Forbes says U.S. defense spending, measured against GDP, is near historic low

U.S. Rep. Randy Forbes recently argued it was time to "go on the offense" against proposed cuts to defense spending.

"As a percentage of our gross domestic product, the defense budget remains just 3.6 percent," Forbes, R-4th, wrote in a July 25 column in Politico. "This figure is low by all historical standards."

Forbes’ district is anchored in South Hampton Roads where military installations dominate the economy. He has been warning that the nation’s security would be hurt by defense cuts that have been proposed during the fight to rein in the federal budget deficit.

Is defense spending really lagging when viewed through the lens of history? We decided to check.

First, a definition: Gross Domestic Product, or GDP, is the measure of all goods and services produced in a country during a given time and is used as measure of a nation’s standard of living.

Joe Hack, Forbes’ spokesman, said the congressman’s assertion that the defense budget comprises 3.6 percent of the GDP comes from the president’s 2011 budget proposal.  It showed the "base budget" authority allocated to the Department of Defense was expected to come in at $550 billion -- or 3.6 percent of the roughly $15 trillion GDP estimated for 2011.

Though analysts often refer to the Pentagon’s base budget when discussing military spending, it doesn’t include all defense spending. It omits billions of dollars set aside each year to pay for operations overseas, including in Afghanistan and Iraq.

Figures from the Department of Defense and the president’s 2012 fiscal year budget show that when those other costs are included, the national defense budget for the agency comes to about $700 billion for fiscal 2011, which ends Sept. 30. That’s just under 5 percent of GDP.

These numbers refer to "budget authority" -- the amount congressional appropriators set aside each year for current and future defense spending. Another way to look at defense spending is by examining outlays, the actual money paid out for defense each year.

Those two sets of numbers will differ in a particular year, but analysts told us that over time, they almost completely equal out as the government spends the money that’s been authorized by Congress.

Forbes’ spokesman also pointed to a November 2010 report from the Center for Strategic & International Studies. It says that, with the exception of President Bill Clinton’s term and a couple years preceding the start of the Korean War in 1950, U.S. defense spending measured as a percentage GDP is the lowest since World War II.

We found tables from the Office of Management and Budget showing national defense spending was below 5 percent only in the late 1940s, late 1970s and since the start of the early 1990s.

Forbes said that defense spending is low "by all historical standards." We found data that rebuts that contention. During the 1930s, for example, defense spending amounted to 1 percent or lower of GDP, according to a 2002 Congressional Research report.

Two analysts told us that for comparison purposes, it’s best to measure the U.S. defense spending after the World War II. "The (pre-World War II) spending was a reflection of the fact that we were not a global superpower," said Daniel Goure, vice president of the Lexington Institute.

So, when measured as a percentage of the GDP since World War II, defense spending is low.

Two defense analysts told us that Forbes’ use of GDP to measure the defense budget is a legitimate gauge.

But Winslow Wheeler, director of the Strauss Military Project at the Center for Defense Information, argued GDP is an unreliable measure of the amount that the U.S. spends on defense.

After all, GDP is constantly changing, he said. Even if the defense budget is on the rise, it could become a smaller percent of the nation’s overall economic output if GDP increases at a faster pace.

Forbes "is engaging in that sliding slippery scale," said Wheeler, whose group was founded by retired military officers to analyze defense issues. "He’s trying to make the defense budget look small. It’s not."

Wheeler also noted that the base budget that Forbes cites only accounts for Department of Defense spending and doesn’t include other military-related costs, such as money spent every year by the Department of Energy to maintain the country’s nuclear stockpile.

Even when adjusted for inflation, the total dollars dedicated to national defense is now at its highest level since World War II, Wheeler said.

Figures from the Department of Defense comptroller’s office show that, when measured in 2005 dollars, the total spending on national defense peaked at just more than $900 billion in 1945 before falling off. It didn’t approach the $700 billion mark until the 2011 fiscal year.

The Center for Strategic & International Studies report also notes that the U.S., by far, spends more money on defense than any other country in the world.

The U.S. accounted for 46.5 percent of global military spending in 2009, according to the CSIS report. China only accounted for 6.6 percent with France in third at 4.2 percent.

To summarize:

Forbes said the U.S. defense budget stands at 3.6 percent of the country’s gross domestic product, a figure that’s "low by all historical standards."

Forbes’ statement stems from a base budget for defense that omits spending for the operations in Iraq and Afghanistan. When those costs are factored in, defense spending comes to about 5 percent of GDP. Even at that higher level, spending is low compared to the post World War II era.

So Forbes is right that the U.S. defense budget is at a relatively low mark when it’s measured by the country’s economic outlook. But by other measures -- such as using inflation-adjusted dollars and comparing U.S. expenditures to the rest of the world -- America’s defense spending is high.

We rate the claim Mostly True."

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