Albert Einstein is said to have called compound interest “the most powerful force in the universe.” A recent budget analysis shows how that powerful force would affect U.S. fiscal policy if Congress follows recommendations to boost annual military spending by 5 percent per year over the next decade.
Following the House Armed Service Committee’s (HASC) passage of the 2022 National Defense Authorization Act (NDAA) on Sept. 1, HASC ranking member Mike Rogers (R-Ala.) touted that he helped secure a 5 percent increase over the Department of Defense’s topline budget for last year.
The 5 percent bump follows the recommendations of the bipartisan National Defense Strategy Commission—a body that helps set broad U.S. security goals every four years—which has recommended annual Pentagon budget increases of 3 to 5 percent above inflation.
Proponents of this annual increase say it’s necessary for the military to complete ambitious goals of overhauling its legacy IT systems, investing in advanced technologies such as artificial intelligence, and revamping its nuclear weapons program—all steps seen as necessary to pivot from the Middle East to great-power conflicts with Russia and China.
However, National Taxpayers Union (NTU) analyst Andrew Lautz says that annual 3 to 5 percent annual increases are untenable in the long run. Writing on Sept. 2 for the Washington-based Quincy Institute for Responsible Statecraft, Lautz showed the long-term implications of this strategy.
This year, a 5 percent increase in the Pentagon’s 2021 budget results in $37.5 billion of extra spending. But that number quickly skyrockets to more than $100 billion in extra spending per year by 2026 and $200 billion per year by 2030.
“The differences compound over time, exceeding a $100-billion delta in four years (FY 2026) and a $200-billion delta in eight years (FY 2030),” said Lautz, referring to “delta” as the difference between the current long-term Pentagon budget forecast and what would be spent if the 5 percent increase plan was followed.
“By the end of the decade, FY 2031, the difference between the defense hawks’ ideal budget and the CBO projection is $253 billion—almost as much as was spent on the March 2020 $1,200 stimulus checks, to cite just one comparison,” he said.
“Add it up over 10 years, and the defense hawks would have us spend $1,244,600,390,000 — that’s more than $1.2 trillion—more on defense than current projections,” said Lautz, the director of federal policy for NTU.
Lautz further noted that lawmakers haven’t proposed spending cuts to offset their ambitious funding increases for the military. He also questioned the need for certain projects the increases would fund, such as the F-35, which he describes as “highly troubled,” and warship construction in what he said are overburdened shipyards.
At a Sept. 1 Brookings Institution webinar, HASC Chairman Adam Smith (D-Wash.) downplayed criticisms of the $25 billion spending increase.
“I don’t support the argument that ‘oh my gosh, we can’t spend another $25 billion because we have all these other priorities.’ We’ve spent a lot of money on those other priorities,” Smith said, referencing the roughly $6 trillion in stimulus injected into the economy over the past year-plus.
But viewing a $25 billion increase in a vacuum is the wrong take, given the strong support in Washington to make these 5 percent increases indefinite, Lautz said.
“A skeptic could claim that it’s ‘just’ $25 billion this year, a drop in the bucket compared to the government’s trillions of dollars in COVID spending. But if the defense hawks get what they want, it will add up to $1.2 trillion over the next decade alone,” he said.