Why Obama Won’t Cut Defense and Reap a Peace Dividend
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The Fiscal Times
February 23, 2011

The wars in Iraq and Afghanistan are winding down, military procurement budgets are bloated, and deficit reduction has become an overriding domestic policy concern.
It would seem that the stars are aligned for the government to declare a peace dividend and free up billions of dollars for other purposes by slashing defense spending. Yet President Obama’s proposed budget for 2012, as well as the spending resolution the House passed for the remainder of this year, would permit sizable growth in Pentagon spending. While the administration’s proposed long-term spending blue print shrinks both domestic and military spending, it takes a much bigger bite out of non-defense spending than it does out of defense.

For many liberals, the administration’s failure to pursue a peace dividend strategy is a squandered opportunity. Significantly reducing Pentagon spending could have softened the blow of domestic cuts, provided much-needed funds for the president’s vaunted investment agenda, and even supplied the wherewithal to maintain high-profile programs like low-income heating assistance that provide a financial cushion for some of the nation’s most vulnerable citizens. But in this post 9/11 society, few politicians — including a president with a history of opposing the Iraq war — appear willing to run the political risk of challenging military spending levels. “The problem is the Democrats are afraid of being branded soft on defense,” said Lawrence Korb, a defense analyst at the left-leaning Center for American Progress. “All the other downturns in defense spending were done by Republicans.”

History bears out Korb’s contention. Obama said last week that by the end of the decade, his proposed spending freeze would shrink domestic discretionary spending to its lowest share of economic activity since Dwight D. Eisenhower was president. What he failed to mention was that the five-star general was ambidextrous when it came to wielding the budget axe.

Republican Presidents Wield the Budget Axe
As president, “Ike” presided over a sharp reduction in military spending, taking defense’s share of gross domestic product from 15 percent at the end of the Korean War to 10 percent by the time he left office in 1961. His farewell address famously included a stern warning about the threat posed by the “military-industrial complex.”

There have been two other substantial build-downs in military preparedness in the modern era. Though vilified by anti-war protesters, President Nixon held military budgets in check during the inflation-prone 1970s. He shrank the number of uniformed personnel by more than a million troops during the “Vietnamization” phase of the Vietnam War. Defense spending as a share of GDP fell by half to barely above 5 percent by the time his successor, Gerald Ford, left office.

President Ronald Reagan engineered a substantial military build-up during the peacetime 1980s, a spending binge that some defense analysts argue undermined the former Soviet Union, which couldn’t keep pace. His successor, George H.W. Bush, a former head of the Central Intelligence Agency, reaped the post-Cold War peace dividend with the help of then-Secretary of Defense Dick Cheney. They shrank defense budgets during their four years in office from the Reagan-era high of 6.5 percent of GDP back to levels last seen under Ford.

The reality is that every major
war of the 20th century began with a
Democrat in the White House and resulted in
Republicans elected to office in its aftermath.

The downward trend continued throughout the 1990s under President Bill Clinton, not so much because military budgets shrank but because the economy grew rapidly. But in the aftermath of the Sept. 11, 2001 terrorist attacks, President George W. Bush nearly doubled the share of economic activity devoted to defense, returning it to levels last seen in the early 1990s.

While Republicans are conventionally seen as hawks in domestic politics and Democrats as doves, the reality is that every major war of the 20th century began with a Democrat in the White House and resulted in Republicans elected to office in its aftermath. The last decade’s response to global terrorism reversed that pattern.

While the Bush II build-up not only sharply increased direct spending on two wars, it also rapidly increased procurement budgets for every military service in ways totally unrelated to the war on terror. So far, no one is willing to call that hardware build-up into question.

While Secretary of Defense Robert Gates has been praised for killing off the F-22 program and a mild slowdown in purchases of F-35s, the latest budget request still included $25 billion for 10 new ships and an additional $1 billion for the $9 billion-a-year missile defense program. Both are continuations of programs initiated in the last decade. 

Moreover, while the war in Afghanistan is supposed to be winding down, the decline in military spending in the Obama budget is contingent on that spending falling rapidly to $50 billion a year — a third of what will be spent in 2011. The latest news from the graveyard of empires doesn’t make one sanguine about the prospects for achieving those savings.

spent 25 years as a foreign correspondent, economics writer and investigative business reporter for the Chicago Tribune and other publications. He is the author of the 2004 book, The $800 Million Pill: The Truth Behind the Cost of New Drugs.