Defense Spending and the Deficit

Via Mark Thoma comes an interesting discussion of the Federal deficit over at Free Exchange. While I liked the general tone of this discussion, one line troubled me:

Mr Bush’s budget increases defence spending by at least 7.5 percent (and one never knows what further appropriations may be required) to a total of $515 billion. That marks the 11th year in a row in which defence spending has increased. Perhaps the world has grown significantly less safe in each of the last 11 years, or perhaps it is time to discuss whether budget cutting zeal ought to be turned exclusively toward entitlements.

I’m not troubled by the criticism of the size of our defense spending, which is certainly the Achilles heal for any GOP pretense of fiscal responsibility. Sure we need to provide for our national defense but the DoD budget certainly has a lot of pork in it. And if we need to spend more for the national defense, we must somehow pay for this. Yet, the GOP continues to talk about cutting taxes and increasing DoD spending at the same time.

But I must object to looking at the year by year increase in nominal defense spending since 1998 when it was $345.7 billion according to this source (see table 1.1.5). Our graph shows defense spending as a share of GDP from 1988 to 2007. In 1988, this share was just under 7%. This share declined from 1988 to 2000 when it dipped below 3.8%. In fact, this peace dividend was the only really significant decline in Federal spending. It is a shame in my view that defense spending has climbed to nearly 5% of GDP but to say that we have seen 11 years in a row where defense spending has increased is highly misleading.

Update: Do other bloggers get the same types of comments when they provide graphs that are designed to inform rather than mislead? I could have shown defense spending as a share of GDP for the last ten years since that was the period that Free Exchange discussed. But then 1998 was the low point so I decided to go back 20 years rather than 10 years as I noted the Peace Dividend allowed to enjoy a reduction in the defense spending to GDP ratio. Of course, I got some asinine criticism that I should not have used a recent high point. OK! The new graph shows the ratio since 1929. I would have gone back further but BEA’s reporting of data does not.