Center for Arms Control and Non-Proliferation

U.S. Security Spending: How Much Do We Really Spend?

by Christopher Hellman [contact information]

October 1, 2007

For Fiscal Year 2007, the Bush Administration requested $463.3 billion dollars for the Department of Defense and the nuclear weapons-related activities of the Department of Energy. Congress authorized a total of $462.8 billion. This "base budget" for the Pentagon does not include military operations in Iraq and Afghanistan - which totaled an additional $173.0 billion in Fiscal Year 2007.

TABLE 1. SUMMARY OF FY 2007 DEFENSE AND SECURITY-RELATED SPENDING

Defense Department and defense functions of the Department of Energy	$462.8 billion
Supplemental Appropriations for Military Operations in Iraq/Afghanistan	$173.0 billion
Other Security-Related Funding	$352.8 billion
Total Defense and Security-Related Spending	$988.6 billion

In fact, when you look at total spending related to the military, the Pentagon's official annual budget represents only a portion of the complete picture. Billions of dollars are contained in other federal programs that are spent as a direct result of the United States supporting and maintaining its military.

NOTE: Unless otherwise indicated, all dollar figures represent funding levels for Fiscal Year 2007 as reported in the Bush Administration's budget request for Fiscal Year 2008 released in February 2007.

THE FEDERAL BUDGET FOR FY 2007

The total federal budget for FY 2007 was roughly $2.8 trillion dollars. Of this, 70% is Mandatory spending. Mandatory spending is money spent in compliance with existing laws that govern the particular program or function. Mandatory spending includes entitlements - money or benefits provided directly to individuals such as Social Security, Medicare, Medicaid, Food Stamps, and Federal Retirement. It also includes interest payments on the national debt.

The other category of federal spending is Discretionary. Discretionary spending is the money the President and Congress must prioritize and appropriate each year. Of this, just over half (or 17% of total federal spending) goes to the Pentagon (the "Function 050" account, not including funding for military operations in Iraq and Afghanistan) while the remainder (or 16% of the total federal budget) goes to all other discretionary programs.

All figures are either contained in or derived from the summary tables to accompany the Fiscal Year 2008 Federal Budget Request, the Office of Management and Budget, available online.

OFFICIAL PENTAGON BUDGET FOR FY 2007

TABLE 2. OFFICIAL PENTAGON BUDGET FOR FY 2007

Department of Defense (Function 051)	$441.5 billion
Department of Energy (Function 053)	$16.5 billion
Other Misc. (Function 054)	$4.7 billion
Total National Defense (Function 050)	$462.8 billion
TABLE NOTES Source: All figures are from Conference Report 109-702, the National Defense Authorization Act for FY 2007, (H.R. 5122/S. 2766), the table "Summary of National Defense Authorization for FY 2007," pp. 451.

SUPPLEMENTAL FUNDING FOR MILITARY OPERATIONS IN IRAQ AND AFGHANISTAN AND RELATED EXPENDITURES

Military Operations/GWOT - $173.0 billion. According to the Congressional Research Service, Congress appropriated an additional $173.0 billion for military operations in Iraq and Afghanistan and other costs related to the "Global War on Terror." Of this total, $165.8 billion was for the Department of Defense, $6.3 billion for the Department of State and the U.S. Agency for International Development, and $1 billion for the Veterans Administration ("The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11," Congressional Research Service, updated June 28, 2007, Table 1.)

OTHER SECURITY-RELATED SPENDING

In addition, the military creates other federal obligations funded in the annual budget. These are:

Homeland Security - $42.8 billion in mandatory and discretionary spending in both the base budget and supplemental appropriations. Of this, $28.7 billion is funded through the Department of Homeland Security, while the remaining $30.6 billion is funded through various other federal accounts, including the Department of Health and Human Services ($4.3 billion), and the Department of Justice ($3.1 billion). NOTE: This figure does NOT include the $16.5 billion for homeland security funded through the annual DoD budget. (Source: Summary tables to accompany the Fiscal Year 2008 Federal Budget Request, the Office of Management and Budget, "Homeland Security Funding by Agency," Table S-4, available online.

Intelligence - $8 billion in discretionary spending. Although classified, the annual intelligence budget is widely estimated at roughly $40 billion. Of this amount, it is estimated that 80 percent is funded within the defense budget. The remaining 20 percent, or approximately $8 billion, is funded through other areas of federal spending.

Foreign Military Aid - $4.7 billion in discretionary spending. (Source: "Analytical Perspectives," Table 27-1 "Budget Authority and Outlays by Function, Category, and Program," Function 150, available online.

International Peacekeeping - $1.2 billion in discretionary spending. (Ibid., Function 150)

Non-Proliferation, Antiterrorism, Demining and Related Activities - $0.421 billion in discretionary spending. (Ibid., Function 150)

Military Space - $3.1 billion in discretionary spending. (Ibid., Function 250, use 20% of total)

DoD Civilian Employees Compensation and Benefits - $55.2 billion, including $43.4 billion in direct compensation, and $11.8 billion for personnel benefits. NOTE: Similar figures for civilian employees of the Department of Homeland Security and other federal agencies are not available. ("Analytical Perspectives," Table 24-4, "Personnel Compensation And Benefits," available online.)

Veterans Benefits - $30.3 billion for hospital and medical care, taken from the non-military portion of the discretionary budget; and $42.2 billion for disability pensions and the G.I. education program from the mandatory budget. These obligations are owed to those who served honorably in past years. Total: $72.5 billion (Ibid., Function 700)

Military Retirees - $43.8 billion for retired military personnel, funded in the mandatory budget. (Ibid., Function 600, under "Military Retirement")

Retired Civilian DoD Employees - There is no precise figure for this. Total Federal Civilian Employee Retirement funding is $62.4 billion. Assuming that the proportion of DoD retirees is roughly the same as that of current DoD employees to the total federal workforce (35.9% in Fiscal Year 2007), this is about $22.4 billion. Again, this $22.4 billion comes from the mandatory budget. (Ibid., Function 600, under "Federal employee retirement and disability," and "Analytical Perspectives," Table 24-1, "Federal Civilian Employment In The Executive Branch," available online)

Interest Payments on the National Debt Attributable to Past Military Spending - Total gross interest payments in Fiscal Year 2004 are $433.0 billion, 22.8% of which is directly attributable to prior national defense spending included in the official National Defense budget (Function 050). This percentage is conservative since it does not include past borrowing for any of the other accounts shown here - such as veterans' programs - which would increase the ratio considerably. Even using this conservative methodology, this figure adds $98.7 billion to annual defense-related spending, included in the mandatory budget.

NOTE: To obtain the 22.8% figure, deficits for each year beginning in 1940 were used. The percentage of each annual deficit that was the result of defense spending was determined by using the figure supplied by the Defense Department for the percentage of the annual budget spent on "National Defense" (Function 050). Total indebtedness was then compared to total "National Defense" related debt, and a ratio derived. The year 1940 was selected because information on the percentage of the Federal budget made up by defense spending was unavailable for earlier years. Given, however, that the national debt in 1940 was relatively modest ($50.7 billion), and that the vast majority of deficit spending by the federal government has occurred since then, this appears an acceptable cut off point. (Ibid., Function 900, use "Total, Interest on Treasury debt securities (gross)")