US Military Budget, Its Components, Challenges, and Growth

Why Military Spending Is More Than You Think It Is

Air Force Jet
••• Photo by MPI/Getty Images

Estimated U.S. military spending is $934 billion. It covers the period October 1, 2020, through September 30, 2021. Military spending is the second-largest item in the federal budget after Social Security. 

This figure is more than the $705 billion outlined by the Department of Defense alone . The United States has many departments that support its defense. All these departments must be included to get an accurate picture of how much America spends on its military operations.

Key Takeaways

  • The federal budget’s second-largest expense category is the military. Social Security takes the largest share.
  • The military budget covers the DoD, overseas contingency operations, the VA, Homeland Security, the State Department, and many others that involve national security.
  • To reduce military costs, the DoD must reduce its civilian workforce, pay and benefits of soldiers, and its military bases around the world.
  • Military spending has been increasing both the current U.S. debt and budget deficits.

The Four Components of U.S. Military Spending

If you really want to get a handle on what the United States spends on defense, you need to look at four components.

First is the $636 billion base budget for the Department of Defense. Second is $69 billion in overseas contingency operations for DoD to fight the Islamic State group. These two, added together, total the $705 billion budgeted by the DoD.

Third is the total of other agencies that protect our nation. These expenses are $228 billion. They include the Department of Veterans Affairs ($105 billion). Funding for the VA has been increased by $20 billion over 2018 levels. That's to fund the VA MISSION Act to the VA's health care system. The other agencies are: Homeland Security ($50 billion), the State Department ($44 billion),  the National Nuclear Security Administration in the Department of Energy ($20 billion), and the FBI and Cybersecurity in the Department of Justice ($9.8 billion).

Defense Department Base Budget

The defense base budget of $636 billion funds 12 initiatives. First on the list are Nuclear Modernization ($29 billion) and Missile Defense ($20 billion). The new Space Program will cost $18 billion, while Cyberspace protection is budgeted at $10 billion.

The Air Force will spend $57 billion, including $11 billion for 79 F-35 Joint Strike Fighters and $739 million for five presidential helicopters. The Navy will spend $32 billion and the Army receives $13 billion.

The Defense Department will also spend $21 billion on munitions and $107 billion in new technology research.

Additional funding goes to each department for readiness development. This includes $31 billion to the Army, $48 billion to the Navy, and $37 billion to the Air Force.

Service members will receive a 3% pay raise and an increase in their housing allowance. Family members receive $8 billion for child care, education, and professional development.

DoD will spend $21 billion on building maintenance and construction.

Overseas Contingency Operations

Ironically, the DoD base budget does not include the cost of wars. That falls under Overseas Contingency Operations. It's budgeted at $69 billion for DoD. Since 2001, the OCO budget has spent $2 trillion to pay for the War on Terror. 

Military Spending History

Here's a summary of military spending in billions of dollars since 2003: 

FY DoD Base Budget DoD OCO Support Base Support OCO Total Spending
2003 $364.9 $72.5     $437.4
2004 $376.5 $91.1     $467.6
2005 $400.1 $78.8     $478.9
2006 $410.6 $124.0 $109.7   $644.3
2007 $431.5 $169.4 $120.6   $721.5
2008 $479.0 $186.9 $127.0   $792.9
2009 $513.2 $153.1 $149.4   $815.7
2010 $527.2 $163.1 $160.3 $0.3 $851.6
2011 $528.3 $158.8 $167.4 $0.7 $855.2
2012 $530.4 $115.1 $159.3 $11.5 $816.3
2013 $495.5 $82.1 $157.8 $11.0 $746.4
2014 $496.3 $85.2 $165.4 $6.7 $753.6
2015 $496.1 $64.2 $165.6 $10.5 $736.4
2016 $521.7 $58.9 $171.9 $15.1 $767.6
2017  $523.2 $82.5 $177.1 $35.1 $818.9
2018 $574.5 $88.1 $181.8 $46.4 $890.8
2019  $616.2 $68.8 $206.4 $10.1 $904.3
2020 Appropriated $633.3 $71.3 $215.0 $8.2 $935.8
2021 Budgeted $636.4 $69.0 $228.4  $0 $933.8

Factors Influencing the OCO Budget

  • 2003: Iraq War launched March 19.
  • 2004: U.S. torture at Abu Ghraib prison increased resistance to the war, but not enough to lower costs.
  • 2005: Afghanistan War costs rose to protect free elections.
  • 2006: Costs rose in Iraq.
  • 2007: Surge in Iraq to counter violence.
  • 2008: Violence rose in Middle East due to recession.
  • 2009: Surge in Afghanistan.
  • 2010: Obama funds Iraq drawdown.
  • 2011: Iraq War ended but costs reached all-time high.
  • 2012: Troop withdrawal in Afghanistan War. Costs began falling.
  • 2013: Sequestration cut spending.
  • 2014: Wind-down of Afghanistan War.
  • 2015: Sequestration cut spending. Still higher than in 2007.
  • 2016: Resurgence of ISIS.
  • 2017: Increase in VA and FBI funding. Trump asked Congress for $30 billion more in military spending.
  • 2018: Trump asked Congress to repeal sequestration for the defense budget. Requested a spending increase to fight ISIS.
  • 2019: Congress repealed sequestration for defense for two years. 
  • 2020: Trump increase VA and OCO and reduced the State Department.
  • 2021: Increase to the base budget for all departments offset decreases in OCO and emergency spending.

Three Ways DoD Tries to Save Money, But Congress Won't Let It

The Defense Department knows it needs to become more efficient. It now spends a third of its budget on personnel and maintenance. That will rise to 100% by 2024, thanks to retirement and medical costs. That leaves no funds for procurement, research, and development, construction, or housing. These necessary support programs now take up more than a third of DoD's budget. 

How could the DoD become more efficient? First, it needs to reduce its civilian workforce instead of resorting to hiring freezes and unpaid furloughs. The civilian workforce grew by 100,000 in the last decade, 

Second, it must reduce pay and benefits costs for each soldier. Instead, it plans to raise both.

Third, and most important, it should close unneeded military bases. By its own estimates, the DoD is operating with 21% excess capacity in all its facilities.

Congress won't allow DoD to close bases. The Bi-Partisan Budget Act of 2013 blocked future military base closings. Few elected officials are willing to risk losing local jobs caused by base closures in their states. Instead, the Pentagon will need to reduce the number of soldiers so it can afford the benefits of bases. 

Congress is also reluctant to allow DoD to cut other costs, like military health benefits and the growth of military pay. Sequestration cut defense spending by $487 billion over 10 years. Many in Congress said the cuts jeopardize national security. They are concerned about a cutback of about 100,000 troops, closure of domestic military bases, and termination of some weapons systems. All of those cuts cost jobs and revenue in their districts. That's why lawmakers added $180 billion to the limits imposed by sequestration for FY 2018 and FY 2019.

At the same time, U.S. military spending is greater than those of the next 10 largest government expenditures combined. In 2018, it was three times more than China's military budget of $250 billion and 10 times bigger than Russia's budget of just $61.4 billion.

U.S. militarism allows other allies to cut back on their own defense spending. It also raises the U.S. budget deficit and the $22 trillion debt. There is no realistic way to reduce either without cutting defense spending.