Beautifully researched and presented, thank you. We have a defense industry that is like the US healthcare sector - twice as expensive as everyone else's and half as effective. Restoring competition is going to be tough but critical...
As I keep pointing out, ships are a waste of money. Ukraine had a (small) navy which was sunk or captured on Day 1 of the Russian invasion. Despite this loss, Ukraine has inflicted a crushing defeat on the Black Sea Fleet, which was the subject of numerous chinstroking articles before 2022. Building a billion dollar boat that can be sunk by a million dollar missile is a really dumb idea. Let the Chinese do that, and send Taiwan lots of missiles.
I don't know, man. It feels like this entire piece hinges on the literary sleight of hand of assuming China and Russia can dominate Eurasia.
Which seems.... impossible? I think we need a concrete example of how they dominate India AND Germany AND France AND Indonesia AND Japan AND South Korea .... All simultaneously.
And then decide to invade and occupy Hawaii setting off a decades long insurrection?
Even time Noah pisses me off with an article, he comes back with something like this which reminds me why I pay to read him. Great article.
One question I had was, if defense spending is lower %GDP than 50 years ago, where did that money go? Because we're clearly not spending less overall, so we must have redirected it somewhere. Fortunately, the US government has data...
Over that time period, every budgetary category stayed essentially flat as a % of GDP, except 2. Defense spending dropped by about GDP 2.5% and health care spending (Medi-care/aid) went up by about 3.5%. Nothing else changed significantly.
Bottom line: we took the money we used to spend building battleships and used it to keep extremely elderly and sick people alive for a little longer. Yes, probably for some (maybe many) other good things too, but the bulk of healthcare costs take place in the first year and the last year of life.
That's how we got here. What do we do? Since we're unlikely to throw Grandma under the bus (because only uncivilized countries like Britain and Canada force babies and old people to die), it seems tax increases will be the answer. I cringe at that as a conservative, but I don't see another viable option. As Noah says though, whether we can agree to do it (in a country that can't agree on what a woman is) seems doubtful.
One way or another, the problem will eventually get solved. A strategic military defeat has a way of focusing a nation, getting it to accept limits and get serious about waste, navel-gazing and decadence. It's a terrible price, but it does work. A defeated and isolated people whose standard of living has suddenly dropped are too busy trying to put food on the table do obsess about what a woman is.
Yes, we spend a lot on defense. No, that doesn't mean we spend enough. No, it doesn't mean we are wasting money on obsolete systems.
I would argue that most of the waste in the system is structural, from having DoD and 5 services instead of a Department of the Navy and a Department of War. From there, we have a sclerotic career system designed to support a mass mobilization in which we expand the military to 40x its present size. We simply don't have the manufacturing capacity to build enough military equipment for a military that large, and yet the officer corps and some civilian functions have been designed around it.
It's absolutely correct that entitlement spending and interest are crowding out military spending, but absent a huge increase in productivity there's going to be a huge debate about how to retire the Baby Boomers in luxury while also remaining a superpower. Cutting health care spending in half is a pipe dream that would never happen in a world where Boomers want all the health care that can possibly be provided to them.
Right now I would settle for a $25B, multi year munitions buy to load up on guided missiles. If we don't do that we risk running out after a week of fighting. I don't think a long war is a the risk. The risk is losing the Pacific Fleet in a week or two and then being shut out of Asia by countries that are too afraid to partner with us.
A. If we don't go to a National Healthcare system and reduce spending from 20% to 10%.of GDP and save $2.5 Trillion annually, we will never have the fiscal horsepower. Healthcare Insurance is killing America.
B. I worked and managed in Automotive, Aerospace, Medical Device industries. The ONLY engineers that design; tool and produce more than 10 things a day are Automotive manufacturers. Exaggerated, but true.
C. So, the ONLY route to make 10,000 artillery shells a day, is to move 30% of Defense funding to GM and Ford. And then make 10,000 artillery shells...every hour.
D. Also build new shipyards not in Senator Tubbyvilles state.
We don’t need the DPA, we need long-term contracts and higher inventories. That is starting to work for things like 155mm shells, but our stocks of rockets and missiles (incl cruise missiles and JSSAMs) are ridiculously low- perhaps a few weeks to a few months worth in a real conflict. Part of this is because Congress and the Pentagon prioritize keeping weapon systems alive through trickling procurement rather than keeping these systems armed and well maintained (eg subs and naval ships generally, as you noted). . Another is the guns/butter tradeoff. Dems don’t want higher defense spending and when they do they often try to buy votes with it (higher health benefits) or reward campaign contributors (the trial bar with the “burn pile” and camp Lejeune water issues)rather than exclusively focusing on readiness and capability.
Anything over a few hundred million in DPA needs Congressional approval (I think) so better to simply budget and fund more ammo rather than directing it. Or within the Biden’s control maybe take the $50-100 mm of DPA spending that Biden mandated on solar panels and use that for ATACMs missiles?
Something needs to be done to simplify the procurement process as well as getting procurement officers out of bed with the so called primes. Often government is unable to use the best providers because of their lack of familiarity with federal regs surrounding procurement. My father who was a jobber who sold corrugated cartons once joked -- never do business with the government, you can charge them twice as much but its never enough. I once worked at Lawrence Livermore National Lab. There I learned about the difference between efficiency and effectiveness. Livermore scored high on the latter but low on the former.
"[T]he pandemic also normalized the use of the DPA, so this is a very realistic option."
I don't like the way you casually suggested abusing emergency powers. The public health industry abused emergency powers during the pandemic, and their power was curtailed in many places as a result, probably to our detriment in future pandemics. Promoting abuse of emergency war powers, which is what the DPA is, will inevitably lead to those powers being curtailed by Congress, to the detriment of our national security.
Great article and I don't want to be a complainer but I would love to see an article of baumol's cost disease as it relates to the US military. We spend a lot and I am sure things like a lack of competition play a role but I also think a combination of high wages relative to the rest of the world and exceptional benefits for US military vets also play a role. Since I am not particularly interested in cutting benefits to those who served I would love to get a better sense of how wages/benefit costs impact our defense spending.
I see this the same issue with our health care system. I have family and friends that work in healthcare in the US and in the UK. The US ones make ALOT more money. I am guess the military issues are similar.
“ The situation is serious enough that Washington may need to invoke the Defense Production Act and begin converting some civilian industry to military purposes.”
I don’t understand. The U. S. spends annually about 40% of the world’s military budget for its own military. The system is fundamentally broken and converting existing industry makes no sense.
I worry about how America would cope with losing a war started by China over Taiwan. America has only lost imperial adventures, ie wars of choice (Vietnam and Afghanistan) that we've agreed ex post should never have been fought in the first place. When I was in first grade I recall my teacher asked what we were thankful for about America and one of my classmates used the fact that we had never lost a war. This status of "back to back world war champs" is a pretty deeply ingrained part of our national identity, and I really think becoming definitively the lesser power would render America totally unrecognizable. I wouldn't analogize this to the fall of the Roman Empire, but more to Weimar Germany, the fall of the USSR, or Tsarist Russia.
Thank you for doing that! I know from work I did consulting with local government that pension costs and medical costs (like everything else in the economy) have blown up over that last couple decades as a source of costs. Given that the military has both costs it actually is surprising that the total cost is not more.
I think we need accept that the return on each dollar of military spending in the US will less than that for countries like Russian and China (possibly even after adjusting for PPP) because of the composition and nature of US costs.
If that is the case it is likely that China is hugely outspending us in terms total military power. I saw a lot of quotes saying we spend plenty on the military but I think those folks are not considering how the composition of our costs limit the actual return on that money in terms of military power.
While I agree with your assessment of the problem, I fail to see, though I support an arms buildup, how, with our deficit/interest payment problem, we'll finance more defense. Clearly, our European allies ought to do more, but they're sclerotic. They're rent-seekers on our defense umbrella in order to protect their social welfare system. Maybe we're going the way of the British empire...just fade away. In the end, democracy may not be sustainable.
Beautifully researched and presented, thank you. We have a defense industry that is like the US healthcare sector - twice as expensive as everyone else's and half as effective. Restoring competition is going to be tough but critical...
As I keep pointing out, ships are a waste of money. Ukraine had a (small) navy which was sunk or captured on Day 1 of the Russian invasion. Despite this loss, Ukraine has inflicted a crushing defeat on the Black Sea Fleet, which was the subject of numerous chinstroking articles before 2022. Building a billion dollar boat that can be sunk by a million dollar missile is a really dumb idea. Let the Chinese do that, and send Taiwan lots of missiles.
I don't know, man. It feels like this entire piece hinges on the literary sleight of hand of assuming China and Russia can dominate Eurasia.
Which seems.... impossible? I think we need a concrete example of how they dominate India AND Germany AND France AND Indonesia AND Japan AND South Korea .... All simultaneously.
And then decide to invade and occupy Hawaii setting off a decades long insurrection?
Even time Noah pisses me off with an article, he comes back with something like this which reminds me why I pay to read him. Great article.
One question I had was, if defense spending is lower %GDP than 50 years ago, where did that money go? Because we're clearly not spending less overall, so we must have redirected it somewhere. Fortunately, the US government has data...
1983: https://usgovernmentspending.com/federal_budget_detail_1986ps11983n_10
2000: https://usgovernmentspending.com/federal_budget_detail_2000ps12018n_10
2022: https://usgovernmentspending.com/federal_budget_detail_2022ps12018n_10
Over that time period, every budgetary category stayed essentially flat as a % of GDP, except 2. Defense spending dropped by about GDP 2.5% and health care spending (Medi-care/aid) went up by about 3.5%. Nothing else changed significantly.
Bottom line: we took the money we used to spend building battleships and used it to keep extremely elderly and sick people alive for a little longer. Yes, probably for some (maybe many) other good things too, but the bulk of healthcare costs take place in the first year and the last year of life.
That's how we got here. What do we do? Since we're unlikely to throw Grandma under the bus (because only uncivilized countries like Britain and Canada force babies and old people to die), it seems tax increases will be the answer. I cringe at that as a conservative, but I don't see another viable option. As Noah says though, whether we can agree to do it (in a country that can't agree on what a woman is) seems doubtful.
One way or another, the problem will eventually get solved. A strategic military defeat has a way of focusing a nation, getting it to accept limits and get serious about waste, navel-gazing and decadence. It's a terrible price, but it does work. A defeated and isolated people whose standard of living has suddenly dropped are too busy trying to put food on the table do obsess about what a woman is.
Yes, we spend a lot on defense. No, that doesn't mean we spend enough. No, it doesn't mean we are wasting money on obsolete systems.
I would argue that most of the waste in the system is structural, from having DoD and 5 services instead of a Department of the Navy and a Department of War. From there, we have a sclerotic career system designed to support a mass mobilization in which we expand the military to 40x its present size. We simply don't have the manufacturing capacity to build enough military equipment for a military that large, and yet the officer corps and some civilian functions have been designed around it.
It's absolutely correct that entitlement spending and interest are crowding out military spending, but absent a huge increase in productivity there's going to be a huge debate about how to retire the Baby Boomers in luxury while also remaining a superpower. Cutting health care spending in half is a pipe dream that would never happen in a world where Boomers want all the health care that can possibly be provided to them.
Right now I would settle for a $25B, multi year munitions buy to load up on guided missiles. If we don't do that we risk running out after a week of fighting. I don't think a long war is a the risk. The risk is losing the Pacific Fleet in a week or two and then being shut out of Asia by countries that are too afraid to partner with us.
A couple of points.
A. If we don't go to a National Healthcare system and reduce spending from 20% to 10%.of GDP and save $2.5 Trillion annually, we will never have the fiscal horsepower. Healthcare Insurance is killing America.
B. I worked and managed in Automotive, Aerospace, Medical Device industries. The ONLY engineers that design; tool and produce more than 10 things a day are Automotive manufacturers. Exaggerated, but true.
C. So, the ONLY route to make 10,000 artillery shells a day, is to move 30% of Defense funding to GM and Ford. And then make 10,000 artillery shells...every hour.
D. Also build new shipyards not in Senator Tubbyvilles state.
We don’t need the DPA, we need long-term contracts and higher inventories. That is starting to work for things like 155mm shells, but our stocks of rockets and missiles (incl cruise missiles and JSSAMs) are ridiculously low- perhaps a few weeks to a few months worth in a real conflict. Part of this is because Congress and the Pentagon prioritize keeping weapon systems alive through trickling procurement rather than keeping these systems armed and well maintained (eg subs and naval ships generally, as you noted). . Another is the guns/butter tradeoff. Dems don’t want higher defense spending and when they do they often try to buy votes with it (higher health benefits) or reward campaign contributors (the trial bar with the “burn pile” and camp Lejeune water issues)rather than exclusively focusing on readiness and capability.
Anything over a few hundred million in DPA needs Congressional approval (I think) so better to simply budget and fund more ammo rather than directing it. Or within the Biden’s control maybe take the $50-100 mm of DPA spending that Biden mandated on solar panels and use that for ATACMs missiles?
Something needs to be done to simplify the procurement process as well as getting procurement officers out of bed with the so called primes. Often government is unable to use the best providers because of their lack of familiarity with federal regs surrounding procurement. My father who was a jobber who sold corrugated cartons once joked -- never do business with the government, you can charge them twice as much but its never enough. I once worked at Lawrence Livermore National Lab. There I learned about the difference between efficiency and effectiveness. Livermore scored high on the latter but low on the former.
Some of this looks like discussions of the supposed "missile gap" and "bomber gap" during the Cold War.
https://en.wikipedia.org/wiki/Missile_gap
https://en.wikipedia.org/wiki/Bomber_gap
"[T]he pandemic also normalized the use of the DPA, so this is a very realistic option."
I don't like the way you casually suggested abusing emergency powers. The public health industry abused emergency powers during the pandemic, and their power was curtailed in many places as a result, probably to our detriment in future pandemics. Promoting abuse of emergency war powers, which is what the DPA is, will inevitably lead to those powers being curtailed by Congress, to the detriment of our national security.
Great article and I don't want to be a complainer but I would love to see an article of baumol's cost disease as it relates to the US military. We spend a lot and I am sure things like a lack of competition play a role but I also think a combination of high wages relative to the rest of the world and exceptional benefits for US military vets also play a role. Since I am not particularly interested in cutting benefits to those who served I would love to get a better sense of how wages/benefit costs impact our defense spending.
I see this the same issue with our health care system. I have family and friends that work in healthcare in the US and in the UK. The US ones make ALOT more money. I am guess the military issues are similar.
“ The situation is serious enough that Washington may need to invoke the Defense Production Act and begin converting some civilian industry to military purposes.”
I don’t understand. The U. S. spends annually about 40% of the world’s military budget for its own military. The system is fundamentally broken and converting existing industry makes no sense.
It sounds like we just need more heavy industry.
I worry about how America would cope with losing a war started by China over Taiwan. America has only lost imperial adventures, ie wars of choice (Vietnam and Afghanistan) that we've agreed ex post should never have been fought in the first place. When I was in first grade I recall my teacher asked what we were thankful for about America and one of my classmates used the fact that we had never lost a war. This status of "back to back world war champs" is a pretty deeply ingrained part of our national identity, and I really think becoming definitively the lesser power would render America totally unrecognizable. I wouldn't analogize this to the fall of the Roman Empire, but more to Weimar Germany, the fall of the USSR, or Tsarist Russia.
Thank you for doing that! I know from work I did consulting with local government that pension costs and medical costs (like everything else in the economy) have blown up over that last couple decades as a source of costs. Given that the military has both costs it actually is surprising that the total cost is not more.
I think we need accept that the return on each dollar of military spending in the US will less than that for countries like Russian and China (possibly even after adjusting for PPP) because of the composition and nature of US costs.
If that is the case it is likely that China is hugely outspending us in terms total military power. I saw a lot of quotes saying we spend plenty on the military but I think those folks are not considering how the composition of our costs limit the actual return on that money in terms of military power.
Maybe the US isn't spending/investing on defense in the right ways, but it's somewhat difficult to believe we're not spending enough.
While I agree with your assessment of the problem, I fail to see, though I support an arms buildup, how, with our deficit/interest payment problem, we'll finance more defense. Clearly, our European allies ought to do more, but they're sclerotic. They're rent-seekers on our defense umbrella in order to protect their social welfare system. Maybe we're going the way of the British empire...just fade away. In the end, democracy may not be sustainable.