Will Romney increase defense spending by $2 trillion?
Paul Ryan insisted in the Oct. 11 debate that Mitt Romney will not increase defense spending. Joe Biden interrupted Ryan twice to say Romney will increase it by $2 trillion. Who's right? The answer depends on another question: compared with what?
Romney would spend $2 trillion more than Obama over the next 10 years on the Pentagon's base budget — which excludes war funding. But Romney won't increase total annual defense spending as a percentage of gross domestic product compared with fiscal year 2012. Total defense spending includes money for the base budget and war funding.
In other words, Obama would use the money now spent on the war in Afghanistan for deficit reduction and/or non-defense spending. Romney would maintain the total level of defense spending, shifting war funds to the Pentagon's base budget.
$2 trillion increase, explained
President Obama and Vice President Biden both claimed in recent debates that Romney will increase defense spending by $2 trillion. Obama mentioned it four times, Biden twice. In the vice presidential debate, it was one of many heated exchanges.
Debate moderator Martha Raddatz: And you're going to increase the defense budget.
Ryan: No, we're not just going to cut the defense budget like they're — they're proposing …
Biden: They're going to increase it $2 trillion.
Ryan: That's not…
Ryan: We're talking about…
Raddatz: So, no massive defense increases?
Ryan: No, we're saying don't — OK, you want to get into defense now?
Romney's national defense plan calls for setting the "core defense spending … at a floor of 4 percent of GDP." Sharp determined that it would cost $7.8 trillion to phase in an increase in the Pentagon's base budget to a minimum of 4 percent of GDP over the next 10 years, from 2013 to 2022, using the Congressional Budget Office's projections (page 57) for economic growth. Obama's fiscal year 2013 budget proposal (page 240) says the president would spend $5.7 trillion on the base defense budget during that same 10-year period — a difference of $2.1 trillion.
Sharp's figures are not in dispute. Thomas Donnelly, a resident fellow at the conservative American Enterprise Institute, wrote that Sharp's analysis "proves the obvious, but undeniably true, facts." But Donnelly also said it proves in his opinion that Obama proposes spending too little on defense in the future. Under Obama, base defense spending would average 2.9 percent of GDP over the 10-year period. It was 3.4 percent in the fiscal year that just ended on Sept. 30.
No increase, explained
The Romney campaign insisted Ryan was right when the congressman said the Republican ticket won't increase defense spending. And how did it arrive at this? Two reasons:
Total defense spending was $670 billion in fiscal year 2012 (Table 1-3) — 4.3 percent of the nation's $15.5 trillion economy (Table 1-1), according to an August CBO report. The Romney campaign says its candidate will increase base defense spending (which was 3.4 percent of GDP in fiscal year 2012), while war spending will naturally decline. As a result, total defense spending will not increase.
The U.S. is scheduled to withdraw the last of its combat troops from Afghanistan at the end of 2014, although there will be some costs to maintain a presence in Iraq and Afghanistan. Obama's budget (Table S-12) assumes that the war costs will drop from an authorized amount of $126.5 billion in fiscal year 2012 to $44.2 billion in fiscal year 2014 and remain at that level through 2022.
Sharp — who wrote an essay in 2008 for the Army War College's journal, Parameters, titled "Tying US Defense Spending to GDP: Bad Logic, Bad Policy" — told us in an email that the Romney campaign essentially wants to "institutionalize war costs" going forward.
"His campaign is arguing that the United States should try to spend at least as much on defense in the years ahead as it did during the past decade when it was fighting two wars," Sharp wrote.
"I'm saying having the additional costs for war makes sense when you have a war," Sharp elaborated in a phone interview with us. "I would question whether you should institutionalize the war costs, which they are suggesting."
Donnelly, the AEI fellow, argued that it does make sense — saying Romney is proposing a "return to normal" if you consider past spending trends. Department of Defense figures (Table 7-7) show that total defense spending was at or above 4 percent from 1949 through 1994. It remained below 4 percent for 10 years — from 1995 through 2004 — before the costs of two wars drove total defense spending once again to 4 percent or more.
We take no position on how much the U.S. should spend on defense as a percentage of GDP. We leave that for the candidates to debate and for voters to decide.