2012/07/13

Where is the budget, there is the power

 There is a long and broad debate in the U.S. about the military spending, and specially this year because of the "Fiscal Cliff". But there is so little debate about the U.S. national security concept, and how it transforms a whole society. This is yet the true nature of things behind such a choice of governments. We have wrote a compilation of texts on this historical perspective.

The growth over time of the Defense budget (FDEFX graph below) is indeed astonishing :

Yes, but the overall federal budget has increased a lot in the same time :


So, let's calculate the percentage of Defense spending over the federal net outlays, and it's history :


Please note the bottom line is 20%, not 0%. This casts a new light on the Korean and Cold Wars.
We must also look with attention to the spending included and not included into FDEFX. And add some defense budget effort taken on Discretionary Budget after votes of the Congress (around 20% of this budget nowadays). We could then be around 30% of the overall budget nowadays.

Most of the time you will find military spendings only used as percentages of GDP, but this blurs the current absolute heavy weight of the U.S. :


I think the part of military spending in the overall budget is much more representative of the real powers in the country. When the federal government is seeking to cut some budgets to reduce expenditures, the real powers behind the scenes appear in direct light, like another political party. Deficit reduction and the automatic cuts scheduled to take effect in January 2013 are viewed as likely to figure in the autumn 2012 US presidential election, but the Congress can attempt at any time to cancel the $1.2 trillion sequester. The real strength of US democracy will effectively be challenged during these times, and the true powers of US deep state could emerge for everyone.

But wait : this Defense budget is financed mostly by debt emission, and at a large extent with US Treasury. Surely the FED is since few years the biggest holder of US Treasury, but many countries also hold them. Their citizens could insist on selling their assets in US Treasury, or even stop buy them and buy instead more... euro-denominated assets for instance.

Update 10/23 :
As anticipated, true powers of US have emerged clearly now for everyone : few hours ago, Obama and Romney have agreed to not cut Defense budget, or even to increase it. New law will be passed before Jan, 2 to modify 2011 Budget Control Act and currently planned military sequester.
Both candidates agree on this very fundamental topic. Because of this, remaining parts of the debate, and thus democracy in the US, is just a farce.

Update 12/3 :
[Add links into the introductory paragraph, and graphics below from our U.S. Debt's dashboard ]

  • U.S. Defense spending history (% GDP), using chained (2003) dollars, from 1910 to 2007 :

  • U.S. Defense spending history (% GDP), 1792-2015 :
A budget reflecting the never-ending war since 1940

  • Percentage of defense spending over the federal expenditures, history from 1946 :
% of defense spending : green line; right hand scale; quaterly updated