Military expenditures in the US and compared to Russia
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Write a paper about 7-10 pages, single space about military expenditures in the US and compared to Russia (or any other country), Then we can ask how much military expenditure is optimum. It means beyond a point more military expenditures brings us no more security but less security in terms of not spending for education, health and infrastructure.
Introduction.
There has been a controversial and growing concerns in the recent years about the harmful effects of military expenditures in the developed countries. According to the studies conducted they reveal that these expenditures disrupts and worsen the balance of payments deficits, hinder economic growth and social sector. These effects of the military expenditures seem to have the adverse effect to the overwhelming majority of the poor and in general the whole nation (Aizenman, Glick, & National Bureau of Economic Research. (2003)).
This paper set to compare the military expenditure of the US and that of Russia. These two countries are among the world super nations and therefore it will be crucial to study trends in military expenditures over time. The paper will also highlight the effects of military expenditure on economic growth.
The chief purpose to study military expenditure data, is to clearly to have an appropriate way to identify and measure the resources absorbed by the military over time in various countries. The analysis of these expenditures data can also be used to judge the perceptions of governments towards defense and military strength. This then makes it easier to conduct an economic analysis of that particular country.
Military actions have various effects that range from the lives that are usually lost on the battle line to the huge level of environmental degradation that is noted in most of the battle areas. Also noted is the damage that usually takes place on both the physical and mental health conditions of most of the individuals involved. There are also costs that are spend among those who witness military violence. This paper will however focus on the economic costs of military expenditure. The expenditure data that is to be used is based upon the different sources of primary data and the sources that include the US Arms Control and Disarmament Agency(ACDA), US Department of State, International Monetary Fund(IMF) and Stockholm Peace Research Institute(SIPRI) (Collier, Hoeffler, & World Bank. (2002)).
Comparison in military expenditure between the US and Russia after the 2nd World War.
The US is clearly distinguished from other developed countries in the degree of its reliance on military spending. The year 2004 was characterized by the world military expenditure reaching 1 trillion US dollars. Nearly half of the amount (47%) was accounted by the United States and this agrees with the research findings of Stockholm International Peace Research Institute which clearly state that the US national defense expenditure increased gradually since 2001, in fact by almost 60%.
At the end of the Cold War, there was a noticeable significant downward trend in the military expenditure in the US that culminated in 1998. Periods henceforth that is from the year 2001 to 2007 have been characterized by the increasing costs of military expense. The increase has been estimated to about 6% annual average increase. The most direct and appropriate way of measuring the extent of the U.S. commitment to the military-imperialist complex over the post - Second World War period is through an examination of U.S. military expenditure itself. However, this is not easily accomplished. The U.S. military expenditure is a complex system presenting numerous dead ends due to incorrect or missing values. What was treated by almost all analysts as a reliable data source for such expenditures was the Office of Management and Budget (OMB) Historical tables, generated along with the federal budget. From the Historical Tables for Fiscal Year 2009, Department of Defense spending is listed as 530 billion US dollars for 2007, while adding in atomic energy defense activities and defense-related activities brings total national defense to about 552.6 billion dollars. This number can be considered the military expenditure, since it is what is usually reported as U.S. national defense spending. However, there is another version of the U.S. national defense expenditure included in the U.S. National Income and Product Accounts (NIPA), a source which gives the final word on the totals for the U.S. economy as a whole.
The National Income and Product Accounts gave 662 billion US dollars as the total for national defense spending for 2007, which over 100 billion more than the OMB expenditure figures. The difference is explained by the fact that the NIPA numbers for national defense, takes into account of the following factors: government consumption of fixed capital, cash payments to amortize the underfunded liability for military and civilian retirement benefits, and expenditures recorded on a delivery rather than cash basis of which were not considered by the OMB. The NIPA figures therefore capture far more accurately economic resources directed to the military, emphasizing full cost budgeting as opposed to OMB. It is observed that for the United States, the NIPA numbers are the most comprehensive and conceptually complete national defense expenditure data they have, since they are expressly based on economists’ national income accounting framework rather than on politicians’ need to review and pass budget requests (Walsh, (2008)).
Using the NIPA figures for national defense spending, however, it only partly solves the problem of developing an accurate assessment of U.S. military expenditure. Despite this, it still remains not to fully explain the military expenditure concealed in other economic categories, and not captured by total NIPA national defense spending. Drawing on other lines in the National Income and Product Accounts, it is crucial and necessary to add to the NIPA national defense figures all or part of the economic grants to foreign governments, space, medical payments to military retirees and dependents at non-military facilities, veterans’ benefits, and the net interest payments on the national debt attributable to military spending
The significant reduction in the military expenditure at the end of the Cold War was mainly attributed to the Warsaw Pact nations declining spend. However, this reduction in other developed countries, Russia included was less notable which was at 5% less in 1993 than in 1987. The progress that was initially made is however being undone where the military spending in the year 2004 was only 6% lower than what was spend during the Cold War. The subsequent upward trend has been majorly instigated by the increasing spending in the United States. To be more precise, the increasing spending has been more significant in the year 2002 mainly because of the military operations in Iraq and Afghanistan (Walsh, (2008)).
After the world war 2 (WW2), the Soviet Union allocated between 16 percent and 18 percent of its yearly gross national product (GNP) to military spending. The expenditure rose to about 6 percent every year, but they eventually declined down due to fall of the GNP to about 3 percent in later years. With the end of the Cold War, Russia and other successor states of the USSR combined military expenditure decline significantly. Between 1989 and 1994, production of firearms and other weapons in Russia declined by about 50 percent for almost every major weapons system. The expenditure on weapons in the year 1992 was about 78 percent less than in 1988 (Wahid, (2009)).
There have been a lot of challenges in estimating the Russian military expenditures. The challenges include lack of sincerity and transparency in the officially published numbers. The 1996 defense budget of the Russian Federation, passed and corrected by the State in December 1995, designated 9 billion US dollars of which about 16 percent was allocated to acquisitions, and 7.3 percent was earmarked for research and development (R&D) which was less than the 1995 budget which allocated10.2 percent to R&D and 21 percent to acquisition. By comparison, the 1996 United States budget for the Department of Defense totaled to 249 billion US dollars, of which 15.7 percent was allocated for acquisitions and 13.7 percent for R&D. In February 1996, the Security Council allocated between 10 to 11 billion US dollars to fund additional state orders, including money for accelerated R&D and manufacture of advanced weapons systems. This supplementary, targeted allocation marked a significant increase over the allocations for 1994 and 1995, indicating a possible redirection of resources to R&D even as the military operating budget remained flat.
In 1997 Russia's defense budget was estimated to be about 65 billion US dollars annually, about 45 percent of the 1992 total amount. According to another estimate, military expenditure had dropped from an estimated amount of 257 billion dollars in the USSR in 1987 to 24.1 billion dollars in Russia in 1997, and as a proportion of GNP from 16.6% in 1987 to 3.8% in 1997. Yet a third estimate placed total military expenditures at 41.7 billion US dollars. In other words, Russian military procurement had slowed to a crawl. Whereas about 1,200 tanks and infantry fighting vehicles were procured in 1992, only about 355 were acquired in 1997. manufacture of combat aircraft also fell from 170 in 1992 to 35 in 1997. Even so, Russia still had the largest military forces and defense budgets of any country in Europe and Eurasia.
Yeltsin made it clear in mid-1997 that military reform would be determined by economic resources. His decision was confirmed in the National Security Concept. Following Yeltsin's decision, concrete steps were put in place to reform the armed forces in the confines of the severely retrenched defense budget under the leadership of the then Defense Minister Igor Sergeev. Russia planned to decrease the number of troops by 300,000 in 1998 in addition to the 200,000 it had cut in 1997, this was according to the adopted reform. As a part of the organizational reform aimed at maximizing efficiency and minimizing military personnel, the Strategic Missile Force and the Military Space Force were integrated in 1997 and the Air Defense Force was merged with the Air Force in 1998. The budget for the first three quarters of 1998 was 7 billion US dollars. The actual expenditures for this period were 4.66 US dollars that is to say that about 66.5 percent of budget was fulfilled. For the first three quarters of 1998, actual military expenditures were about 1.8 percent of overall GDP. The budgeted amount would have constituted 2.7 percent of GDP.
As opposed to the later years, the military's budget in 1998 was closed. An unofficial line-item defense budget was published on a monthly basis in Krasnaya Zvezda. The unofficial budget occasionally reflected discrepancies such as the receipt of less money by the Ministry of Defense than that which the Ministry of Finance announces as paid. Through this, the military demonstrates their accountability for what money is received, and documents their claim that they do not receive enough funds to be combat ready. On the other hand, the Finance Ministry and treasury have been unsuccessful in obtaining a detailed accounting of defense expenditures consistent with the budget. The Defense Ministry maintains the only federal government agency not yet included in the treasury's cash management system.
In mid 1990s combat training had become completely non-financed, with the military receiving only 6 percent of the resources required for combat training in 1998. This amount was only use for maintaining infrastructure, forcing the military to finance fuel, ammunition, and training equipment costs from other alternative sources. Training continued to be conducted on a reduced scale or is replaced by less resource-intensive activities. In the ground forces, only 35 percent of planned regimental-level and 73 percent of battalion-level tactical exercises were conducted in 1998. Sea duty for Russian fleet submarines was reduced by 25 percent and for surface vessels by 33 percent. Russian air force elements executed between 15-40 percent of their standard training norms. This was the contributing factor to rapid decay of combat readiness, according to Ministry of Defense internal assessments, the average Russian soldier is only marginally combat capable.
Russia experienced chaos and economic meltdown during the 1990s. During this time, the Russian military expenditure compared to that of the US decreased rapidly. According to SIPRI, the Russian military expenditure dropped from 41 billion US dollars in 1992 to 14 billion US dollars in 1998. However, since 1998, the military expenditure of Russia has steadily been increasing and in 2008, the expenditure was at 38 billion US dollars. The rapid military expenditure of Russia has been largely attributed to its progressive economic growth. According to the resolutions of the Security Council meeting, the major reform measures of the general purpose forces were to be accomplished by 2006. The force level reductions commenced in 2001 and the main reductions are to be continued up to 2003. By that time these forces were supposed to have about 750,000 servicemen, for a total reduction of 350,000-400,000 troops. The army would lose 180,000 men, the navy more than 60,000 and the air force about 45,000. The internal troops of the Russian Interior Ministry are expected to be reduced by over 30,000. The number of railway troops will be reduced by 12,000 and the Federal Border Guard Service will be reduced by 5,000. Other ministries and agencies that have military formations were reduced by a total of over 25,000 people. The number of units and formations of permanent readiness was substantially increased. Defense spending of 3.5% of the GDP may grow if the GDP grows more than 7% a year (as was the case in 2000) for several years in succession. By 2016, the plan is to spend 50% of the military budget on operations and maintenance, and 50% on their development (Wahid, (2009).
The United States is arguably the foremost contributor to the global military expenses. The military expenditure for US in 2015 alone was the highest of 570 billion dollars compared to that of Russia which was 55 billion dollars. The report by the U.S government indicates that a third of the world total military expenditure was accounted by the United States and the year 1999 was characterized by the U.S spending threefold of what was its closest military spender. The estimates by the Stockholm International Peace Research Institutes estimated the spending by the U.S to be at 47% which was 456 billion U.S dollars of the total global spending. The spending was much far than the next closest spender that was the U.K at 48.4 billion. There was an exponential increase in the level of spending between the years 2001 and 2004. Despite the fact that there have been increases in the regular military spending, notable increases have been due to military operations in both Iraq and Afghanistan the war that is usually funded through supplemental appropriations. The Department of Defense appropriations between the years 2003 and 2005 exceeded the military spending in the Middle East, Asia, Africa and Latina America combined. A keen observation of the U.S military expenditure together with the relative and economic indicators it is less exceptional. For example, if the expenses in military are to be taken as a percentage of the Gross Domestic Product, the 1999 statistics indicated that the U.S ranked 52nd of the 169 countries. The U.S was however ranked 40th in terms of military expenditure as a percentage of central government expenditure. It can however be seen that the U.S is the highest ranked in terms of the military spending per member of the armed forces.
The amount allocated towards military expenditure on the annual basis in the US differ significantly by different sources description by the different sources. The variations are brought about by the differences in definition of the category of military expenditure that include different expenditures. For example, the Friends Committee on National Legislation (TFCNL) attributes 42% of the spending on federal military spending which is estimated at 51% by the Center for Defense Information (CDI) (Adams, Behrman & Boldin, 1991). The CDI only considers the discretionary funding by the Congress and leaves out “mandatory” spending. The “mandatory” spending includes costs such as the interest on Food Stamps, Medicaid, and interest on debt. The TFCNL on the other hand considers all the expenses that are done in a particular year (Smith, (2009)).
The first emergence of the U.S as the world super power was during the World War II. The significant change during the period was the increase in the number of armed forces that rose from 334,000 to 12,123,000. The forces were demobilized with the end of the war but the expenses were turned to their post war levels. The views among the majority are that the U.S acted as a superpower out of proportion both with the potential external threats and the level of resources that were available to it. When a broader view is taken about the broader category of military “security” spending, there is noticeable favoring by the U.S on military aspects of security as compared to the non-military aspects. The estimates by the national Priorities Project indicates that 91% of the government spending goes towards the military with 5% being allocated to the homeland security with 3% being allocated to the preventive measures. Seven times of the funds available are allocated to the military as on non-military programs and homeland security combined. With the inclusion of the current military operations, the proportion is nine to one. There are indicators that the current spending on the military has tightened the spending levels on the fundamental aspects of the economy such as the education sector, environmental protection and health care which are the most basic social aspects of the economy (Ponzetto, & Troiano, (2014)).
Indicators are also available to show that the general public is advocating for the reduction of the total defense budget. Recent surveys indicate that 70% are support the idea of the federal government transferring amounts that have been allocated to security agenda that has nothing to do with war on terrorism i.e. sector such as destroyers, bombers and nuclear weapons.
There are contrasting facts if the military expense levels within Russia and the United States. Study findings by shows that the period ranging from 1970 to 1980, the industrialized market economies, the U.S included, had GNP growth rates above 3% on an annual basis. The period was also characterized by very low military expenditures. There was a sharp decline in the level of spending on military despite the fact that there was rapid growth in Central government spending. The burden that is usually posed by the spending on military operations declined over the decade. In contrast, the GNP growth within Russia was also growing with the increasing rates of central government expenditures. The military expenditure within the country was on the rise increasing military burden over the years.
The increase in the GNP growth rates however declined from 1980 to 1988 within the U.S economies. Also noticed was the significant drop in the level of government expenditure. The decline in the growth rates did not however stop the U.S government from increasing the level of military expenditure. The effect was that there was a considerable increase of the military burden.
The comparison between the military expenses of the U.S and that of Russia two countries taken from the already industrialized part and the now developing nations is made possible through the use of parities and exchange rates available on the market. The use of exchange rates that is available from CGE, MILEX and GNP does not show that that the growth rates within Russia were higher than what was experienced in the U.S the period ranging from 1980-1985 and the preceding decade. The real military burden growth has been persisting within the U.S but there is considerable evidence to show that the growth within Russia has been high above the existing value within Russia from the 1970s (Smith, (2009))
The gap of military expenditure has continued to widen between the two nations despite the fact that the U.S has put in place considerable efforts to combat war and acts of terrorism across the globe from the 1980s. The decade ranging from 1970-1980 was associated with rapid growth of the GNP levels within Russia. The growth in the level of government expenditure was greater as compared to the level of growth in military expenditure.
Conclusion.
From the comparison the military expenditure of these two superpower nations, a question emerges what is the exact amount the country is to spend in order to be termed as having an optimal level of spending? Some of the arguments put forward were that, the spending within the military is not supposed to over-burden other aspects of the government budget. Arguments have also been raised discussing the fact that spending by the government is not supposed to increase the level of taxes levied on most of citizens beyond the unsustainable levels. Citizens within the U.S economy have complained that there is no need for the government in military equipment that is not meant for terrorism purposes such as the nuclear weapons and sending troops overseas. It is also evident that that military expenses will interfere with the basic components within the economy such as consumption, education and investment. Military operations are to be carried out within the allocated budget. The use of funds from other sectors of the economy for military purposes shall amount to operations being beyond the optimal level (Aizenman, Glick, & National Bureau of Economic Research. (2003)).
It is vividly evident that the investments that are usually carried out by the government in both the military and non-military operations can be termed as being productive expenditures with no doubt. Evidence of military expenditure having a negative impact on the economic growth of the concerned country is a clear indicator of the expenditure being beyond the optimal; such a case is a clear indicator of un-sustainability of military operations in the concerned country. The case cannot be generalized to the current state in the U.S because the operations have been sustainable to the economic conditions that exist within the U.S (Collier, Hoeffler, & World Bank. (2002)).

References.
Aizenman, J., Glick, R., & National Bureau of Economic Research. (2003). Military expenditure, threats, and growth. Cambridge, Mass: National Bureau of Economic Research.
Collier, P., Hoeffler, A., & World Bank. (2002). Military expenditure: Threats, aid and arms races. Washington, D.C: World Bank, Development Research Group
Ponzetto, G. A. M., & Troiano, U. (2014). Social capital, government expenditures, and growth. London: CEPR.
Smith, R. (2009). Military economics: The interaction of power and money. Basingstoke [England: Palgrave Macmillan.
Wahid, L. (2009). Military expenditure and economic growth in the Middle East. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan.
Walsh, D. (2008). The military balance in the Cold War: US perceptions and policy, 1976-85. London: Routledge.