Tag: allies

Obama’s Reassurances to Europeans Should Dishearten Americans

President Obama is in Poland today, a visit that coincides with the 25th anniversary of that country’s liberation from communism. His four-day European tour will include a D-Day remembrance, meetings with G-7 leaders, and a possible encounter with Russian President Vladimir Putin in France, all while the crisis in Ukraine rages on.

Moments after stepping off Air Force One in Warsaw, with F-16s as a backdrop, the president sought to reassure our European allies, stating that America’s commitment to their security was “a cornerstone of our own security and it is sacrosanct.” He detailed the increased support America has provided, including a larger presence in the region, and later announced that he would ask Congress to fund a “European reassurance initiative” to the tune of $1 billion.

This is exactly the wrong approach. American taxpayers have been subsidizing the defense of European allies for too long. And they have reacted as one would expect—by spending less.

In fact, only three NATO countries – Estonia, Greece, and the United Kingdom – spent the NATO-mandated 2 percent of GDP on their defense in 2013, and even those three barely met the threshold. That is compared to the United States, which spent 3.7 percent of its GDP on defense, a figure that excludes national security spending in the Departments of Energy, Homeland Security, and Veterans Affairs.

As this chart prepared by my colleague Travis Evans shows, U.S. spending has risen and fallen over the past 13 years, but spending by NATO countries has consistently declined. And Americans still spend more than in 2002, both as a share of GDP, and in real, inflation-adjusted dollars.

US and NATO

In his speech last week at West Point, President Obama correctly called on U.S. allies to spend more on their own defense. He had done the same thing in March. Bob Gates made headlines in one of his last speeches as Secretary of Defense when he scolded NATO allies for their inadequate defense spending. Such exhortations have consistently failed, and I predicted last week that the president’s latest approach to getting the allies to share more of the burdens would also fail.

I elaborated on why yesterday at War on the Rocks:

Our allies are unlikely to pick up the slack unless the United States pulls back on its promises to defend others from harm, and reshapes its military accordingly.

This has been clear since at least the mid-1960s, when Mancur Olson and Richard Zeckhauser first articulated an economic theory of alliances. Because there is a general tendency for smaller nations to free ride on the security assurances of larger ones, Olson and Zeckhauser predicted that “American attempts to persuade her allies to bear larger shares of the common burden are apt to do nothing more than breed division and resentment.”

MIT’s Barry Posen states the bottom line succinctly in his new book, Restraint: A New Foundation for U.S. Grand Strategy. America’s allies, Posen writes:

Make their defense decisions in the face of extravagant United States promises to defend them. They will not do more unless the United States credibly commits to doing less.

Conversely, Obama’s pledges of more U.S. troops and more U.S. money will discourage the Europeans from doing more. Indeed, the president’s actions in Poland belie his burden-sharing rhetoric at home, and should be deeply disheartening to the people who elected him. Americans want genuine burden sharing, but they are likely to get only the phony kind favored in Washington.

Subsidizing the Security of Wealthy Allies

How much does the United States spend on the military relative to our allies? A lot. 

A new Cato video, produced by Cato multimedia gurus Caleb Brown and Austin Bragg, puts this comparison in perspective. The data jumps out of the Cato infographic from last week, and shows how we are subsidizing the security of our wealthy allies who can and should defend themselves. Instead, we provide for their security while they free-ride and spend their money on everything else (including bloated welfare states). Your tax dollars at work. 

Check out the video below.

The Costs of Our Overseas Military Presence

The AP’s Donna Cassata is reporting today on a study commissioned by the Senate Armed Services Committee, which purports to calculate the costs of the U.S. military presence overseas. This is a hot topic, but it isn’t exactly a new one. Americans have long been frustrated by inequitable burden sharing, with many of our wealthy allies spending a fraction of what we do on defense. On Monday, Cato published a new infographic on the subject to coincide with tax day (see below).

Unfortunately, the committee’s estimate that the permanent stationing of U.S. troops overseas costs us $10 billion each year is too low–in all likelihood, much too low. I have not yet had a chance to read the entire report, but the DoD’s own estimate of overseas military costs includes the costs of personnel, and is more than twice that amount, $20.9 billion (see p. 207 in the latest budget submission). Even the DoD’s figure, however, understates the true cost of our commitments to defend other countries that can and should defend themselves, because it doesn’t fully account for the additional force structure that is required to maintain a presence many thousands of miles away from the United States. If the U.S. military operated chiefly in the Western Hemisphere, with regular expeditionary operations far afield, we could safely have fewer people on active duty, and mobilize a large and well-trained reserve for genuine emergencies. This smaller military would require ships and planes to take them where they were needed, when they were needed, but not as many planes and ships as we have today. And no report can actually assess the costs and risks when and if our security commitments compel us to become embroiled in a distant war that does not engage vital U.S. interests. 

Other studies have attempted to assess all of the costs of these various global commitments, and the estimates vary widely. Graham Fuller and Ian Lesser of the RAND Corporation, for example, estimated in 1997 that the U.S. military presence in the Persian Gulf cost between $30 and $60 billion per year. A more recent study by Mark Delucchi and James Murphy estimated costs between $47 and $98 billion. Several of us at Cato have been compiling these estimates, and coming up with our own, as part of a comprehensive study of the costs of our global military presence. We will publish our key findings when they become available.

In the meantime, this much is clear: our security commitments, many of them holdovers from the Cold War, induce other countries to spend less than they could on their own defense. And they compel Americans to spend more than we should.  

 

Subsidizing the security of wealthy allies

 

Obama’s 2014 Military Spending Request

The Obama administration $640.5 billion fiscal year 2014 request for military spending authority is predictably unrealistic and excessive. Still, political circumstance continues to drag the Pentagon toward fiscal restraint. 

That $640.5 billion includes $88.5 billion for war (a.k.a. overseas contingency operations), $526.6 for non-war spending in the Department of Defense, and another $25.4 billion spending outside DoD, mostly for nuclear weapons in the Department of Energy, which officially counts as “national defense” or budget function 050 spending. 

Those spending levels ignore the budgetary cap set by law and the political reality it reflects. The $552 billion requested in 2014 for non-war “national defense” spending exceeds by $55 billion the spending cap set by the 2011 Budget Control Act, as amended by the American Taxpayer Relief Act of 2012. Were Congress to enact the president’s budget and leave the cap in place, that total would be sequestered equally across “defense” spending categories, including the war. 

Even if Congress agrees to a grand bargain altering the caps, military spending will likely face additional cuts. Republican resistance to tax hikes and Democratic protection of entitlements mean that any deal they cut will likely again target discretionary spending, more than half of which goes to the military. Of course, Congress’ failure thus far to undo this year’s more onerous sequestration suggests that no deal is likely. An over-under on where the non-war Pentagon budget winds up for 2014 would be closer to $500 billion than $550 billion. 

In a certain light, there is some sacrifice here. The non-war DoD request of $526.6 billion is just $1.2 billion more than last year’s request. Factoring in inflation, it’s about a 1.5 percent cut. This budget would bring the portion of GDP going to the military to 4 percent, versus. 4.3 percent this year, according to the administration. And as Russell Rumbaugh points out, DoD’s projected spending over ten years is down $114 billion from a year ago. 

On the other hand, the request would be a substantial increase over the $493 billion that the Pentagon actually got from Congress this year, after sequestration (see page 10 here). Economic growth is the main reason that a declining portion of national wealth is going to the military. And the cuts scheduled over the decade would arrive mostly in its second half, when someone else is president, meaning that the cuts are basically imaginary

Additionally, the “placeholder” request of $88.5 billion in Pentagon funds for war—the same as last year—is suspiciously high. The administration says they will revise the request once they determine force levels in Afghanistan. But the president already announced plans to halve total U.S. troops there from 68,000 to 34,000 by next February. Even with the increased cost from exiting, the total cost should be far lower. The Pentagon is likely continuing to use the war budget to dodge caps and fund personnel and other non-war functions. Meanwhile, the administration still claims to support a ten-year cap on war spending. As Charles Knight and I explain here, that is a feckless gesture at a good idea. 

One reason why the Pentagon request is unrealistically and unnecessarily large is that it’s part of a struggle with Republicans over the shape of deficit reduction. The White House may be holding military spending cuts in reserve to offer as an alternative to tax increases that Republicans will refuse. Another, more fundamental, reason is that the administration remains wedded to the liberal internationalist species of the militarist consensus that sees U.S. military power as the linchpin to global stability, trade, and liberalization. Here are some newer arguments against that bipartisan consensus. Hopefully the new secretary of defense, Chuck Hagel, shares some of that skepticism and will demonstrate it once he has time to guide the budget. 

Given our safety, we should stop spending on the military as we did at the height of the Cold War. The Pentagon budget should comply with the spending cap by making choices among missions and goals, rather than clinging to existing alliances and ambitions. The cuts on offer are mostly efficiencies—they require doing the same things more cheaply. Some reforms of this kind, like the administration’s proposal to increase TRICARE fees and start another Base Realignment and Closure (BRAC) round, can save big bucks, though Congress will probably ignore them. Bigger cuts require larger choices. If, for example, we shed allies and the pretension that stability everywhere depends on our military presence, far deeper cuts to each service, especially the ground forces, are possible. We could cut a leg or two of the nuclear delivery-vehicle triad without sacrificing deterrence. One virtue of austerity is to encourage these sorts of overdue choices.

Learning Nothing, Forgetting Nothing: The Useless Laments About Allies’ Contributions to Defense

Today in the Los Angeles Times, Gary Schmitt argues that America’s Western allies are not spending enough on their militaries. This is not news. But Schmitt offers no solution to the problem.

Smaller countries free ride on larger countries’ security guarantees because it is the rational thing to do. Almost two years ago, Schmitt authored a very similar piece in the Wall Street Journal. If he was concerned then, or is concerned now, with the inadequate spending of our allies, the best way to change that is to revoke our commitment to defend them. As I wrote in response to Schmitt’s Wall Street Journal article:

In their 1966 article “Economic Theory of Alliances,” Mancur Olson Jr. and Richard Zeckhauser solved this puzzle. Olson and Zeckhauser explained the disproportionate contributions of NATO members with a model that showed that in the provision of collective goods (like security) in organizations (like the NATO alliance), the larger nations will tend to bear a “disproportionately large share of the common burden.” Due in part to these dynamics, Kenneth Waltz concluded by 1979 that “in fact if not in form, NATO consists of guarantees given by the United States to its European allies and to Canada.” As Waltz pointed out, France’s withdrawal in 1966 from NATO’s integrated military command failed to “noticeably change the bipolar balance” between NATO and the Soviet-sponsored WTO.

The implication of the Olson-Zeckhauser model, which has held up remarkably well over time, is that the only way to force Europe to spend more would be to make clear that the United States views European security as a private, not a collective, good, and that consequently its provision was rightly Europe’s responsibility. Given U.S. policymakers’ extreme reticence to adopt this conclusion, likely because a more independent Europe would be more independent, we should expect European defense spending to stay low and U.S. defense intellectuals to keep complaining about European free-riding, all to no avail. (I have previously written about this subject here and here.)

If we maintain a commitment to defend our European wards, they’ll keep free riding and Uncle Sucker will keep paying. Think tankers writing earnest op-eds and policymakers giving stern speeches isn’t going to change this dynamic.

The Flawed Bipartisan Consensus on Military Spending and Foreign Policy

I have a new piece up at ForeignPolicy.com this morning, commenting on the GOP’s apparent confusion about government spending and the effects that such spending has on others.

The party that opposes nearly all other forms of federal spending happily embraces the military variety. Republicans assert that military spending cuts will result in massive job losses, even as they argue that cuts in other federal spending would grow the economy and create jobs in the private sector. They are skeptical that the federal government should engage in nation-building at home, but celebrate it abroad. Republican candidate Mitt Romney accuses Obama of fostering a “culture of dependency” in the United States, yet ignores that U.S. security guarantees have created an entire class of affluent countries around the world that now rely upon U.S. tax dollars to pay for their defense.

Trouble is, as I point out, President Obama “hasn’t been anxious to kick other countries off the dole.” He boasts that the “the United States is still the world’s ‘indispensable nation,’” and he pledges that the U.S. military will continue “to underwrite global security,” which doesn’t leave much for anyone else’s military to do.

Such an ambitious mission is expensive.

Obama’s unwillingness to make deep cuts in military spending confirms his rhetoric. Over the next decade, the Pentagon’s annual base budget (which excludes most war costs) will average $517 billion in constant 2012 dollars, 11 percent higher than what Americans spent during the George W. Bush years.

For many Republicans, but especially for Mitt Romney, that isn’t nearly enough. They accuse the president of gutting the Pentagon’s budget, and loudly complain about his unwillingness to undo the automatic spending cuts that would cut even more (that they, inconveniently, engineered).

Republicans could reasonably claim that military spending should get a pass because the Constitution clearly stipulates a federal role in defending the country. But nowhere is it written that Americans must provide security for others; that is the job of their governments, not America’s.

Indeed, the Republicans’ reflexive commitment to more military spending is particularly curious given their appreciation for how incentives work in the domestic sphere. Republicans know quite well that people are not inclined to pay for things that others will provide for them. GOP leaders speak often of moral hazards – when individuals or businesses behave irresponsibly because others are there to bail them out. The same problem exists in international politics, but is strangely ignored in the GOP’s plan to continue policing the world.

I conclude the piece with some unsolicited advice for the GOP nominee, but I doubt he’s listening. You can read the whole thing here.

The Truth about Sequestration

Cato has just released a new video, titled “The Truth about Sequestration,” that tells the real story about sequestration, the automatic budget cuts required by the Budget Control Act. Many in Congress claim to abhor their creation, including many of those who voted for it, yet the members and the president haven’t done much to prevent it. Perhaps they shouldn’t do anything and let the cuts happen. In our video, my colleagues Ben Friedman and Dan Mitchell join me in explaining that, whatever its shortcomings as legislation (and there are many, as discussed below) sequestration may be the only viable way to reduce the Pentagon’s budget.

However, there’s little likelihood that sequestration will significantly reduce the defense budget long term. That’s because sequestration cuts the defense budget only in the first year. Every year after that, defense spending will increase. Spending levels will indeed be lower than the Pentagon last year expected them to be. But only in Washington is that considered a cut. So, under sequestration, instead of spending $5.7 trillion on defense over the next decade, as the FY2013 budget suggests, the government will spend about $5.2 trillion.

That $500 billion difference may not actually materialize. Congress has a few options to mitigate the effects of the initial $55 billion slice off the budget. They could reprogram funds after the sequester, change the definition of “programs, projects and activities” (the budget level at which the cuts are implemented), or take advantage of the flexibility within operations and maintenance (O&M) funds. In fact, because the Office of Management and Budget has declared that war spending is eligible to be sequestered, the total cuts to O&M can be spread out across a bigger pot of money. Beyond all that, sequestration does not affect outlays or funds already obligated, which means it will not affect existing contracts. So, the real story is that should sequestration actually happen, Congress and the Pentagon will have much more flexibility than they’re willing to admit.

Our video also highlights the fact that we spend far more on the military than is necessary. Since the end of the Cold War, policymakers and pundits have coalesced around the idea that the United States is the “indispensable nation” responsible for protecting everyone from everything. Under the misapprehension that threats anywhere in the world are necessarily threatening to the United States, we have taken on the responsibility of policing the entire planet. This increases the chances that the United States will become involved in conflicts that do not engage vital U.S. interests, or that we do not fully understand, or can easily remedy. This strategic hypochondria (H/T Ted Galen Carpenter) also burden American taxpayers with additional costs that could and should be borne by others. The video includes a nifty graphic showing the expansion of NATO. We have added a host of weak or fragile countries in the Middle East and Southwest Asia (including, still, Iraq and Afghanistan), and now we are doubling down with assurances to Asian nations that we will constrain China (and implying that they need not do so).

In short, a bloated defense budget has enabled these misguided policies, encourages free-riding by our “allies” and make us less safe abroad and less free at home. Though I would have much preferred a serious strategic debate before the current fiscal crisis, and indeed called for such a thing, sequestration should help us to refocus our national security priorities. In fact, the real story is that sequestration doesn’t restrict our choices, it enables us to make better ones.

Americans shouldn’t worry that sequestration will make our defense budget too small. We account for approximately 48 percent of the world’s military spending. We will retain a margin of superiority over any conceivable combination of rivals, including China, even if our share of military spending fell to 44 or 45 percent of the world’s total.

Sequestration was no one’s first choice, but keeping our reckless spending and strategic myopia on auto pilot is worse.