Ideals & Allies: Why the American military budget is unfit for the 21st Century

The United States military budget and the strategy it serves is not built for the threats facing America in the 21st Century. The US Department of Defense budget is by far the world’s largest, accounting for more than one-third of the world’s military spending, but the US is not particularly adept at “power conversion” — translating power resources into desired outcomes.?The uncomfortable truth is that the US track record since the Second World War has been unsatisfactory, if not appalling if one really considers the enormous sums that have been poured into the effort. As Henry Kissinger often points out, the American military “has fought five wars since 1945” — Korea, Vietnam, the Gulf War, Afghanistan, and Iraq— “and has gained its objectives in only one of them.” The unambiguous triumph was to liberate Kuwait in the 1991 Gulf War. But even this was only a tactical success; it was a “fundamental failure” in the broader strategic sense of creating a lasting stability.?Historian Andrew Bacevich notes that since 1945, “US forces have not achieved a conclusive success in any contest on a scale larger than policing actions such as the 1983 intervention in Grenada or the 1989 invasion of Panama.” For military hawks, the problem is a constrained budget. “America is careening toward strategic insolvency” — the point at which its commitments exceeds its capabilities to defend allies and deter adversaries, write the hawks Brands and Edelman. In their analysis, the “only way” to avoid this danger is to significantly ramp up defense spending. This paper argues there are several alternatives.?

Pace military hawks, the problem is not the budget; the US has been the world’s largest economy since 1872 and the preeminent world power since the Second World War. The problem is strategy: the American military’s Force Structure — the number and type of combat units, plus personnel and equipment — are directed at areas where the US is already dominant; it does little to counter non-military threats, such as China’s border expansion in the South China Sea, nor is it well-equipped to combat new forms of hybrid or unconventional warfare, such as Russia’s use of “Little Green Men” to invade Crimea. The US is unable to effectively counter these threats because the defense budget and strategy it has employed since the attacks of September 11, 2001, have “grown without discipline,” giving the Department of Defense “an ever-growing array of tasks”.?The Pentagon’s 2014 Quadrennial Review and the White House’s 2015 National Security Strategy attest to this, proscribing policies to eliminate risks the world over. The strategy finds support from policy-makers such as Senator John McCain, who in July 2014 said the world was “in greater turmoil than at any time in my lifetime.” This echoed a 2012 comment from General Martin Dempsey, then chairman of the Joint Chiefs of Staff, who said: "I will personally attest to the fact that [the world is] more dangerous than it has ever been.”?In June 2017, Defense Secretary Jim Mattis doubled down on this strategy, calling for a larger budget to address "warfighting readiness shortfalls ... by putting more aircraft in the air, ships to seat, and troops in the field.” The new budget would increase "capacity and lethality," "reassert our technological edge" and modernise the nuclear arsenal. This paper contends that it would be difficult to be more myopic. None of the major defeats America has suffered since 1945 would have been mitigated by additional hard power; if anything, the misguided hope that additional hard power would bring victory has prolonged wars and wasted resources.?In the Vietnam War, to take one example, “the total tonnage loosed upon an area the size of Texas was three times the Allied tonnage dropped on Europe, Africa and Asia during World War II.” Moreover, America’s predominance in conventional warfare is the very force incentivising unconventional challenges. A US strategy of investing heavily in national defense and?power projection?— defined by the Pentagon as "the ability of the United States to project large-scale military power abroad” — had a certain logic in the Cold War, to fuel an arms race with the Soviet Union that accelerated its economic strain and helped lead it to collapse. But in the 21st Century the threats are different. With the rise of China, this papers finds a parallel between today and the 1980s rivalry between the US and the Soviets, but one with critical twist: the US is now playing the role of the Soviets.

This work draws on the work of scholars who argue that the expansive grand strategy adopted after the Cold War ended, sometimes called “Liberal Hegemony” or “Enlightened Liberal Dominance”, has failed. These scholars call for the US to narrow its foreign interests, place far less emphasis on force, and broaden the burden of defense spending for the US-led world order by incentivising allies to do more. In particular I refer to Walt and Mearsheimer calling for the US to return to a policy of “Offshore Balancing;” to the policy of “Restraint,” associated with Posen; and to “Responsible Competition,” associated with Wright. I refer to these scholars as “ravens” throughout, in contrast to “hawks” who support the current grand strategy and believe in a larger military budget. I use “ravens” instead of “doves” because although these scholars are in favour of retrenchment, to varying degrees, all but Wright embrace realism; none are reluctant to use force per se, but all emphasise being smart and selective. The hawks I juxtapose them against are represented by a prevailing establishment view that is global, interventionist, and concerned with US primacy. These hawks include policy-makers at the Pentagon and White House (despite neo-isolationist rhetoric), the House and Senate Committees on Armed Services, and the “intellectual axis” comprising a number of scholars and think tanks such as the Heritage Foundation.

This paper seeks to contextualise the failure of US strategy, then make the case that a shift is not merely a preference, but a necessity. It addresses what I believe to be a gaping hole in the ravens’ case for a new policy: the budget. In the key policy texts advocating retrenchment, none of the ravens lay out in any detail how expensive the US defense budget is. A few figures are given, but it is merely assumed the reader knows the budget is bloated. This is a large blind spot, because hawks do not merely believe the defense budget is affordable, they think it is a bargain. The influential scholar Eliot Cohen, for instance, says "the weakest of all arguments against global policy engagement back by armed force" is the notion that it is too expensive, given that it is just 3-4 per cent of gross domestic product. The purpose of this paper is to offer a riposte to this thinking.?

My argument therefore concerns US military strategy and the budget that enables it. My thesis is straightforward: the current budget is unaffordable; the strategy it serves is failing. If the US is to begin winning wars again, strategy must be overhauled to narrow US interests, prioritise diplomacy, and incentive allies to be more involved. I structure my argument as follows: Part One sets the scene to show that while war has been transformed by a host of new actors and methods, US politicians, voters, and the defense establishment have been complacent. This helps to explain why budget allocation is stubborn. In Part Two, I argue that the question of whether the defense budget is too big or small is of little value; instead we will examine, in three chapters, whether it is affordable, competitive, and effective. I conclude it is unsustainable, that the basis for US primacy is eroding, and the strategy it serves is undisciplined. In Part Three we look at how the US can preserve its superpower status even as China becomes the world’s largest economy. I argue it should adopt a strategy that prioritises sustainable and unique strengths, including its allies and the ideals it stands for — a more constant set of strengths than its economy.?

P a r t?O n e?:?A?C o l d?W a r?m e n t a l i t y?

Chapter One: Fourth-Generation Warfare, Third-Generation Strategy

Theories of what war is have been transformed in the 21st Century. Scholars such as Colin Gray used to speak with certainty when they pontificated about the nature of war, using Clausewitz as a guide, but this is increasingly recognised as folly. In 2007, Gray wrote that it was “nonsense” to differentiate between regular or irregular war; “There are only wars,” he said. A year earlier, he was even more dogmatic:

War cannot change its nature, any more than my cat can become a dog. If war changes its nature, it becomes something else. This is not a pedantic academic point. If the changing character of war is confused with change in the nature of war, wholly unrealistic expectations are encouraged.

But the cat has become a dog. Gone are the days of decisive battles between professional armies, when slaughter on a defined battlefield was part and parcel of war. What Mary Kaldor calls “post-Clausewitzian” wars tend to persist and be inconclusive. Instead of a contest of wills, a US-led coalition may win by strengthening non-sectarian identities. “Victory,” as Schuurman writes, “no longer rests on the ability to inflict massive destruction but on the ability to wrestle popular support away from one’s opponents, isolating the insurgent or the terrorist from the things he needs most”. Blurry lines now stand between warfare and crime, and between civilians and soldiers; enemies might still be groups, but they can also be ideologies; battles over territory have given way to “population-centric warfare” in which enemy civilians need to be protected because they are “objectives to be won”. Even weapons now come in the form of aircraft and cars — or lines of computer code. These transformations are so large that British General Rupert Smith opened his 2006 book,?The Utility of Force, with this declaration: “War no longer exists.”

Despite these dramatic changes, it is common for US legislators to speak in caricatured Churchillian language to beef up the military and carpet-bomb terrorists, as if wars were still conclusive events resolved by might. In this section I offer a brief look at how American culture is still mired in an old-fashioned mindset of warfare, because it helps explain why the defense budget fails to reflect war’s transformation. As Nadia Schadlow?points out, “America’s ‘strategic culture’ matters. In a democracy, the culture, history, and old experience of a nation inform and shape public opinion in wartime.”

A) Militarism and the 2016 election:

When Texas Senator Ted Cruz was running for president in 2016, he laid out a vision for an expensive, high-tech military that would stand heads and shoulders above any rival to ensure the United States would be safe from new threats in the 21st Century. Cruz would enlarge the Army by more than 100,000 soldiers, bolster the Navy from 273 to 350 ships, fund 12 new next-generation submarines and expand the number of Air Force planes from 5,000 to 6,000. Missile-defense systems for the homeland would also be prioritised, as would cyberwarfare capabilities and protecting assets in space. Cruz proposed cutting $500bn in federal programmes over a decade to pay for this build-up, while increasing defense expenditures to 4.1 per cent of US gross domestic product. Cruz said the US faced “a momentous decision” to restore the military following “almost a decade of irresponsible defense cuts” that had “shrunk the size of our Army, Navy and Air Force below any reasonable standard.” Such cuts, he said, had created a “void” enabling “Russian aggression in Eastern Europe, Chinese claims to false-island territory in Asia, and a staggering increase” in radical Islamic terrorism. By creating a bigger, bolder military, he said, “We could send no stronger message to enemies like North Korea and Iran.”

It would be easy to dismiss this vision of hardening US military power as simply one politician trying to sound tough in a crowded field of candidates, but for one issue: what Cruz was envisioning was not imaginative, it was routine. The Texas Senator was actually considered to be on the dovish end of the Republican spectrum. Cruz, of course, lost?the race for the Republican nomination to Donald Trump. Yet Trump, ostensibly an anti-war candidate, shared virtually the same vision for the military: he once boasted of being “much more militaristic” than George W. Bush. A tweet on January 24, 2016 is representative not only of his views, but the entire Republican Party outside of the Libertarian wing: “I will make our Military so big, powerful & strong that no one will mess with us.” Nor is the image of a high-tech, equipment-intensive US military confined to conservative circles. If the world view of Democratic candidate Hillary Clinton was distinct during the 2016 election, it was that she was more inclined to actually deploy a large military, rather than just boast one. “For all their bluster about bombing the Islamic State into oblivion, neither Donald J. Trump nor Senator Ted Cruz of Texas has demonstrated anywhere near the appetite for military engagement abroad that Clinton has,” writes Mark Landler, the author of a book on Clinton's foreign policy instincts. And while it is true that President Barack Obama fought against this mentality by trying to avoid wars and clamp down on defense spending, the resistance these efforts met prove the over-arching dominance of US militarism. Republican Congressman Howard “Buck” McKeon, who in 2013 was chairman of the House Armed Service Committee, said that Obama’s plan to save $400bn over 12 years “fails to acknowledge the perilous global security environment, which may be the most dangerous we have witnessed in a generation.”?Moreover,?Bacevich has pointed out if Obama “turn[ed] the page on a decade of war” — as was claimed — it was only to open a new chapter. With the US still boasting “unquestioned and unchallengeable military superiority,” Bacevich wrote, “the Obama approach to national security preserved far more than it changed.”

Numerous scholars have noted that the idea of American Exceptionalism prioritising a militaristic stance and leading “to reckless interventions abroad” is one that “transcends party ideology,” as Jackson Lears puts it. Republicans and Democrats “may quibble over foreign policy at the margins,” adds Posen, “but they agree on the big picture: that the United States should dominate the world militarily, economically, and politically, as it has since the final years of the Cold War, a strategy of liberal hegemony.”?Indeed, even in these partisan times Congress passed a defense policy bill, in September 2017, for the 56th consecutive year. It sailed through the House and received 89-9 support in the Senate.?

Nor is militarism confined to US leaders. For Bacevich, a Vietnam veteran, ordinary Americans are “today as never before in their history enthralled with military power.” Sociologist Michael Mann argues that the United States, with its warrior constitution and foreign policy, is an outlier within ‘the North’ and ‘The West’, and is “arguably more warlike than ever before.” Indeed, a 2017 Gallup poll found that among 16 institutions, Americans “have the most confidence in the military,” with 72 per cent saying they a had "great deal/quite a lot" of support, compared with 57 per cent for the Police and 12 per cent for Congress. Perversely, however, this enthusiasm for the military does not correlate with being more knowledgable about war, nor does political support for the troops correspond with taking military affairs more seriously. In a 2016 book about the military-civilian divide (co-edited by Jim Mattis, the current Defense Secretary), one essayist quips: “Most Americans know roughly as much about the US military as they know about the surface of the moon.” Journalist James Fallows blames complacency about the military as a central reason why Americans' are willing “to wade into conflict after conflict, blithely assuming we would win.” This deference to the military manifests itself in Congress, where there is "overwhelming support...for increasing military pay and benefits, even when the military services themselves would like to curtail the rate of growth.” Indeed, when President Trump recommended an historic military build-up after entering office, Congress approved a base budget of $640bn — $37bn more than requested — plus $60bn for ongoing wars.

B) The post-1945 anomaly:

And yet, for how pervasive support for a massive US military is, it is easy to forget that it is a relatively novel phenomenon. Harvard historian Jill Lepore writes that early Americans “considered a standing army — a permanent army kept even in times of peace — to be a form of tyranny.” True, the US was not an isolationist country, as is sometimes claimed. Its ‘manifest destiny’ expansionism across the continent, and then to Hawaii, the Philippines and Panama, put Americans in contact and rivalry with the world powers even before the nation was formed. The Seven Years War, fought from 1756 to 1763, was famously called the first world war by Winston Churchill. “Americans think of themselves as peace-loving, but few nations have had as much experience at war as the United States,” writes George C. Herring in his history of US foreign relations. Still, until the Second World War the US did not even have a proper military. As of 1939, the US army was ranked 39th in the world by size, comparable to Bolivia’s ground forces and just trailing Portugal’s. Only in 1946 did the US form the Armed Services Committee, followed by the Defense Department a year later.?The justification then was mutual enmity between the US and the Soviet Union, which led to a perceived need to promote and protect democracy in Eastern Europe. The US also stationed troops in Japan to safeguard its interests and quell concerns from China and South Korea.?

Scholars such as Robert Kagan have persuasively argued the US was instrumental in creating an America-led world order that prevented war among the great powers, grew the number of democratic countries from a dozen to more than 100, and lifted billions of people out of poverty.?One can, however, distinguish between what G. John Ikenberry calls “the two postwar settlements”. One was a political reaction to the Soviets, leading to a policy of containment, nuclear deterrence and ideological competition. The other was an economic reaction to 1930s rivalry, leading to “the liberal democratic order” centered on open economies and increased cooperation. Both postwar settlements have their achievements, but from the start critics sensed that the political settlement might generate a militarism that would be hard to suppress. In 1954, after the Korean War, sociologist C. Wright Mills coined the term “military metaphysics” to refer to the growing tendency “to see international problems as military problems”. In 1961, President Eisenhower delivered his “Military-Industrial Complex Speech” in which he warned Americans of the ”recurring temptation to feel that some spectacular and costly action could become the miraculous solution to all current difficulties.” Today, such sentiments are not warnings per se, but descriptions of reality. Former Pentagon advisor Rosa Brooks penned a book last year about how the US military has come to be viewed as an “all-purpose tool for fixing anything happens to be broken”. In one section, “Dial 1-800-MILITARY”, she describes how "the more the military's role expands, the more civilian agencies such as the State Department find themselves sidelined — until finally, the military becomes virtually the only game in town.” It is unlikely Brooks was surprised when, a few months after her book was published, newly elected President Trump proposed a 28 per cent budget cut for the State Department and the US Agency for International Development, to $25.6bn.

This cut to diplomacy was proposed just as the Trump administration asked for the Pentagon budget to be increased by $52bn, to $639bn. As Brown University's?Costs of Wars Project?commented: "We are looking at what might be the largest buildup in the Pentagon and related spending since World War II.” The buildup would increase the Navy from 272 to 350 ships, add tens of thousands of soldiers and Marines, accelerate "an already hugely costly nuclear buildup" and initiate a Reaganesque Star Wars missile defense system. As Colin Tierney writes: the White House “intends to pour resources into capabilities designed for the?least likely scenarios, like a naval showdown with China, rather than the?most likely scenarios, like battling terrorists and insurgents.” In short, the US outlook is mired in a Cold War mentality — minus the restraint against reckless adventurism provided by having the Soviets as a rival superpower — with broad support from the people and both political parties serving to enable disproportionate spending on defense.

P a r t?T w o :?T h e?U S?D e f e n s e?B u d g e t?

Whether the US military budget is too large is a question that, for many observers, has an obvious answer; the trouble is, depending on political persuasion and worldview, it is obviously too large, or obviously too small. Few analyses determine that the military budget is in the Goldilocks’ position of being “just right.” Moreover, the two camps often talk past each other by using different measures of spending. Ravens are wont to use absolute numbers to make their case: the $700bn allocated for the fiscal 2018 military budget is, after all, a very large number indeed, especially when coupled with comparisons that show the US spends more than the next seven to 15 nations combined. In making the case that the post-9/11 wars are expensive, Posen points out that by 2010 the US had spent $784bn on the Iraq war and $321bn on Afghanistan. Walt and Mearsheimer use the same tactic, but they use an estimate of the costs that includes long-term medical care and disability compensation: "The wars in Afghanistan and Iraq cost between $4 trillion and $6 trillion,” they write. By contrast, advocates of a bigger military use a different number: spending as a percentage of gross domestic product. As Kagan notes, a defense budget that is roughly 4 per cent of GDP is “cheap” by historical standards. He notes, correctly, that it is “lower than the 10 percent of GDP that the United States spent on defense in the mid-1950s or the 7 percent it spent in the late 1980s.” The implication is that as large as the US defense budget might be in absolute terms, relative to economic output it is small; a greater budget is thus affordable. Both measures tell part of the story, but neither is particularly illuminating without more context. The point of this section therefore is to examine the size of the military budget with a series of measures that are historical, comparative and contextual.?

Chapter Two: Unsustainable

A) The US defense budget in absolute terms:

In absolute terms, no other nation comes close to the US military budget. From 2000 to 2011 — years in which US total economic output rose 50.8 per cent from $10.28tn to $15.52tn — the US defense budget rose far more quickly, more than doubling as it rose 136 per cent from $301bn in 2000 to an all-time high of $711.3bn. Referring to this peak, O’Hanlon points out that in constant 2013 dollars, the defense budget had "exceeded the cold war inflation-adjusted spending average of $475 billion by about 50 per cent.” Military hawks thought this all-time high was appropriate. When the Budget Control Act of 2011 was on the horizon, along with the the winding down of the Iraq War, Ike Skelton, former chairman of the House Committee on Armed Services, said the coming cuts would be “downright devastating” and “imperil our nation … to the sidelines of history.” Reflecting on the cuts later, in 2015, the Heritage Foundation said they had “degraded” and “significantly weakened” the military. But even in 2016, when spending had been pulled back by 20 per cent from its peak, the US defense budget was still nearly three times larger than China’s and was bigger than the next eight countries’ budget combined (in order: China, Russia, Saudi Arabia, India, France, UK, Japan, Germany). The US research and development budget alone, at $71.9bn in 2016, is greater than all other countries' entire defense budgets except China’s. In 2017, President Trump proposed increasing the military budget by $52bn; this figure alone is greater than the entire 2016 defense budgets of the UK, Japan, Germany or South Korea — each of whom are among the top 10 spenders in the world.?

The notion that the cuts implemented after 2011 crippled the military is questionable at best. Since the 1990s the US has consistently accounted for more than a third of global defense spending, its allies have made up another third, and potential adversaries and competitors have spent a bit less than 20 per cent (while the rest of the world combined for about 15 per cent). This was still true in Obama’s final year. In 2016, the world spend nearly $1.7tn on defense, or 2.2 per cent of global GDP. The US, which makes up roughly a fifth of the world economy, accounted for 36 per cent of global defense spending. Its allies or friends — including at least 11 of the 15 top spenders in the world — made up another third. Rival states still account for about a fifth of global spending: China and Russia combined for 17.1 per cent of the total; other adversaries such as Iran and North Korea hardly register on this measure. In short, the US military budget remains large and its overall budget, having increased significantly since 9/11, is bigger than during the Cold War.

Even so, citing these absolute figures is not particularly convincing. As military hawks will rightfully point out: the US is the third largest country in the world by population, after China and India, who are far poorer in per capita terms. As a result, the US outspends its rivals on a host of measures: in 2015 Americans spent $3.2tn on health-care — almost 18 per cent of GDP and more than the next nine countries combined. In 2012, Americans’ share of entertainment spending, globally, was about one-third. The US budget on research and development, about $400bn in 2012, is also about one-third the world total; in terms of patents, the US receives nearly half the world total. What the defense numbers offer, therefore, is little more than a confirmation that the US is a big, rich country, and one that devotes more to defense than its European allies. Moreover, high spending figures are not likely to convince hawks that the budget is too large. After all, hawks do not deny that US spending is disproportionate; they will proudly say it is disproportionate by design. The most recent National Security Strategy from the Executive Branch says a strong US military is “the bedrock of our national security” that it “must remain dominant in every domain.” It adds that there “there is no substitute for American leadership whether in the face of aggression, in the cause of universal values, or in the service of a more secure America.” Or as Senator Cruz likes to say, a little more glibly: “If you think?it's too?expensive?to?defend?this?nation,?try not defending it.”?

B) US defense spending as a proportion of GDP:

The great rejoinder employed by hawks to show that defense spending is small is one metric: military spending as a percentage of GDP. Charting this metric from the Second World War to the present shows a clear downward slope, allowing hawks to point out that current spending is relatively low. Speaking before the House Committee on Armed Services in 2011, scholar Max Boot argued against spending cuts because, by this measure, the US defense budget has been “eminently affordable,” adding: “It is, in fact, a bargain considering the historic consequences of letting our guard down.” Brands and Edelman, similarly, write that Washington’s military primacy since the 1990s has been achieved “at bargain-basement prices.” They add: “This dominance has come at a remarkably affordable price — usually between 3 and 4 percent of GDP, as compared with 12 percent at the peak of the Cold War.”?

This common argument is problematic on a few counts. First, if we look at US spending in constant dollars, it is clear that military spending has generally been going up. As Harvard’s Jill Lepore notes, the 2011 defense budget was larger, “in adjusted dollars, than at any time since the Allies were fighting the Axis.” This suggests that the low percentage of expenditure spent on the military is, like the absolute figure, more indicative of a growing US economy. Second, there is common sleight of hand here: by establishing the Cold War years as the baseline, current spending as a percentage of GDP looks low. But the US became a nation in 1776, and any longer-term view of military spending shows that the Cold War-era is an anomaly. From 1792 to 1940, the only time time defense spending rose above 4 per cent of GDP was during the Civil War (for four years) and the First World War (for three years). During the War of 1812 (1812-1815), defense spending ranged from 2 to 2.7 per cent of GDP; in the Spanish-American War of 1898, it was 1.63 per cent. In each of these instances the US withdrew spending more rapidly than during the 1990s after the Cold War. Third, those who use the percentage of GDP figure tend not to highlight that the falling percentage of GDP spending is not a national trend, but a global one. By looking at the US in isolation, it is implied — and sometimes said directly —?that the US is unilaterally imposing austerity on the military. But global military spending as a percentage of GDP fell from 6 per cent in 1960 to 2.2 per cent last year. Similarly, from 1972 to 2015, global military spending a percentage of central government expenditure fell by a third, from 23.8 per cent to 8.1 per cent. As a result of this global trend, the US has been able to consistently account for 35 to 45 per cent of global defense spending since the end of the Cold War.?

C) A more helpful measure:

More important than any of these points, however, is that neither absolute figures or spending as percentage of GDP really says anything at all about whether the budget is affordable or sustainable. In 2016 the US boasted the largest economy in the world, by far, at $18.6tn. If one cares to know whether the military budget is sustainable, it is far more apt to examine what share of GDP translates into government revenue — which can then be spent on the military. If, for instance, the US managed to take in 50 per cent of its GDP as tax revenue, or $9.3tn, then a $600bn budget would easily be affordable. But, if the US took in 10 per cent of GDP as tax revenue, or $1.86tn, and most of the $600bn defense spending had to debt-financed, then clearly this would be unsustainable. Alas, the reality is that the US government is not particularly adept at generating tax revenue. Unlike most of its peers in the advanced world, the US lacks a value-added or consumption tax, making it overly reliant on individual and corporate tax. As a result, Uncle Sam’s wallet — all income the government receives — is small relative to its large economy.?

A few numbers help establish this. Total US tax revenue as a share of GDP in 2014 was 26 per cent. This is almost half the rate of Denmark (47 per cent) or France (46 per cent), far below the rate for Germany (37 per cent), and well below the OECD average (34 per cent). General government revenue, a wider measure that includes taxes on imports and production, totals just 33.4 per cent of GDP — the third lowest in the OECD. Conservative politicians like to say that Washington has a spending problem, not an income problem. But the facts say otherwise: of the 35 OECD nations, US government spending as a percentage of GDP is the sixth lowest; by contrast, the US ranks 31st when it comes to generating tax revenue.?,??The CIA acknowledges that “US revenues from taxes and other sources are lower, as a percentage of GDP, than those of most other countries.” Of the 220 countries in the CIA’s database, the US ranks 166th by tax revenue as a percentage of GDP. In its ranking of balanced budgets, the US ranked 105th in 2016, when it experienced a budget deficit of 2.9 per cent of GDP.?

This point, typically ignored by hawks when they say the budget is cheap, is also ignored by ravens when they make the case for a new strategy. But is important if we are to determine whether the defense budget is affordable. Most analyses, regardless of political persuasion, look at military spending relative to total expenditure. Even the nonpartisan Congressional Budget Office, for instance, examines the size of the US military by noting its budget accounts for about one-sixth of federal spending. Similarly, the hawks Brands and Edelman say defense “consumes around 16 per cent of federal spending” and contrast it with higher domestic entitlements. But this is awkward. If the US decided in a given a year to spend billions more on health care, for instance, causing overall spending to rise and the deficit to balloon, the percentage of defense spending would consequently decline, wrongly implying defense austerity. To avoid this problem, it is important to look at the budget relative to tax revenue, because that is the money the US actually has. The rest is debt. For fiscal year 2017, the CBO estimates the US will spend $4.0tn, but only take in $3.3tn of revenue. The budget deficit is projected at $693bn. A military budget passed by the Senate in September was $700bn. That is 17.5 per cent of total spending. As a percentage of expected revenue, the defense budget will be 21.2 per cent, about four percentage points higher than the previous year.?

This a far more meaningful metric than percentage of GDP. True, hawks could still point out that spending more than a fifth of tax revenue on defense is still lower than in earlier decades, and they would be right. But as we have seen, that is true on a global basis as well; therefore it has little meaning. What matters is to compare this figure with other nations today. By doing so, it becomes clear that because the US takes in less tax as a share of its economy but also boasts one of the world’s largest military budgets as a percentage of GDP, it has developed a structural disadvantage to its only near-peer competitor: China.

?

Chapter Three: The Basis for US Primacy is Eroding

In the 1950s, Soviet leader Nikita Khrushchev pledged that the USSR would outproduce the United States by 1970 and have a higher standard of living than any capitalist country by 1981.?The US took these claims seriously, and in 1955 published its first report comparing the two economies. It declared: “The factor of relative economic strength is fundamental. Neither morale nor political stability nor a firm military posture can long be sustained in its absence.” In?1984, a CIA report found that the USSR had only made scant progress achieving its goals. In 1960 and 1965, Soviet gross national product was 49 per cent of US GNP; by 1975, it had reached 58 per cent, but the Soviets then "lost ground", falling to 55 per cent in 1980 and staying there by 1983. The CIA also recognised that since the early 1970s, the Soviets were spending "substantially" more on defense in absolute terms but especially as a percentage of GNP, versus the US. But, the faster growth of the American economy was beginning to outweigh this. Soviet GNP for the rest of the 1980s was estimated at 3 to 4 per cent. Projecting higher US growth, the CIA contended that Soviet GNP "will be back down to less than half the US figure” by the end of the decade.?

The report underscored the merit of a strategy that President Ronald Reagan was already implementing. With the Soviet economy wobbling and its military losing its edge, Reagan would enact a buildup of the US military, including a highly publicised effort to build a Strategic Defense Initiative, or "Star Wars” programme, in the hopes of?actively spurring an arms race with his great rival. As the late Ronald Hilton pointed out, the USSR felt "compelled ... to raise the share of its defense spending from 22 percent to 27 percent of GDP, while it froze the production of civilian goods at 1980 levels.” Scholars still dispute whether the 1991 collapse of the Soviet Union was a direct result of this policy; what is notable for this paper, however, is that the US had a clear understanding of relative economic performances and it based its defense strategy around the recognition that economic primacy was its chief asset.?

Today, with China becoming a near-peer of the US, this paper argues there is a parallel between the 1980s and today, but with a key twist: the US is playing the role of the Soviets this time. Indeed, it is almost inevitable that China will become a far larger economy than the US a decade from now, with the capacity to build a bigger, newer, and more geographically focused military. US politicians that want to counteract this with higher spending on defense are enacting the exact role the CIA and Reagan hoped the USSR would play in the 1980s. The more hawkish they are, the better they play the role. In the following section, I attempt to show that China is in a better place to improve its military and accelerate the relative decline of the US.

A) Mired in the Cold War

That US strategy is still mired in the Cold War can be seen by the ubiquity of hawks who use language and ideas from the 1980s to support strategy for an entirely different battlefield. Writing in?The National Interest?in 2016, Robert C. O’Brien lauded Senator Cruz’s vision of a “Reagan-style build up” after President Obama had “systematically drained resources” from the US armed services. “While President Obama may have been hoping that unilateral disarmament … would result in similar behaviour from other major powers, the opposite has happened. Both China and Russia are engaged in significant military buildup,” he argued. Brands, another hawk, says there is an arms race going on, with US rivals “racing the hardest.” Despite “severe economic and demographic problems, Russia has conducted a major military modernisation,” he writes. China, he adds, “has been increasing its military spending by double-digit annual increments for roughly two decades.” Duncan L. Hunter, chairman of House Committee on Armed Services from 2002 to 2006, warned Congress in 2011 about cutting defense budgets following the post-9/11 buildup, because it “was not as robust as that of the Reagan years.” He warned of cutting the defense budget just as “China is emerging as a military super-power, stepping into the shoes of the former Soviet Union, developing high performance missiles, aircraft and ships, outproducing the U.S. in key areas such as attack submarines (5 to 1), and ballistic missiles.”

?These are common arguments that mislead in multiple ways. First, even after a sharp reduction in US military spending between 2010 and 2016, US defense spending was still 36 per cent of the global total — several percentage points higher than when Reagan left office. Second, while there is little doubt that Russia has become more bellicose in recent years, its economy has also been hit hard from low oil prices and US-led sanctions. Russia’s defense spending rose from 2014 to 2016 in GDP terms, expanding from 3.17 per cent in 2014 to 3.68 per cent,?but this reflects the big contraction of its economy. In constant dollars Russia was forced to cut military spending to $46.6bn last year, down 27 per cent from $64.5bn in 2014, according to IISS. Third, while it is true that the US share of defense spending has decreased from a peak of nearly 42 per cent in 2010, the main factor driving this is?faster foreign growth, not US cuts to defense. Economist Peter Morici, professor of international business at the University of Maryland, noted in 2011 that even without sequestration China's military budget "could effectively match U.S. spending in the late 2020s," in purchasing power parity terms.? Understanding the sources of Beijing’s defense spending is critical to devising a strategy that would contain or counter China. When Brands says that China defense spending has been rising by double-digits for two decades, he conveniently omits that China’s defense budget is growing rapidly because it has experienced double-digit GDP growth, on average, for four decades. It is implausible that US defense budget can maintain its edge in this environment. From 2001 to 2014, for instance, inflation-adjusted US military spending grew a rapid 45 per cent. This is a rate of growth broadly understood to be unsustainable, though many people of different political stripes would defend the buildup with reference to the Iraq and Afghanistan Wars. Yet in China over the same period, defense spending grew 321 per cent. By 2016, Beijing was spending $215bn, according to Sipri. But here is the rub: as a percentage of GDP China’s defense spending was?constant?at 1.9 per cent — below the global average of 2.2 per cent, under the target for Nato countries, and roughly half the post-Cold War average of the US. Certain?actions?Beijing has taken in the South China Sea may represent growing belligerence, but its defense spending alone does not; it merely reflects the country’s rise. Indeed. China’s defense spending accounted for 13 per cent of the global share in 2016, but China’s share of the global economy is actually larger, at 15 per cent in dollar terms. Chinese spending on defense is also lower, as a percentage of GDP, than all but two of the top 10 military powers.

In short: the problem posed by China is that its economy is growing, and growing quickly; this calls for an economic response, not a military buildup. Responding to Beijing with a higher defense spending would be foolish, because unlike in the 1980s the US does not have the economic advantage. As the Council on Foreign Relations points out — and as we have already seen via the CIA and Reagan — rising military expenditures is “likely to be more sustainable over the long term” when it is based on a rising share of global GDP; if, by contrast, a decision is simply made to spend more on defense “at the expense of other priorities,” it is likely to strain the budget.?

A better US strategy has to face a series of inconvenient facts and projections. First, the reality: in 2014 the US stopped being the world’s largest economy, when measured in purchasing power parity terms, or PPP. This is the preferred measure of comparison at the International Monetary Fund and the World Bank because it takes into account cost of living considerations that are lost in simple exchange rate comparison. Second, the projections: the IMF estimates that China will be 40 per cent larger than the US by 2021, in PPP terms. According to the OECD, China will still be growing above 4 per cent a year in 2025, a rate at which the economy would double in size every 18 years. That same year the US is projected to be growing at 2.4 per cent; at that rate it would double in size every 30 years. As Harvard’s Graham Allison points out, China’s economy will be triple the size of America’s by 2049 — the 100-year anniversary of modern China — if it meets the projections of President Xi Jinping. Of course, nobody can be certain China will achieve this growth, but these are mainstream projections after four decades of proven results; a US strategy cannot simply bank on it not happening. Moreover, as Rachman notes, it would take a lot for China to veer off course. “The analogy to the rise of Germany from the mid-nineteenth century onward is instructive,” he writes. “Germany went through two catastrophic military defeats, hyperinflation, the Great Depression, the collapse of democracy, and the destruction of its major cities and infrastructure by Allied bombs. And yet by the end of the 1950s, West Germany was once again one of the world’s leading economies.” Third, the implications: Beijing will eventually have the capacity to build a bigger military. A RAND study in 2015 projected that by 2017, China would already be able to win a war fought over Taiwan. By 2040, China’s military spending is expected to surpass America’s, according the?China Power Project?at the Center for Strategic & International Studies.?The?Economist?reckons Beijing could match US spending as early as 2025.?

B) Beijing outperforms the US on military capacity:

Crucial for our purposes is to show that China is already better equipped to translate its economic growth into military power. As the accompanying chart makes clear, China is more adept as generating tax revenue from its economy, so that it when it spends on defense it does so without marring economic growth or straining the budget. In dollar terms, China GDP last year was $11.2tn, and it collected $2.3tn of taxes for its budget — or 20.4 per cent of total output. By comparison, US GDP was $18.57tn and it collected $3.36tn in revenue, or just 18.1 per cent. The difference may looks slight, but the implications are in the hundreds of billions of dollars, so this matters when we compare how affordable their defense budgets are. As a percentage of GDP, Washington spent 3.25 per cent on defense in 2016; Beijing spent 1.29 per cent. As a percentage of government revenue, the difference is even starker: Washington spent 17.97 per cent of revenue on defense, Beijing only 6.31 per cent. The upshot is that an analogy with the Soviet Union is misplaced, as “China has the potential to match the US in certain military spheres with a similar burden on its economy,” writes Robertson. “This is in stark contrast to the Soviets’ cold war strategy, where they matched the US only by spending up to 20% of GDP on the military.”?

Indeed, one can take this further and say that Chinese spending can deliver more dollar-for-dollar than the US. According to a 2010 statement on the website of China's Ministry of National Defense, "China's defense expenses per service person amounted to 4.49 percent of that of the United States" in 2007. In?The Military Balance 2017, per capita defense spending in China was estimated at just $105 last year, versus $1,866 for the US. A central reason why is the low of labour in China, which is a third of the budget. Robertson and Sin found that by looking at the cost of inputs — the localised cost of spending on real military services —?China's real military spending "is much larger than suggested by exchange rate comparisons." They argue that PPP exchange rates “are not necessarily appropriate for comparing military output … insofar as they reflect the relative price of an average bundle of all goods and services, usually GDP, and not just military services.” After they construct a “military unit” of exchange to account for this, they found if Beijing and the US spent the same per cent of GDP on defense, China’s spending would equate to more than 90 per cent of the US budget. Significantly, this calculation was based on 2010 figures, when the US budget was near its apex and when Beijing’s budget was two-fifths the size, in dollar terms.,?From 2010 to 2016, China’s defense budget grew by $144bn to $225bn, in constant 2015 dollars.

The US Department of Defense recognises that China is not filling the shoes of the Soviet Union in this key respect. In 2015, the DoD said China's military spending would still be affordable even if its GDP growth slows. After noting that China's economy had recently been growing at 10.7 per cent, it added, "China will probably sustain defense spending growth at comparable levels for the foreseeable future” The conservative, hawkish Heritage Foundation also provides support for China’s superior capacity in its?2017 Index of Economic Freedom. The index, which uses proprietary measures to rank countries, positions China above the US on both taxing and spending. It gives China's tax burden a ranking of "mostly free", versus "moderately free" for the US, and it calls China government spending "mostly freely" in contrast to "mostly unfree" for the US. Moreover, in its inaugural ranking of fiscal health, Heritage ranked China near the top, in it "free" category, which the US was ranked "mostly unfree” — just a few points short of “repressed." Data from the OECD add that Beijing does a far better job of saving money for payment imbalances: its latest figures for government reserves, from late 2014, show China siting on a cash pile of $2.66tn, the world's biggest. The US cash reserve was just $91bn — less than Mexico’s, and smaller than even some US companies such as Apple.?

To be sure, defense analysts believe China’s military capabilities are still decades behind the United States, whose own advantages are not easy to quantify but include a great deal of experience, training, and bases around the globe. But as a RAND study comparing the US and China militaries stated, “Over the next five to 15 years, if U.S. and [People’s Liberation Army] forces remain on roughly current trajectories, Asia will witness a progressively receding frontier of U.S. dominance.” As we have seen, Beijing’s growing dominance is not based on military spending, but its economic might. Mercifully, a war between these two great powers is unlikely. There is little evidence that China would seek a conventional war with the US, and given the disastrous, almost unimaginative consequences of such a war, everything from common sense to game theory would suggest, as Cordesman writes, that “the only way to win is not to play.” There is, however, “substantial evidence that China’s economic and financial policy is a more urgent problem for the United States,” write Adams and Leatherman, “but one of the best ways for the United States to respond to that is to get its fiscal house in order.”?

When it comes to military strategy, then, Beijing’s mindset is akin to a consumer deciding when to buy a car within a deflationary spiral: it always pays to wait. With China’s economy growing, Beijing is focusing strategy on changing facts on the ground by surreptitiously expanding its border in the South China Sea and strengthening regional ties, knowing that the US military focus on expensive hardware projects for interstate conflicts and an ever-expanding array of global policing missions will do little to hinder its goals. Even after Obama’s much-vaunted “pivot” to Asia, Beijing came to understand this was more about rhetoric than reality, as the US kept getting sucked back into Middle-Eastern conflicts that drain its resources. So, as the US plows further into debt, “a common Chinese view is that the United States will instead eventually find it can no longer afford its military position in the Pacific,” Rachman writes. The trouble, therefore, is not that China is developing its military and the US lacks the?political?will to compete. It is far more profound than that. The trouble is that China has the economic capacity and revenue potential to triple its military budget, and the US does not. With China’s faster growth, this is not an easy problem to remedy.?

Chapter Four: American strategy is undisciplined

China’s growth figures would be far less worrying if the American military were winning wars, preserving its power and enhancing its reputation with allies and enemies alike. This is far from the case. As Bret Stephens, a hawk at the?New York Times,?writes in the context of China's quantitative advantages: “The [China] numbers — and the contrast with the United States — are even more impressive considering that China's military budget is not overburdened by personnel costs as that of the United States. Indeed, the closer one looks at trends in US military spending, the more worrisome they appear.” In this section we look at two problems reflected in the US defense budget: rising personnel expenses and poor cost allocation.

A) Bloated personnel costs:

Unfortunately, it is difficult to argue with the notion that the US will eventually lose interest in the Pacific and gift an enlarged sea border to Beijing. One reason is bloated personnel costs for the US military. A CBO report in early 2017 said the Pentagon’s operation and maintenance (O&M) account — the largest item in the DoD base budget, funding day-to-day operations — had “increased significantly” in past decades, “even as the number of active-duty military personnel has remained flat or declined.” In 2015, funding for military personnel totalled $135bn, up from an average of $120bn (in 2015 dollars) from 1980 to 2015, whereas funding for procurement was $94bn, less than the average $106bn over the same period. This example reflects the simple reality that growing personnel spending “means fewer resources are available for other defence needs, particularly in periods of fiscal restraint.” Independent estimates by Harrison are even more alarming. He estimates that pay and benefits for each active-duty service member rose 57 per cent in inflation-adjusted terms between 2001 and 2012, and total personnel costs rose 59 per cent, even though service members rose only 3 per cent. In a separate analysis, Harrison estimates “costs per warrior” in Afghanistan had sky-rocketed to $1.1m, by far a record high “versus an adjusted $67,000 per year for troops in World War II and $132,000 in Vietnam.” Little wonder why former Defense Secretary Robert Gates once said healthcare was eating the defense budget alive. Despite those complaints, Congress continues to raise pay and benefits for the military, against the Pentagon’s own requests. In 2017, when President Trump proposed a 2.1 per cent pay increase, following a 1.3 per cent increase a year earlier, the House counter-proposed with a 2.4 per cent increase. Their reasoning was simple: politics. As Mattis and Schake write, “No one gets elected in America running against the troops.”

The result of these rising expenses is that past wars are likely to keep future spending high, which may force US strategy to narrow regardless of whether it is working. As Harvard's Linda Bilmes concludes in her financial study of the post-9/11 wars, the Iraq and Afghanistan conflicts “will be the most expensive wars in US history – totaling somewhere between $4 to $6 trillion” including long-term medical care, disability compensation, military replenishment and social and economic costs. “The largest portion of that bill is yet to be paid,” she writes. “As a consequence of these wartime spending choices, the United States will face constraints in funding investments in personnel and diplomacy, research and development and new military initiatives. The legacy of decisions taken during the Iraq and Afghanistan wars will dominate future federal budgets for decades to come.”

B)?Poorly allocated?

Hawks often cite the 2011 budget cuts as the catalyst for why America’s military looks diminished. Jim Thomas, director of studies at the Center for Strategic and Budgetary Assessments, warned Congress before the cuts that “if the sequestration trigger were pulled, it could result in even more drastic reductions placing the United States at great peril.” Max Boot worried that if the F-35 fighter jet — the most expensive US weapons program ever, with a lifetime cost of $1.5tn — were “cancelled altogether” or cut back significantly then the US would not be able to respond to threats from China or Russia. It would, he added, “signal the death knell for American power in the Pacific.”?

Defense secretary Jim Mattis brought this to the point of absurdity in June 2017: "For all the heartache caused by the loss of our troops during these wars, no enemy in the field has done more to harm the readiness of our military than sequestration.”

But the reality is that the US has boasted a military budget an order of magnitude larger than all of its allies and most of its rivals for decades. This remains true regardless of whether one believes the US drew down its capacity too much in the 1990s or after 2011. If these enormous sums have not delivered a massive, lasting superiority in readiness, modernity and capability, this suggests problems at the Pentagon go far beyond recent budget cuts. We need not go to critics of American power to make this point. Instead we can refer to one of the military’s biggest supporters, the Heritage Foundation, which compiles an annual report to judge the quality of the American military.?

The results of the 2018 index are astonishing in how pessimistic they are. Presenting the 2018 index in October 2017, editor Dakota Wood described the US military as "minimally ready, rapidly aging, and has so shrunk in size that even senior military leaders question its ability.” Thomas Spoehr, director for national defense at Heritage, writes in an accompanying article: “American military capabilities have now markedly deteriorated to a dangerously low level.” The Heritage scholars have little to say about military blunders, the role of allies, or how the call for more defense spending will be met. But Spoehr makes clear what the over-arching goal is: ”The U.S military must be superior everywhere.” The publication itself is a 450-page document that overstates risks, understates US abilities, and offers no substantial changes to strategy. For instance the threat of Russia is described as "aggressive" and "formidable," while China is perceived as "testing" and "formidable." As for the US ability to defend its interests: the Army and Marine Corps are deemed “weak.” Heritage is a little more generous to the Navy and Air Force, describing them as “marginal,” a ranking that even applies to America’s nuclear inventory — though it makes up about half the world’s arsenal.?

C)?Waste:

The question of how the US spends more than all of its rivals combined and yet produces, apparently, an entirely incapable force, is not addressed. The report does acknowledge the theoretical possibility of wasteful, misallocated spending, but only to dismiss the reality of it: “It is possible that a larger defense budget could be associated with less military capability if the money were allocated inappropriately or spent wastefully. That said, however, the budget does reflect the importance assigned to defending the nation and its interests in the prioritization of federal spending.” Ironically, however, this point was undermined by a humorous example when Congressman Mac Thornberry, chairman of House Armed Services Committee, offered a story at the publication’s event:

I just have to say I was struck by the Navy’s announcement that to operate periscopes on new submarines they’re going to use Xbox 360 controllers, which cost about $30 apiece, rather than the specially designed controllers that cost $38,000 apiece, partly for cost but mainly because the guys who were coming in to run those periscopes already know how to work those controllers and they work fine.

Thornberry offered this story as an example of military “agility and innovation,” apparently oblivious to the question: why has the Navy been procuring controllers at a cost of more than one thousand times the market rate of a superior product? Of course this is just one example, but it seems unlikely that the Pentagon could not find not similar savings across the board. Indeed, it is probable that such spending excesses go back decades, but that more examples have come to light since the 2008 financial crisis because of the need to impose budget cuts.?

It would be helpful to be more certain in this and cite more examples. But the Pentagon has never been audited. Moreover, Congressional reports that attempt to account for rising costs essentially shrug their their shoulders at times, citing for instance “many vague and large ‘other’ categories” that elude them. A recent internal Pentagon study estimated it could save $125bn over five years without reducing military personnel or civil servants, simply by taking the sort of steps that are routine among big corporations: streamlining bureaucracy and making better use of information technology. The study proved so embarrassing that it was buried, but it leaked to?The Washington Post. Among its findings were that the DoD employs more than 1m back-office personnel, and that almost a quarter of the entire budget was spent on overhead and business operations such as accounting, human resources and logistics. Cordesman, who has published several studies on the cost of wars and the DoD’s budget, calls it “striking … how little serious attention is spent on examining the key elements of its total cost by war and mission, and the linkage between the use of resources and the presence of an effective strategy.” The US, he adds, is in denial that war is the grim reality; instead it chooses to treat it as a “temporary aberration” to be funded by supplemental budgets such as Overseas Contingency Operations. He adds: “Reporting by the Executive Branch seems almost designed to obscure the real costs of conflict, and avoid linking them to an examination of strategy, its effectiveness, and the prospects for conflict termination.”

Fallows reports that these problems are pervasive. He uses the term “political engineering” to describe “the art of spreading a military project to as many congressional districts as possible, and thus maximizing the number of members of Congress who feel that if they cut off funding, they’d be hurting themselves.” The F-35, mentioned earlier as the most expensive US weapons project ever, is arguably?expensive by design. It takes the art of political engineering and turns it global, sourcing parts, as Fallows reports, from more than 250 locations across 11 allied countries and 90 congressional districts. As these budgetary questions largely go unaddressed, so too are failures of strategy ignored. Fallows reports that despite the US military being defeated, repeatedly, “by less modern, worse-equipped, barely-funded foes”, there is “almost no accountability or personal consequences for military failure.”?

Having contrasted China’s rise with an overextended US military, we now turn to a pressing question: what to do about it?

P a r t?T h r e e : I d e a s?&?A l l i e s?

Chapter Five: Strategic insolvency

When Army Generate Stanley?McChrystal was asked in 2009 to lead efforts in Afghanistan, he performed a 60-day review and concluded that an additional 80,000 troops would be needed to realise the White House strategy. The Administration balked, allowing for just 30,000 extra troops to be deployed. The compromised result meant that US forces were spread too thinly to really have an effect. This problem of adequately aligning the military force with US strategy is, writ large, one of the biggest problems facing the military. Hawks make this point too, though with different intentions. After the Heritage Foundation published its 2017 index, editor Dakota Wood told the?Military Times: “Clearly, the takeaway on this … is that the military is too small. It’s much too small to handle the tasks being assigned to it.” Similarly, Brands and Edelman have argued: “American military power has become dangerously insufficient relative to [its] grand strategy.”?These critiques are fair, but the only solution proposed by the hawks is to increase the budget — just as McChrystal determined that more troops were needed. But what McCrystal was not asked, as Brooks points out, was

if he thought the president’s strategy in Afghanistan was a?good?strategy,?or if he thought long-term US interests might be better served by pursuing a radically scaled down counterterrorism mission, or even by withdrawing US forces altogether. McCrystal was instead told to address a rather narrow question: What resources were required for the existing strategy to succeed??

What Brooks is saying for McCrystal I would extend to the entire US grand strategy. That is, I agree with the hawks that US power?is?insufficient to current strategy. But because the US budget is already unaffordable, the solution should be to narrow the strategy, not plow more resources into it. In this section, I outline what threats are facing America in the 21st century and will briefly outline what grand strategies the US could adopt to narrow its interests. In doing so I am following Posen, who has said: “If you accept the present grand strategy, it might be true that the defense budget is actually too small. On the other hand, if you have a different strategy, if you focus narrowly on the security needs of the United States, I think you could have a much smaller force structure, I think you could have a much smaller defense budget.”

A) 21st Century Threats

The problem of American strategy can be divided into two threat categories:

(a) Against the likes of China and Russia, the US is too prepared for improbable, inter-state conflicts, at the expense of being prepared for the facts actually changing on the ground. As David Lai points out, the US is prepared to play a total annihilation game such as chess, but its smart rivals are playing?Go, where winners more typically build up a steady accrual of advantages until they encircle the enemy. China’s steady expansion of its sea border in the South China Sea is a perfect example of where diplomacy and pressure from allies is far more likely to produce a desired outcome than increasing the size of the Navy or Air Force, given that the probability of a large, violent conflict over uninhabited islands is slim. The US therefore needs follow less in the footsteps of Clausewitz, and instead look to Sun Tzu. The 19th Century Prussian once said: “The greatest successes are obtained where all engagements coalesce into one great battle”. The ancient Chinese scholar, by contrast, said the acme of skill is “not to winning every battle but in defeating the enemy without ever fighting”.

(b) Against rogue states and insurgents, the US is equipped to fight short battles, but it is unready to win long-term wars. If the US is going to achieve lasting victory rather than mere tactical success, its strategy must focus less on industrial warfare and more on Fourth-Generation Warfare. Victory in these conflicts is not determined by military will alone; as DoD critic and retired Colonel Thomas X. Hammes argues, “superior political will, when properly employed, can defeat greater economic and military power.” Or, as Joseph Nye puts it: “Conventional wisdom holds that the state with the largest army prevails, but in the information age, the state (or the nonstate actor) with the best story may sometimes win.”

For both types of threat, the trouble is not the size of the DoD budget — which easily eclipses the budgets of these rivals, combined — but how it is allocated. The US needs to narrow its interests, place far less emphasis on force, and assume a far more holistic strategy. This requires moving away from the US comfort zone — large interstate conflicts typified by the Gulf War — to instead tackle more probable threats.?

The catalyst for this needed shift is based partly on my analysis earlier that the current strategy does not work well, nor is it affordable, but it is also based on the recognition that there are limits to power. As Nye writes, a central problem for the US is figuring out “what to do in light of the realization that even the largest country cannot achieve the outcomes it wants without the help of others.” I have argued, to quote Betts, that “a hawkish stance on national security policy made good sense in the Cold War”. The Soviets, he reminds us, had “five million men under arms and thousands of nuclear weapons.” But the new threats of today, such as secretive terrorist groups, requires a response that lays “more in intelligence and unconventional special operations than in regular military forces.” The goals of US power projection are based on out-dated notions of war, including the aim to “win decisively.” The reality is that internal or civil wars make up 90 per cent of conflicts in the 21st century. Since Vietnam, enemy states have killed fewer than 300 Americans, while more than 10,000 have been killed by insurgents and terrorists. The US, however, is often refusing to even think, let alone operate, with the long-term mindset that is required to win such battles. In Afghanistan, for instance, Schake argues the US has had 15 consecutive versions of a one-year war “instead of actually having a political goal and amassing the resources to attain it” over a 15-year period.?

What this suggests is that US legislators need a reality check when they shut down the only US training center dedicated to irregular warfare, and instead favour spending $1tn over the next 30 years to modernise its nuclear arsenal.,?As Collina wrote in 2014, “these weapons play essentially no role in responding to today’s highest-priority threats” — then considered to be Russia’s invasion of Ukraine, the Islamic State’s expansion Iraq and Syria, and Ebola. US policy-makers are all too aware that because North Korea may have a few dozen nuclear weapons,?perhaps?with the ability to launch them on intercontinental ballistic missiles, the rogue regime has create a strong deterrent against a conventional attack. But somehow the same logic of deterrence does not apply to the US, which has roughly 7,000 nuclear weapons. Instead the Pentagon must spend billions modernising its force to defend the homeland in case a major power invades — something that last took place in 1812. What this hawkish thinking misses is that “more is not better if less is enough,” as Kenneth Waltz pointed out in 1981. “With deterrent forces, the question is not whether one country has more than another but whether it has the capability of inflicting ‘unacceptable damage’ on another, with unacceptable damage sensibly defined. Once that capability is assured, additional strategic weapons are useless.”

Indeed, while terrorism is a persistent threat, one reason it is a threat at all is that all rivals accept that a conventional war against the US military would be suicidal. However, rival actors play for their interests in other ways. China is expanding its sea border surreptitiously and incrementally; determined Taliban fighters are engaging in guerrilla warfare against unenthused US-trained fighters defending a corrupt regime; Islamic terrorists are using non-weapons as weapons against civilians, turning the West's great attributes — vast territory, open culture and limited government — into liabilities. More conventional actors, such as Russia and North Korea, understand that America’s military dominance is not necessarily a stumbling block either. Russia has invaded two countries in the past 15 years, having surmised that neither the Bush or Obama administrations would risk war over Georgia and Crimea; North Korea has continued to develop its nuclear arsenal, convinced that the threat of a US invasion is unlikely.

But hawks continue to push for greater military budgets with ever more hyperbolic assertions of a decimated military in a world in chaos. In 2016 O’Brien warned that the US “may be facing the most dangerous geopolitical environment since 1938.” He added that in the event of “an actual shooting war” with Iran, North Korea, or terrorist groups such as ISIS and Al Qaeda, “we would find America, the leader of the free world, unprepared as the armed forces face readiness issues not seen since the ‘hollow force’ days of the 1970s.”?

Such claims have been widespread since the end of the Cold War. In 1993, Jonathan Clarke, a former member of the British diplomatic service, complained that certain common assumptions — i.e. that the end of the Cold War created more instability and that the US alone had the power to solve these new problems — were freezing US foreign policy in “a Cold War time warp” that would keep it playing the role of world policeman and “too readily reach[ing] for military solutions.” In reality, he said, threats to the US had diminished considerably:

Recall the ultimate threat that hung over the United States every day of the Cold War: total national annihilation through the doctrine of ‘mutual assured destruction.’ Now that this threat is, in the words of Senators Sam Nunn and Richard Lugar, ‘at an all time low,’ it requires a major effort of imagination to recollect that twenty-four months ago nuclear submarines roamed the ocean depths, strategic bombers were on twenty-four-hour-alert active duty, and hardened silos were on active maintenance, all to prevent the destruction of the United States in a thermonuclear holocaust.

More recently, Harvard psychologist Steven Pinker has demonstrated in?The Better Angels of Our Nature?that “we may be living in the most peaceable era in our species’ existence.” Pinker’s work has been controversial; Mann, for instance, finds that war has not declined so much as been transformed, “with deadly civil wars largely replacing inter-state wars,” and he finds it hypocritical for Northern countries to claim they have achieved a pacific civilisation given that they export arms and “contribute to faraway wars with more callous indifference than person-on-person ferocity.” These complications aside, Americans enjoy an unprecedented level of safety, with weak allies to the north and south and vast oceans separating them from most of the world. “Americans, especially” argues Preble, “enjoy a measure of security that our ancestors would envy, and that our contemporaries do envy.” This peace is often juxtaposed with the frequency of unaddressed gun violence, which underscores that Americans are far more likely to die from domestic sources than foreign ones. In October 2017, for instance, The Guardian?printed that more than 1.51m people have died from gun-related deaths since reliable data started in 1968; by contrast, fewer than 1.4m Americans have died in all wars going back to 1776. Yuval Noah Harari, an Israeli historian, really drives home the point in his opening passage to?Homo Deus:?

For the first time in history, more people die today from eating too much than from eating too little; more people die from old age than infectious diseases; and more people commit suicide that are killed by soldiers, terrorists and criminals combined. In the early twenty-first century, the average human is far more likely to die from bingeing at McDonald's than from drought, Ebola or an al-Qaeda attack.

This is not to say that America does not face threats or that national security should not be taken seriously. It is to say, however, that US legislators need to be more honest about what these threats are and better describe the limits of American power to deal with them. A starting point would be to understand that not all foreign problems can be dealt with militarily. Moreover, it would help to understand that the idea of an-all powerful America in the 1940s and 50s is a myth. “The United States’ power is not what it used to be, but it also never really was as great as assumed,” Nye writes. “After World War II, the United States had nuclear weapons and an overwhelming preponderance of economic power but nonetheless was unable to prevent the ‘loss’ of China, to roll back communism in Eastern Europe, to overcome stalemate in the Korea peninsula, to stop the ‘loss’ of North Vietnam, or to dislodge the Castro regime in Cuba.” This is worth keeping in mind when hawks details the global array of threats that should supposedly top the list of America’s concerns.

ii)?21st Century Strategy:

The notion that America is facing unprecedented threats is asserted, not ascertained. Brands and Edelman, for instance, write that North Korea “has a growing arsenal of nuclear bombs,” while “Iran tests ballistic missiles” and backs sectarian forces, and ISIS “had displayed far greater military competence than previous terrorist group.” All of these threats are real; none can be dismissed. But the idea that they are bigger threats than previously seen, necessitating even greater US defense spending to counter them, is risible. North Korea’s entire economy is estimated at $28bn, about half the size of Rhode Island’s. Iran's economy is much larger, at $1.5tn, but its defense spending is under $16bn, only the 19th largest in the world. As for ISIS, an economic analysis of its economy at the height of its power in 2015 found its productive capacity to be "small" and its institutions to be "inimical to sustained growth." The best strategy, the analysts concluded, was one of containment, because ISIS was unlikely to garner the resources to continue expanding. "Daesh’s inherent economic fragility also implies there may be long-run political benefits in allowing the group to collapse of its own inherent contradictions."?

While each of these threats has the capacity to hurt US interests, it is debatable at best whether they could they meet a narrow definition of being a risk to US national security, comprising territorial integrity, sovereignty and power position. Furthermore, in each scenario the US is allied with regional forces that are far stronger. The South Korean economy, for instance, is fifty times that of its neighbour; its population is twice the size and its army is among the largest in the world, with 630,000 active duty personnel and 4.5m in reserve. As Posen surmises: “North Korea is tiny, backward, and disengaged from the rest of the world … [South Korea] is a prosperous and militarily capable country, well able to look after itself.” As for Iran, its great foe in the Middle East, Saudi Arabia, has the world’s fourth-largest military budget and one that is four times the size of Iran’s. Iran hardly has free rein in the region, considering its other Sunni rivals, not to mention the technologically-savvy, experienced and highly-motivated State of Israel. Finally, ISIS as of this writing has basically collapsed after its much-despised ideology motivated a seventy-two-nation coalition to form against it. In each of these cases, regional players have more at stake than the US. They also know the territory, are more likely to speak the language, and their presence cannot so easily be construed as imperialist, meaning their actions are less likely to cause resentment and backlash that can fuel terrorist attacks against the very interests the US so often tries to protect.?

What this suggests, of course, is that US strategy should be more focused on making allies step up. It is outside the scope of this paper to detail what grand strategy is the correct fit, but I have already alluded to three options. One is “Offshore Balancing,” which stresses maintaining American power but being far more selective of when to intervene. At its core the strategy would have US sit on the sidelines of distant conflicts and only intervene to prevent a power to become a regional hegemon. “Such was the case during both world wars: the United States came in only after Germany seemed likely to dominate Europe,” write Walt and Mearsheimer. A second is “Restraint,” which takes the same principles but extends them further. Posen argues this strategy could cost only 2.5 per cent of GDP. He argues the current strategy of Liberal Hegemony is “unnecessary, counterproductive, costly and wasteful.” A third is “Responsible Competition.” Among its focal points, says Wright, is to keep US military primacy but emphasise that allies “are the linchpin of US strategy … a power multiplier … and a source of stability.” Moreover, it is more accepting of dealing with regimes that have non-liberal values, less interventionist than Liberal Hegemony, and it would prioritise diplomacy, sanctions and, to quote the title of Wright’s book, all measures short of war.

Each of these suggestions aligns with one fundamental conviction in this paper. The US strategy adopted after the Second World War, and doubled-down upon in the 1980s, made sense because it exploited the core advantage the US had over all of its rivals: its economic strength. In the coming decades, a new strategy cannot make the same assumption. Instead, the US should recognise that the strengths to exploit, particularly against China and Russia, are the ideals it stands for and the allies that stand with it.

C o n c l u s i o n?

This paper has argued that US military spending is unsustainable because of the strain it puts on the budget, uncompetitive for the future because the US is losing its economic advantage, and that it is buttressed by an undisciplined strategy that allocates costs poorly. The policy conclusion, however, it not necessarily that the US needs to cut its defense budget. Clearly that would be one option, and I have outlined three grand strategies the US could adopt to narrow its interests. But it would be just as viable to make changes to the denominator in the equation. There are two options here. It is outside the scope of this paper to go through either in any detail, but I offer them as points of further of research to supplement my conclusion.?

The first option is one that already has bipartisan support in the US: incentive Nato allies and Europe to pay more. This harks back to the theme of being mired in the Cold War. After the Second World War, when Soviet expansionism was a threat, European stability was questionable and US allies were fragile and weak powers, it made sense for America to adopt a grand strategy that exploited its economic power and took the burden of defense spending. Those conditions are no longer present. Now, with their high per capita GDPs, European allies can afford to build up their militaries. The problem is, “they have no incentive to do so,” as Posen argued in 2013, as he called contemporary policy “welfare for the rich.” Indeed, the EU-28 countries generated an astonishing $7.6tn in government revenue last year, or 45 per cent of collective GDP. The EU’s cumulative defense budget, just 1.4 per cent of GDP, or $228bn, amounts to just 3 per cent of government revenues — compared to 18.1 per cent for the US. The capacity for Europe to step is real, but US diplomacy has been atrophied after decades of focus on hard power. The risk here, according to hawks, is that if the US steps back from its commitments, “the cohesion of U.S. alliances will suffer … as American allies lose confidence that the United States can truly protect them in a crisis,” say Brands and Edelman. One might respond that this is not wholly negative; US allies should not only be able to protect themselves but more ably support allies. The trick, of course, is what incentives would work. This is, I would suggest, among the biggest problems for maintaining the US-led world other.

The second option is to implement a value-added tax to raise more revenue. True, raising taxes is the third rail in American politics. But a VAT on consumption could be politically appealing because it does not tax productivity, but consumption. According to one study, a VAT of 5 per cent, coupled with subsidies for poorer consumers, could have generated between $160bn and $258bn in 2012, or up to 1.64 per cent of GDP. The common claim that it would hurt American productivity does not appear to be credible. More than 160 nations have a value-added tax, including the four countries that rank above the US in productivity per hour worked. Among the 35 OECD nations America is the single country without a VAT. Moreover, it is worth noting that in 2017, China simplified its own VAT and cut taxes on income, a move likely to boost revenue further and enable it to increase its military capacity in the coming decades. Considering the rhetoric of some conservative politicians who believe this is the most dangerous time to be living in decades, it seems reasonable that average Americans could help foot the bill for its all-volunteer force by paying a modest premium on the $57,311 consumed by the average person each year. If not, to steal a good line from Hormats, the US will be “living in a post 9/11 world with a pre-9/11 fiscal policy.”