Is the Defense Budget Too Large?

Philip Kotler
10 min readOct 31, 2020

Philip Kotler

The Trump administration released its defense budget on February 12, 2018. It asked for $686 billion. Defense amounts to 62 percent of the proposed total federal spending budget. The defense cost is even higher if you include other costs in the total budget, such as the $88.9 billion that pays for the War on Terror, including military operations in Iraq, Syria, and the War in Afghanistan. One could add other agencies’ costs that include the FBI and Cybersecurity, the National Nuclear Security Administration, Homeland Security, the Department of Veterans Affairs, and the State Department. These add $181.3 billion to the base budget. There is also a proposed $101 billion addition to the emergency fund.

Military defense is the largest part of the annual federal budget. If Congress determined that the defense budget is too large, then the current administration should cut its proposed military budget. Congress should attack waste, get our alliance partners to pay a fair share, and examine how many military basis we need around the world. The savings could be used to reduce the growing federal deficit or to improve our deteriorating infrastructure or improve our health or education outcomes. If there is a significant opportunity to reduce defense spending without risking our future militarily, we should do this.

Whether the U.S. is spending too much on defense is not an easy question to answer. It depends on our assessment of future wars. If we judge that the world is becoming safer, then we are spending too much. If we judge that major wars with China, Russia or others are highly probable, then we are not spending nearly enough. Much depends on our military defense vision and objectives and what it will cost to implement them.

Our political parties are divided on whether the military budget is too big or too small. The Republican Party favors a large budget believing in tough adversaries and the need for tough, even brinkmanship negotiation. The Democratic Party leans more to using soft power to discourage adversaries from starting wars and prefers to use money to improve the lives of poor and working class citizens. There is even a division among military leaders, with a few leaders who believe that we are building more battleships and other weapons than we really need.

Let’s examine the following three questions:

1. What are the main arguments of those who think that the military budget is too large and those who think that the military budget is too small?

2. How much waste exists in our military expenditures, that if eliminated, could lead to substantial reductions in military expenditures?

3. Which military weapons will be key to winning future wars if they were to take place?

Arguments about The Proper Size of Our Defense Budget

Here are the main arguments stating that our current defense budget is too large.

1. Our military budget is the largest in the world. The U.S. spends over $600 billion a year, whereas Russia spends around $60 billion and China spends around $130 billion on military expenses. Russia and China can spend less because their interests are regional. The U.S. spends much more because its aim is to protect its allies around the world. Does the U.S. need to have bases and interests in every part of the world?

2. Members of Congress favor high defense spending because defense spending takes place in every state. They want to protect defense jobs in their state. Yet we need to reduce the number of munitions factories and military bases in the U.S. and abroad.

3. Our military budget is overspending on old war weapons (tanks, battleships, etc.) when much of this equipment already exists and is mothballed. We make too much of old military weapons and not enough of the new weapons that will win in future cyber wars.

4. We can never be fully protected no matter what we spend. If we spend too much, we will bankrupt the nation or severely reduce our education, health and social security. How much preparedness do we need?

5. Estimates point to 20 percent waste in our military expenditures. If we can eliminate this waste, we would still have the same defense capability.

6. We have too many outposts around the world and in safe countries. We could cut the number of our outposts in half without weakening our defense.

7. We need to get NATO and other friendly nations to increase their military expenditures and rely less on us.

8. Our military consumes enormous amounts of resources that could be put to better use elsewhere in American industry.

9. The American people are brainwashed by pro-defense groups into fears that we are in constant danger from adversaries who want to take over our country.

10. We should spend more on diplomacy, negotiation and soft power to lower the probability of wars taking place.

11. We should support leading international organizations and peace organizations to advocate lower military expenditures by all nations.

Now let us look at the main arguments that the current military budget is too small.

1. China is increasing its military expenditures and growing more powerful. President Xi aims to make China the most powerful nation in the world. China is currently making trouble in the South China seas. Many expect an ultimate war to take place in the Pacific between China and the U.S.

2. Russia under Vladmir Putin took over Crimea and has its eyes on the Baltic. We would have to go to war if he attacks the Baltic countries.

3. If we reduce our budget or fail to increase it by enough, enemy countries will be more aggressive and increase their military budgets.

4. The U.S. must remain the leader and prevent new power blocs from forming.

5. We have to protect the sea lanes that are vital to our international commerce.

6. At least 10 wars that might take place in the next 10 years. They are: 1. China vs. Everyone in the Pacific, 2. China vs. The United States, 3. Russia vs. NATO, 4. Iran vs. Saudi Arabia, 5. Civil War in Iraq, 6. Kurdistan Independence War. 7. Israel vs. Hezbollah. 8. Civil War in Turkey, 9. Civil War in Afghanistan, and 10. China vs. India. We need to expand our defense.[i]

Let’s add North Korea vs. Anyone. North Korea’s nuclear threat calls back pictures of the Cold War where the United States and the Soviets each built up enough nuclear weapons to kill everyone on Earth many times over. Neither side could risk using nuclear because both sides would lose. After stockpiling so many nuclear armaments, the U.S. and Russia agreed to decommission tens of thousands of nuclear weapons. We would have to get North Korea’s leader, Kim Jong-un, to see the futility of relying on nuclear weapons for their defense. The latest effort by President Trump failed.

Those defending the need for a larger military budget like to point out how deficient we are in military equipment compared to the past. Senator David Perdue of Georgia complained: “Today we have the smallest Army since WWII, the smallest Navy since WWI, and the oldest and smallest Air Force ever… At the same time, we face complex threats from China, North Korea, Russia, and Iran.” Senator Purdue submits that the U.S. has 287-odd ships, fewer vessels than at any time since the Great War.

The real question is not the number of ships so much as whether we have the right mix of battleships, destroyers, aircraft carriers, submarines, and other seafaring vessels and other equipment to meet future battles and achieve our strategic objectives. Our navy today is “larger” than found in any other nation. This should favor not adding more ships. Even if China plans to have 500 vessels by 2030, this wouldn’t matter if their ships are smaller and no match for our types of ships.

Is There Too Much Waste In Our Defense Expenditures?

Sometimes we hear that the government paid $100 for a $2.98 hammer or $600 for an ordinary toilet seat or $3,000 for a coffee maker. The government has more than 20 cost categories associated with each item — marketing, travel, training, cleaning, general administration, facilities, and other overhead items whose costs are allocated by military formulas defined in the contract. The Department of Defense (DOD) writes rules that military goods suppliers must meet to cover overhead.

DOD uses different rules for procuring different types of items. Items such as building a road or bridge are procurred at an agreed-upon firm fixed price for acquiring an object at a specified quality level. DOD purchases other items at a cost-plus contract where the government pays the supplier whatever the supplier reports as its costs. This makes sense when it is not possible to know actual costs in advance. DOD purchases still other items on a cost plus incentive fee where the profit is explicit in the contract. All said, the government has a huge set of rules in fine print governing how each type of contract can be priced.

Buying a hammer and other items requires meeting overhead costs falling of the seller as well as the government. The DOD has rules specify what can be charged to the government. Contractors will load up whatever cost categories they can. Much of the high cost of certain items is the result of allocating heavy overall costs.

In 2015, the Pentagon decided to carry out an audit on the Department of Defense’s budget. McKinsey and other consultants were hired to inspect and prepare a report. The resulting audit reported $125 billion in wasteful spending. The audit indicated that this amount could be saved over the next five years without layoffs or reduction in military personnel. Imagine how this cost saving of $125 billion could assist in correcting some high priority social problems. However, in 2016, senior defense officials suppressed and hid the report from the public to avoid political scrutiny.[ii]

The defense department wants to keep its annual budget at the same level or higher. Yet Congress needs to do a better job of probing the military budget and pressing for more efficiency. Every major global multinational firm has a tough financial office working to keep its costs down. How about DOD closing unneeded military bases? The U.S. has 800 overseas bases; the Russians have only 9. The DoD by its own estimates is operating with 21 percent excess capacity in all its facilities. Yet Congress won’t allow DoD to close bases. The Bi-Partisan Budget Act of 2013 blocked future military base closings. Members of Congress don’t want to risk losing local jobs. How about cutting the number of soldiers living on each base? Many options need to be examined.

Congress doesn’t want DoD to cut other costs, like military health benefits and the growth of military pay. Congress does not want to cut the number of troops, or close or reduce domestic or foreign military basis, or terminate some weapons systems. Members of Congress worry that military cuts will jeopardize national security and might even hurt their own chances of reelection.

What Will The Next War Look Like?

The last great war, World War 2, was fought with tanks, airplanes, naval power, and millions of soldiers. This war had the highest number of casualties. Over 60 million people lost their lives, or 3 percent of the world’s population in 1940. When the war ended in 1945, roughly 416,800 American military personnel had lost their lives. The only other weapon used, a most dangerous one, were the two nuclear bombs dropped on Hiroshima and Nagasaki in Japan to end the war.

The next war is going to be different than previous wars. We now face non-state adversaries such as Isis and Hezbollah. We have adversaries who are weaponizing information and shaping public opinion. We have adversaries who are using artificial intelligence and algorithms to guide their attacks. We see a rise in robotic soldiers and mercendary armies. All this means that we need to change our thinking and stop relying on building superexpensive aircraft carriers and fighter planes to protect us.

Warfare is going to be more in cyberspace and with remote, guided weapons. ‘Boots on the ground’ will be viewed as anachronistic and barbaric. The military has to get over conventional warfare thinking. Advance electronic and digital technology will come into play.[iii] Cyberconflict would play a major role. Russia has already started to use this new equipment. Russia and Russian hackers have spied electronically. They have launched cyberattacks against banks, power plants, and transportation systems. They have used the Internet to interfere with U.S. and some European elections.

Any future war will include several new weapons in the hands of fighting countries.

1. Drones and unmanned vehicles electronically guided.

2. AI applications for drones, self-driving vehicles and cybersecurity.

3. Rocket systems.

4. Anti-rocket and anti-tank defense weapons.

5. Heightened foreign country’s messaging to influence domestic voter attitudes.

6. Software attacking electronic grids, computer systems or targets in the real world.

7. Nuclear missiles.

8. Poison gas and poisoning of water systems.

Putin said that he views artificial intelligence as “the future, not only for Russia, but for all humankind.” In September 2017, Putin told students that the nation that “becomes the leader in this sphere will become the ruler of the world.”

A Digital Geneva Convention has been proposed to ask countries to agree to limit AI conflict. However, independent nationalist groups, militias, criminal organizations, and terrorists might still resort to AI weapons. Such a convention may not take place or prove to be a barrier.

The clear implication is that the next war will be fought with new weapons and new strategies. If the U.S. continues to build tanks and warships, it will lose its wars.

Sean McFate, in his New Rules of War, believes that Russia and China have already learned how to win future wars. Russia uses subversion, denial, and information distortion to advance its interests. Russia doesn’t want to fight enemies on a battlefield so much as outfox them. Russia has become a disinformation superpower, “hacking the 2016 U.S. presidential election, stoking the Brexit vote, supporting fringe political groups, and fueling right-wing nationalism in NATO countries.”[iv] McFate’s plea is that the U.S. must replace reliance on conventional Clausewitz thinking and move into shadow warfare along the lines of Sun Tzu’s unconventional war maxims.

The need to rethink our posture in the world and our defense needs is greater than ever. Average citizens are hapless in knowing what is going on with defense budgets and international tensions. We need a Congress that will seriously examine where we stand and what defense budget makes sense in this chaotic world. The job of our citizens is to continue to press Congress for allocate enough budget to improve their lives and provide for their personal safety net.

[i] The Incoming Commander-in-Chief, by Blake Stilwell, We Are the

[ii] Craig Whitlock and Bob Woodward, “Pentagon buries evidence of $125 billion in bureaucratic waste”. Washington Post, December 5, 2016.

[iii] Jeremy Straub, “Artificial intelligence is the weapon of the next Cold War,”

January 29, 2018.

[iv] Sean McFate, The New Rules of War: Victory in the Age of Durable Disorder, New York, William Morrow, 2019.



Philip Kotler

Philip Kotler is the S.C. Johnson and Son Distinguished Professor of International Marketing, Kellogg School of Management, Northwestern University (emeritus)