservatively considered here to be eighty percent military. For instance, under the International Affairs portion of the budget $8 billion was spent in 2007 on International Security Assistance, $16 billion on International Development and Humanity Assistance, most of which were imperial expenditures.

b) Includes one-third of “Other” government social benefits category (National Income and Product Accounts, Table 3.12), defined by BEA as consisting “largely of payments to nonprofit institutions, aid to students, and payments for medical services for retired military personnel and their dependents at nonmilitary facilities.”

c) Assumes 80 percent of net interest payments attributable to military. This is less than other estimates by major analysts. Robert Higgs of the Independent Institute attributes 91.2 percent of the national debt to the military. See James Cypher, in his most recent estimate, uses a figure of 81 percent. See James M. Cypher, “From Military Keynesianism to Global-Neoliberal Militarism,” Monthly Review 59, no. 2 (June 2007): 47, 54.

Sources: National Income and Product Accounts; Office of Management and Budget, Budget for Fiscal Year 2009, Historical Tables, Tables 3.1, 3.2.20

However, there is another, fuller accounting of U.S. national defense spending included in the U.S. National Income and Product Accounts (NIPA), a source which constitutes the final word on the totals for the U.S. economy as a whole (see table I). The National Income and Product Accounts give $662 billion as the total for national defense spending for 2007, or over $100 billion more than the OMB figures. Much of the difference is explained by the fact that the NIPA numbers for national defense, as opposed to the U.S. budget figures, take account of the following: government consumption of fixed capital, cash payments to amortize the underfunded liability for military and civilian retirement benefits (which in the budget accounting are included elsewhere as “intergovernmental transactions”), and expenditures recorded on a delivery (accrual) rather than cash basis (as in the budget).21

The NIPA figures thus capture far more accurately than the OMB data the economic resources directed to the military, emphasizing “full cost budgeting.” As economist and peace researcher Jurgen Brauer observes: “For the United States, the NIPA numbers are the most comprehensive and conceptually complete national defense outlays data we have, since they are expressly based on economists’ national income accounting framework rather than on politicians’ need to review and pass budget requests.”22

Adopting the NIPA figures for national defense spending, however, only partly solves the problem of developing an accurate assessment of U.S. military spending. It still remains to add to this the military spending concealed in other economic categories, and not captured by total NIPA national defense spending. Drawing on other lines in the National Income and Product Accounts, it is necessary to add to the NIPA national defense figures all or part of: economic grants to foreign governments; space; medical payments to military retirees and dependents at non-military facilities; veterans’ benefits; and the net interest payments on the national debt attributable to military spending.

All of the above items are recognized in NATO and SIPRI definitions of military spending, except veterans’ benefits and net interest payments, which are excluded as “legacy costs.” Yet, since legacy costs are an important part of military expenditures (and some other legacy costs are included in the basic data) we incorporate veterans’ benefits and the net interest payments attributable to past wars and military expansions here, in line with estimates of military spending provided by other analysts. This makes more sense as we are concerned with the social, economic, and imperial legacy of the rise of a U.S. military establishment over more than half a century.23

Our figures, provided in table 1 show that actual U.S. military spending in 2007 came to $1 trillion. This contrasts with SIPRI’s clearly understated estimate (in relation to countries other than the United States as well) for all the world’s nations in 2007 of $1.3 trillion.24

The above estimate of total U.S. military spending in 2007 is in the same ballpark as those that have been derived by some other critics of U.S. military spending—through the alternative, very arduous process of adding up the many different components of military spending hidden in the budget. In a June 2007 article for Monthly Review,economistJames Cypher, adopting a budget-based approach, arrived at an estimate of U.S. military expenditures for 2006 amounting to $929.8 billion. More recently Chalmers Johnson, author of the anti-empire trilogy Blowback, Sorrows of Empire, and Nemesis, has contended that when all military spending elements of the U.S. 2008 fiscal year budget are added up the total comes to “at least $1.1 trillion.”25

Graph of Military Spending

Chart 1. Actual and acknowledged military spending as percentage of federal expenditures (minus transfer payments)

a) For derivation of actual military spending see table 1.

b) Acknowledged nation defense equals Office of Management and Budget, National Defense.

Source: See table 1.

a) For derivation of actual military spending see table 1.

b) Acknowledged nation defense equals Office of Management and Budget, National Defense.

Source: See table 1.

Our method above has also been used to develop estimates of actual military spending levels as a percentage of GDP for the post–Second World War era as a whole.26 According to these figures, total military spending as a share of GDP in 2007 was 7.3 percent, the highest level since 1997. In contrast, acknowledged national defense spending as presented by the Office of Management and Budget, misleadingly shows military spending as a percentage of GDP at 4 percent in 2007. (See table 1.)

It is crucial to track military spending as a proportion of total federal government expenditures. In doing so, we follow the accepted practice of excluding social security, medicare, and other transfer payments from our measure of federal expenditures, since transfer payments are self-financing, hence do not draw on the income-tax based general fund or contribute to the national debt. Actual military spending as a percentage of federal spending minus transfer payments (see chart 1) declined every year from the end of the Reagan era in 1988, when it stood at 68 percent, to 2003, when it reached a half-century low of 49 percent. Since then it has changed direction and has risen again to 52 percent. This naturally closely parallels, although at a higher level, the path for acknowledged national defense spending as a percentage of federal spending (also depicted in chart 1). Acknowledged national defense spending in 2007 was only 29 percent of federal expenditures (minus transfer payments), grossly misrepresenting the share of military spending in federal outlays.

The U.S. Imperial Triangle Today

What does the foregoing tell us in relation to our original question? Is it reasonable to argue, as Hobsbawm and others have, that the expansion of U.S. militarism and imperialism in the present period is the result of “a group of political crazies,” who have come to power in Washington and constructed a “radical right-wing regime” abounding in “megalomania”? As an explanation of the current phase of U.S. empire this is clearly inadequate. Despite the often neoconservative nature of the Bush administration’s top operatives, they have had the broad backing of the greater part of the establishment in the wars on Afghanistan and Iraq, the War on Terrorism as a whole, the huge military buildup, etc.

To be sure, if a Democratic administration under Al Gore had come into power in 2000 it is not at all certain that the United States would have gone to war with Iraq, in addition to Afghanistan, though an attempt would have been made to uphold U.S. imperial interests. The Bush administration from the first was distinguished by the particularly bellicose group of neoconservatives at its helm. But in pursuing their belligerent ends they hardly lacked solid backing within the circles of power. Strong support was extended by both political parties, Congress, the judiciary, the media, and the corporations generally. Disagreements were largely about troop levels, the amount of force to be applied, relations to allies, dates of withdrawal (partial or whole), distribution of forces between the major “theaters,” etc. More fundamental questions, even the use of torture, were avoided. Major dissent has mainly come from the bottom of the society.

All of this suggests that expanded militarism and imperialism is deeply entrenched at present, at least within the top echelons of U.S. society. It reflects a general concern to expand U.S. hegemony as part of an imperial grand strategy, including rolling back insurgent forces and “rogue states” around the world, and keeping junior partners in line. The war in Iraq is best viewed as an attempt to assert U.S. geopolitical control over the entire Persian Gulf and its oil—an objective that both political wings of the establishment support, and which is part of the larger aim of the restoration of a grand U.S. hegemony.27 The vast scale of U.S. military spending—encompassing more than 50 percent of the federal budget (excluding social security, medicare, and other transfer payments) and constituting 7 percent of the entire GDP—is thus externally rooted in the needs of the U.S. imperial grand strategy, which continually strains the U.S. system to its limits (as measured by the budget and trade deficits).

U.S. imperialism has been transformed in recent decades by the absence of the Soviet Union, giving the United States more immediate power (particularly in the military realm), coupled, paradoxically, with signs of a secular decline in U.S. economic hegemony. It is this dual reality of a temporary increase in U.S. power along with indications of its long-term decline that has led to urgent calls throughout the power elite for a “New American Century,” and to attempts by Washington to leverage its enormous military power to regain economic and geopolitical strength, for example, in the Persian Gulf oil region. In recent years, the United States has enormously expanded its military bases and operations around the world with bases now in around seventy countries and U.S. troops present in various capacities (including joint exercises) in perhaps twice that number. Washington is thus not just spending money on the military and producing destructive weapons, or engaging in wars and interventions. It is also building a lasting physical presence around the world that allows for control/subversion/rapid deployment.28

As a further reason not to dismiss the new surge in U.S. militarism and imperialism as merely the “megalomania” of a few, our argument points back to Kalecki’s imperial triangle, as constituting the principal dilemma facing opponents of imperialism. The creation of a huge military establishment to serve the U.S. empire was also understood, in military-Keynesian terms, as a quasi-full-employment strategy aimed at combating economic stagnation. With the help of the media (which, as General Electric Wilson insisted, had the task of “marshalling” public opinion in support of the permanent war economy), the distinctive foundations of post–Second World War U.S. capitalism were laid. The growth of the antiwar movement in response to the Vietnam War, and the end of the Cold War, represented setbacks for the imperial triangle, which showed up in terms of temporary drops in military spending as a percentage of GDP. Each time, in the late 1970s/early 1980s and again in the late 1990s/early 2000s, such temporary lulls in military spending have been followed by a military resurgence.29

For Kalecki the weak link in the imperial triangle was clearly the mass media propaganda system, which had the job of selling the permanent war economy to a population that could conceivably opt for other more rational, just, and egalitarian courses. Unlike the Korean War or the Vietnam War, the Iraq War (like the Gulf War before it) was preceded by a massive antiwar movement in the United States, demonstrating the willingness of perhaps a majority of the population to seek another way, opposed to militarism and imperialism. It was the monopoly media, far more concentrated than in Luce’s day and now virtually indistinguishable from monopoly-finance capital (becoming simply its public voice), that came to the rescue of U.S. war capitalism in its moment of need, giving credence to its obvious lies. “The press,” as one of us has written, “was [soon] eating out of the Bush administration’s bowl.”30

In a period of economic stagnation, financial crisis, declining hegemony, impending environmental collapse, and new populist insurgencies, Washington, representing the U.S. oligarchy as a whole, was once again able to enlist the media monopoly in the marshaling of public opinion in support of the imperial project through the promotion of war hysteria. What made this possible was the prior existence of a well-oiled, privatized propaganda system designed to limit the range of legitimate debate in the mainstream media. In this system even the outer reaches of the quite timid liberal punditocracy were strictly walled-in to fit within the proscribed boundaries of elite debate. Today fundamental dissent toward the existence of the military-imperial system, no matter how thoughtful or well-informed, is decidedly off-limits, except for periodic ridicule. Ours is decidedly a “military-industrial-media complex.”31

Nevertheless, the imperial triangle is now increasingly confronted with its own contradictions. As Baran and Sweezy foresaw more than four decades ago in Monopoly Capital, the U.S. military system faced two major internal obstacles. First, military spending tended to be technologically intensive and hence its employment stimulating effect was decreasing. “Ironically,” they observed, “the huge military outlays of today may even be contributing substantially to an increase of unemployment: many of the new technologies which are byproducts of military research and development are also applicable to civilian production, where they are quite likely to have the effect of raising productivity and reducing the demand for labor.” Second, expansion of “weapons of total destruction” and the devastating effects of the use of more powerful weapons, could be expected to generate a growing rebellion against the permanent war economy at all levels of society, as people perceived the dangers of global barbarism (or worse, annihilation).32

Today the enormous weight of Washington’s war machine has not prevented it from being stretched to its limits while becoming bogged down in Iraq and Afghanistan. Although still capable of great destruction, the United States is significantly limited in its ability to deploy massive force to achieve its ends whenever and wherever it wishes. The dream of Pax Americana, first presented by John F. Kennedy at the height of the Cold War, has turned into the nightmare of Pox Americana in the years of waning U.S. dominance. The role the media monopoly has assumed in recent years in the promotion of war propaganda has contributed to the rapid growth of a media reform movement, which is now challenging the concentration of communications in the United States.33

There is no doubt that a society that supports its global position and social order through $1 trillion a year in military spending, most likely far exceeding that of all the other countries in the world put together, unleashing untold destruction on the world, while faced with intractable problems of inequality, economic stagnation, financial crisis, poverty, waste, and environmental decline at home, is a society that is ripe for change. It is our task to change it.

Notes :

1.   Office of Management and Budget, Budget for Fiscal Year, 2009, Historical Tables, Table 3.2; Stockholm International Peace Research Institute, SIPRI Yearbook 2008: Summary, http://yearbook2008.sipri.org/files/SIPRIYB08summary.pdf, 10–11; SIPRI, Military Expenditure Database (United States), http://milexdata.sipri.org/result.php4. SIPRI data on U.S. military expenditures (drawn on here for estimates of increases in real military spending and for international comparison) are only marginally (about 5 percent) higher than the acknowledged national defense figures contained in the Office of Management and Budget Historical Tables, and are clearly based on these. While the Office of Management and Budget lists $552.6 billion in total national defense for the United States spending in 2007, SIPRI provides a figure of $578.3 billion. It should be noted that SIPRI data, athough based on the same or similar nominal figures as the acknowledged U.S. national defense spending, registers a higher rate of increase in U.S. military expenditures than “reported in official U.S. data because of the method of conversion into constant dollars. While SIPRI uses the consumer price index (CPI) for price conversion for all countries, the US official figures are converted using military-specific deflators. Thus, the SIPRI data show the trend in the purchasing power of the military budget had it instead been spent on typical consumer goods and services, while the US official data show the trend in its purchasing power for military goods and services. The nominal change is the same for the two series.” SIPRI Yearbook, 2007, 275.
2.   Michal Kalecki, The Last Phase in the Transformation of Capitalism (New York: Monthly Review Press, 1972), 96.
3.   Eric Hobsbawm, On Empire: America, War, and Global Supremacy (New York: Pantheon, 2008), 57–59.
4.   C. Wright Mills, The Power Elite (New York: Oxford University Press, 1956), 198. It should be noted that Hobsbawm is not alone in promoting what can be called the “cabal theory.” See the discussion of this in John Bellamy Foster, Naked Imperialism (New York: Monthly Review Press, 2006), 13, 18, 107–08, 117–20.
5.   “WPB Aide Urges U.S. to Keep War Set-Up,” New York Times; January 20, 1944; Charles E. Wilson, “For the Common Defense,” Army Ordnance 26, no. 143 (March–April 1944): 285–88; Fred J. Cook, “Juggernaut: The Warfare State,” special issue, The Nation, October 28, 1961, 285; Johnathan Feldman, Universities in the Business of Repression (Boston: South End Press, 1989), 149–50. Charles E. (General Electric) Wilson did not literally use the term “permanent war economy,” widely attributed to his January 19, 1944, speech. Rather, he spoke, of a “program of industrial preparedness” for war that would be “permanent and continuing.” On the end of the Second World War and military spending see Robert L. Heilbroner, The Making of Economic Society (Engelwood Cliffs, NJ: Prentice Hall, 1980), 160.
6.   Joan Robinson, Contributions to Modern Economics (Oxford: Basil Blackwell, 1978), 8–9. For an account of the role of military Keynesianism in successive U.S. administrations see Lynn Turgeon, Bastard Keynesianism (Westport, CT: Greenwood Press, 1996).
7.   Kalecki, Last Phase, 75–83, 95–97; Kalecki’s analysis of military spending derived originally from his analysis of the importance of armament expenditures in Nazi Germany’s economy and then the basic argument was extended to the role military spending was to play in post–Second World War capitalist economies.
8.   Ibid.; Cook, “Juggernaut,” 292.
9.   Kalecki, Last Phase, 97; Harry Magdoff, The Age of Imperialism (New York: Monthly Review Press, 1969), 185.
10. These five reasons, presented in essentially this order, were provided by Baran and Sweezy to account for the growth of militarism in their classic chapter on “Militarism and Imperialism” in Monopoly Capital (New York: Monthly Review Press, 1966), 178–217. It is worth noting that their argument was geared primarily to military spending for empire and turned to its macroeconomic benefits in absorbing surplus and staving off long-run stagnation only at the end. The same structure to the argument on military spending (empire first, economy second) can be seen in Harry Magdoff, Imperialism: From the Colonial Age to the Present (New York: Monthly Review Press, 1978), 198–212. Hence, critics, such as Larry Griffin, Joel Devine, and Michael Wallace, who later attempted empirically to test the Monopoly Capital argument, which they characterized as a “‘naive’ model...which suggests that the degree to which national output is absorbed by military spending should be dependent on aggregate economic conditions such as unemployment,” were clearly attacking a “naïve model” of their own devising. Ironically, after rejecting this naive model, these same authors ended up concluding that in the face of declining monopoly profits the U.S. state intervenes to absorb surplus through increases in military expenditures—a view much closer to Baran and Sweezy’s own argument, but lacking its emphasis on empire over macroeconomics. See Larry J. Griffin, Joel A. Devine, and Michael Wallace, “Monopoly Capital, Organized Labor, and Military Expenditures in the United States, 1949–1976,” American Journal of Sociology 88 supplement (1982): S113–S153.
11. Baran and Sweezy, Monopoly Capital, 159, 161, 177, 208–11. Baran and Sweezy’s contention more than four decades ago that civilian government purchases had about reached their outer limit as a percentage of GDP by 1939 was to be borne out in subsequent developments. In 1939 civilian government purchases were 13 percent of GDP; from 1960 to the present they have averaged 14 percent of  GDP (and were also 14 percent in 2006). Economic Report of the President, 2008, 224, 250.
12. The foregoing quotes from Slichter, Luce, U.S. News and World Report, Lawrence, and Harris are all taken from Cook, “Juggernaut,” 285, 300–01. See also Fred H. Cook, The Warfare State (New York: Collier Books, 1962); Baran and Sweezy, Monopoly Capital, 207–13
13. U.S. National Security Council, NSC-68, April 1950, “Section D: The Remaining Course of Action,”; James M. Cypher, “The Basic Economics of ‘Rearming America,’” Monthly Review 33, no. 6 (November 1981): 12–13; Noam Chomsky, “The Cold War and the Superpowers,” Monthly Review 33, no. 5 (November 1981): 4–5.
14. Charles Erwin Wilson quoted in Cook, “Juggernaut,” 277, 299.
15. Eisenhower, quoted in Cook, “Juggernaut,” 276–79.
16. Baran and Sweezy, Monopoly Capital, 205.
17. The classic argument on how nuclear weapons were continually used by the United States as direct threats to achieve its ends was made by Daniel Ellsberg, “Call to Mutiny,” in E. P. Thompson and Dan Smith, ed., Protest and Survive (New York: Monthly Review Press, 1981), i–xxviii.
18. Robert Kaplan, Imperial Grunts (New York: Random House, 2005), 3.
19. Jurgen Brauer, “United States Military Expenditure,” in Wolfram Elsner, ed., Arms, War, and Terrorism in the Global Economy Today (Hamburg: LIT Verlag, 2007), 61–66.
20. The design format of this table was adapted from Cypher, “Basic Economics of ‘Rearming America.’”
21. Benjamin A. Mandel and Mary L. Roy, “Federal Budget Estimates for Fiscal Year 2007,” Survey of Current Business (Bureau of Economic Analysis), March 2006, 13.
22. Jurgen Brauer, “Data, Models, Coefficients: The Case of United States Military Expenditure,” Conflict Management and Peace Science 24 (2007), 58; also Brauer, “United States Military Expenditures,” 67.
23. Stockholm International Peace Research Institute, SIPRI Yearbook, 2003 (Oxford: Oxford University Press, 2003), 365; Brauer, “United States Military Expenditure,” 66, and “Data, Models, Coefficients,” 56. Note: We have not included Homeland Security in our figures, in line with SIPRI and NATO’s exclusion of civil defense programs.
24. SIPRI Yearbook 2008: Summary, 10–11.
25. James Cypher, “From Military Keynesianism to Global Neoliberal Militarism,” Monthly Review 59, no. 2 (June 2007): 45–48; Chalmers Johnson, “Why the U.S. Has Really Gone Broke,” Le Monde Diplomatique, February 2008.
26. The complete set of data is not provided in this article, but follows the above method throughout.
27. For this general argument see Foster, Naked Imperialism (New York: Monthly Review Press, 2006), especially 107–20.
28. Foster, Naked Imperialism, 55–66; Chalmers Johnson, The Sorrows of Empire (New York: Henry Holt, 2004), 151–85.
29. The military resurgence after periods of relative decline arose in both cases at the tail end of Democratic administrations: Carter in the late 1970s and Clinton in the late 1990s, and gathered momentum in the Republican administrations that followed: Reagan in the 1980s and George W. Bush at the beginning of the 2000s. 

30. Robert W. McChesney, The Political Economy of the Media (New York: Monthly Review Press, 2008), 105, 108.
31. Norman Soloman, “The Military-Industrial-Media Complex,” Extra, July–August 2005, http://www.fair.org/index.php?page=2627.
32. Baran and Sweezy, Monopoly Capital, 213–17.
33. See John Bellamy Foster and Robert W. McChesney, “Preface,” in Foster and McChesney, ed., Pox Americana: Exposing the American Empire (New York: Monthly Review Press, 2004), 7–10; McChesney, Political Economy of the Media, 491–500.

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