Appendix 6E. US military expenditure and the 2001 Quadrennial Defense Review

No increases were requested for weapons procurement in the FY 2001 US Defence budget. The Bush Administration had promised a far-reaching revision of US military strategy in the Quadrennial Defense Review (QDR). During the 2000 presidential election campaign, he had indicated that his administration would consider skipping a generation of weapons in order to free funding for a major transformation of the US military. The resulting budget request for FY 2002 was 7% higher, in real terms, than the FY 2001 budget request of the Clinton Administration.

The 11 September 2001 terrorist attacks in the USA changed this outlook. With the near unanimous consent of the Congress, President Bush declared a ‘war on terrorism’ that was expected to be long-lasting and near global in scope. Congress authorized a supplementary appropriation of $40 billion to be applied immediately to anti-terrorism activities, half in FY 2001 and half in FY 2002. Rather than postponing any large projects, administration officials indicated that the existing procurement projects would be retained in its budget request for FY 2003 and in its programme for future years. Thus, the USA was poised to begin a major expansion of its military spending.

The 2001 QDR has provoked relatively little discussion, especially when compared with the 1997 QDR. This may be due to the environment that has emerged after the terrorist attacks in the USA. The failure of the 2001 QDR to articulate a more specific vision of US military policy, and the emphasis in the budget on continuity rather than change, suggests that a major opportunity has been lost. It also suggests that providing the military with substantially more funding, however justifiable in terms of short-term security perceptions, may, over time, prevent the very reforms that leaders claim are needed.

There are many uncertainties in the short-term outlook for US military spending, the course of the war against terrorism being the most important. The programme put forward by the Bush Administration for the US armed forces, both in its budget requests and in its other statements, most prominently the QDR, also raises uncertainties in terms of its ultimate affordability and its conformity to an overall vision of the role of the US military in the emerging global environment. The investment accounts are ‘back-loaded’, that is, a large part of the funding for the completion of current programmes is concentrated in the later years of the five-year projections. Such back-loading assumes that funding will be available when it is needed, but a future budget squeeze would force the DOD to make the choices between programmes that have so far been postponed.

Dr David Gold (USA) is Visiting Fellow at the Center for Global Change and Governance, Rutgers University, Newark, New Jersey. He was previously Senior Economic Affairs Officer in the United Nations Secretariat in New York. His research is focused on trends in US defence spending, economics of the peace dividend and economics of the arms trade. He has published in professional journals and books, including, most recently, ‘Defence spending and the US economy’, Survival (2001) and ‘Could we have done better? a retrospective on the 1990s peace dividend in the United States’, in ed. A. Markusen, America’s Peace Dividend (Council of Foreign Relations and Columbia International Affairs Online, 2000).