A Historical Perspective on Defense Budgets

What We Can Learn from Past Presidents About Reducing Spending

SOURCE: AP/Ron Edmonds

Former President Bill Clinton had to identify reasonable levels of defense expenditures as the United States transitioned from war spending to peacetime budgets.

By Lawrence J. Korb, Laura Conley, Alex Rothman | July 6, 2011

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Total U.S. defense spending (in inflation-adjusted dollars) has increased so much over the past decade that it has reached levels not seen since World War II, when the United States had 12 million people under arms and waged wars on three continents. Moreover, the U.S. share of global military expenditures has jumped from about one-third to about one-half in this same period. Some of this growth can be attributed to the wars in Iraq and Afghanistan, but the baseline or regular defense budget has also increased significantly. It has grown in real terms for an unprecedented 13 straight years, and it is now $100 billion above what the nation spent on average during the Cold War. The fiscal year 2012 budget request of $553 billion is approximately the same level as Ronald Reagan’s FY 1986 budget.

As a result of this “gusher” of defense spending—to quote former Secretary of Defense Robert Gates—Pentagon leaders have not been forced to make the hard choices between competing programs as they traditionally have. And the ballooning defense budget played a significant role in turning the budget surplus projected a decade ago into a massive deficit that forces the U.S. government to borrow 43 cents of every dollar it spends. As the nation attempts to bring this massive deficit—which chairman of the Joint Chiefs of Staff Michael Mullen calls the greatest threat to our security—under control, leaders from both parties recognize that these unprecedented levels of defense expenditures cannot be maintained.

The question currently facing Congress and President Barack Obama—how much to spend on defense in times of large deficits or in the final years of a war—is not new. Presidents Richard Nixon and Bill Clinton had to identify reasonable levels of defense expenditures as the United States transitioned from war spending to peacetime budgets, while President Ronald Reagan needed to control defense spending in the face of rising deficits. Presidents Dwight Eisenhower and George H.W. Bush confronted both scenarios at once, like President Obama today.

The graph below demonstrates that these previous presidents successfully oversaw reductions in defense spending during their terms. It contrasts those spending trends with the alarming defense budget growth experienced during the George W. Bush administration, as well as President Obama’s first few defense budgets.

We can draw three important lessons from these reductions:

First, requesting fiscally responsible defense budgets has historically been a bipartisan effort:

• To keep a balanced budget, President Dwight Eisenhower, a five-star Army general and lifelong Republican, slashed defense spending by 27 percent after the armistice ended the Korean War.
• Richard Nixon, also a Republican and Eisenhower’s vice president, cut the budget by 29 percent as he withdrew from Vietnam.
• Between 1987 and 1998 the defense budget fell for 11 straight years as Presidents Reagan, Bush, and Clinton—two Republicans and a Democrat—brought spending down to more sustainable levels as the Cold War wound down.

Second, despite claims to the contrary, previous spending reductions have not compromised U.S. national security or created a hollow military:

• The spending cuts usually attributed to President Clinton and, on occasion, George H.W. Bush, were actually begun during the Reagan administration’s second term, when the United States was still engaged in the Cold War. This smaller military drove the Taliban out of Afghanistan in a matter of weeks and successfully ousted Saddam Hussein from Iraq. It might have fared better in both conflicts had the George W. Bush administration not insisted on an inadequately light footprint in the early years of those wars.
• Presidents Eisenhower and Nixon balanced sensible budget cuts with investment in the future of the force: President Eisenhower cut the defense budget by 27 percent during his time in office, but he also doubled funding for research, development, testing, and evaluation so that the United States could maintain its technological edge over the Soviets. It was the Eisenhower military that convinced the USSR to back down in the Cuban Missile Crisis.
• President Nixon also reduced the budget topline substantially. But he outlined a more significant role for the military reserves (the Total Force) to ensure that a smaller active duty force had the support it needed to be successful in future conflicts. He also instigated a plan for aircraft procurement known as the high-low mix, meaning that the services would diversify their purchases among expensive advanced fighters and less costly but still very capable planes (F-15s and F-16s for the Air Force and F-14s and F/A-18s for the Navy and Marines). This strategy allowed the Pentagon to buy a sufficient number of fighters at an acceptable cost.

Third, the Obama administration has the opportunity to achieve large savings from sensible reductions in the defense budget because both its total and baseline budgets are at unprecedented levels:

• The Obama administration inherited a defense budget far in excess of even Ronald Reagan’s peak Cold War spending. The idea that budget cuts will result in a “hollow force” or be catastrophic—advanced by critics such as former Defense Secretaries Donald Rumsfeld and Robert Gates—simply does not stand up to historical scrutiny. The Obama administration and Congress could cut $150 billion from the budget and still be at Reagan levels. President Obama would need to reduce the budget by about 40 percent, or close to $300 billion, to reach the budget levels established by Presidents Eisenhower, Nixon, and Clinton.

In a forthcoming report, the Center for American Progress will provide an in-depth analysis of defense spending decisions under Presidents Eisenhower, Nixon, Reagan, George H.W. Bush, and Clinton in order to inform the Obama administration’s defense and deficit decisions.

Lawrence J. Korb is a Senior Fellow, Laura Conley is a Research Associate, and Alex Rothman is a Special Assistant at American Progress.

See also:

• Sensible Defense Cuts by Lawrence J. Korb, Laura Conley, and Alex Rothman