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American Forces Press Service

Gates: Historical Context Important When Considering Budget Requests

By Jim Garamone

American Forces Press Service

WASHINGTON, Feb. 7, 2007 – Considering budget requests in their historical contexts is important when experiencing "sticker shock at their combined price tags," Defense Secretary Robert M. Gates told the Senate Armed Services Committee during testimony yesterday.

Gates said that the funds requested this year, including the money needed to fight the global war on terror, total about $700 billion. These funds are needed to accomplish several objectives.

The funds "will make the strategic investments necessary to modernize and recapitalize key capabilities in the armed forces," Gates said. They will also "sustain the all-volunteer military by reducing stress on the force and improving the quality of life for our troops and their families."

Additionally, the funds will be used to "improve readiness through additional training and maintenance and by resetting forces following their overseas deployment," Gates said, and to "fund U.S. military operations in Iraq, Afghanistan and elsewhere in the ongoing campaign against violent jihadist networks around the globe."

Gates pointed out that only about 4 percent of U.S. gross domestic product will be spent on defense this year. The gross domestic product is the total value of goods and services produced within a country's borders in a year. The Commerce Department’s most recent estimate of U.S. gross domestic product is $13.4 trillion.

“The amount of money the United States is projected to spend on defense this year is actually a smaller percentage of GDP than when I left government 14 years ago following the end of the Cold War and a significantly smaller percentage than during previous times of war, such as Vietnam and Korea,” Gates said.

Since Gates left government in 1993, the world has arguably become more complicated and more dangerous, he said.

“In addition to fighting the global war on terror, we also face the danger posed by Iran and North Korea's nuclear ambitions and the threat they pose not only to their neighbors but globally because of their record of proliferation; the uncertain paths of Russia and China, which are both pursuing sophisticated military modernization programs; and a range of other potential flashpoints and challenges,” he said. “In this strategic environment, the resources we devote to defense should be at the level to adequately meet those challenges.”

Gates said that past drastic reductions in the defense budget had negative impacts on national security.

"Five times over the past 90 years, the United States has either slashed defense spending or disarmed outright in the mistaken belief that the nature of man or the behavior of nations had somehow changed or that we would no longer need capable, well-funded military forces on hand to confront threats to our nation's interests and security," Gates said. "Each time we have paid a price."

Comparing the amount spent on defense against gross domestic product is one way of measuring the effect of defense spending on America. By that measure, defense spending is at historic lows for a time of war, according to information provided by Defense Department officials.

In 1945, at the height of World War II, the defense portion of U.S. gross domestic product was 34.5 percent. More than a third of every dollar spent in the United States went to the war effort, officials said.

In 1950, North Korea invaded South Korea, and the United States found itself part of the United Nations response to that aggression. The defense percentage of GDP jumped to 11.7 percent. At the height of the Vietnam War in 1968, defense expenditures were pegged at 8.9 percent of GDP, officials said.

The 1970s saw the beginning of the all-volunteer force in 1973 and a fall in defense spending as the war in Southeast Asia wound down. The defense portion of GDP dipped below 5 percent, and pundits and Pentagon officials talked about a “hollow force” -- one so starved for money that it couldn’t perform its missions, officials said.

Military spending grew under President Ronald Reagan during the 1980s, but it still only amounted to 6 percent of GDP at its height in 1986, officials said.

When the Soviet Union fell in 1991, the United States experienced a “peace dividend." Following a small uptick to 4.4 percent of GDP for the Persian Gulf War, defense spending dropped to under 4 percent of GDP and has remained there, officials said.

While defense costs as a proportion of GDP have stayed the same, the Defense Department has continued to receive more money each year because the overall U.S. economy and its gross domestic product have increased exponentially.

In 1945, U.S. GDP was well under a trillion dollars. It wasn’t until the late 1960s that the U.S. reached the trillion-dollar GDP mark. Since about 1980, U.S. GDP has grown from around $2 trillion to more than $13 trillion, officials said.

So the American taxpayer has seen what is spent of defense actually drop as a percentage. In 1945, more than a third of every dollar produced in the country went to defense. Today, 3.7 cents of every dollar go to defense, officials said.

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