...A
recent CBO report estimates these costs for the 2008-2017 period at a total of $481 to $603 billion under a more rapid withdrawal of US forces. It projects that it would cost $924 to $1,010 billion in a scenario involving a more gradual withdrawal from Iraq.
The cost of defense expenditures in the future is, therefore, likely to be significantly higher than the current estimates, but this does not mean that the resulting defense burden on the American economy would be high by historical standards. In fact, despite the relatively large recent increase in Defense Outlays since FY2001, the GDP burden is almost 20 percent lower than during the “peace-dividend era” of the early 1990s.
If one looks at the annual peaks of national defense spending during past conflicts, the US spent 38 percent of GDP on defense in World War II, 14 percent at the height of the Korean War, and 9.4 during Vietnam. The Reagan era “military build-up” caused a peak annual defense burden of 6.2 percent of GDP in 1986, the highest post-Vietnam value. By comparison, even including the Global War on Terror supplemental funding, the current burden for FY2007 and FY2008 will merely amount to a little over 4 percent.
Another way to analyze the defense burden is to consider what percentage of annual federal spending is allocated to national defense. The Global War on Terror brought about a shift in national priorities, but even with the increases in defense spending over the past six years today’s value of the defense share in the federal budget is 40 percent lower than the peak Reagan-era value in FY1987.
None of the three major components of the defense budget (Manpower, O&M, and Investment spending) are likely to experience a cost decrease in the future. However, the Administration’s FY2008 budget request anticipates markedly lower levels of total DoD spending in the coming years despite the recent trend in the opposite direction. The current wartime environment is likely to force DoD’s planners to revise upwards their estimates for the out-years in the FY2009 budget request and beyond.....
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