May 03, 2021
Here’s a myth often repeated: “The United States defense budget is larger than the next 10 countries combined.” You hear it all the time from progressives, led by the Senate Budget Committee Chairman, in their arguments to cut funding for our military. It’s time to remove this false talking point from our vernacular. Here’s the truth: our defense budget is almost certainly smaller than the combined Chinese and Russian military budgets after you adjust for basic economic realities.
Let’s be clear. Because the Chinese and Russians manipulate their defense budgets, measuring their actual spending is very difficult. Both Beijing and Moscow lie about just about everything—the coronavirus, genocide, poisoning political opponents—so it should be no surprise they intentionally hide significant parts of their defense spending. For instance, the Chinese don't report any research and development spending in their defense budget, and significant portions of their space program and basing costs are omitted. (By comparison, the U.S. R&D budget was about $100 billion, or almost 15 percent of our military budget last year.)
This isn’t a new problem – but our lack of study on it is. During the Cold War, we had legions of Kremlinologists who spent day and night trying to understanding Soviet defense spending. Yet today, almost no effort has been put into understanding our adversaries’ defense budgets. That’s why last year’s National Defense Authorization Act tasked the Pentagon, alongside an independent research center, to give us better tools to understand Chinese and Russian defense spending as it compares to ours.
So these ill-considered comments about our “larger than the next 10 countries” defense budget are not doing an apples-to-apples comparison, and they also aren’t using the appropriate metrics to make an accurate assessment. While most people who parrot the “10 countries” talking point probably don’t bother to look at the data, those who do always cite the Stockholm International Peace Research Institute (SIPRI) military expenditure database.
The SIPRI database compares defense spending adjusted by market exchange rates, a metric appropriate for traded goods, like food and household electronics. But market exchange rates are extremely volatile, and they are not a good metric for measuring non-traded goods—like military equipment. A dollar spent on military equipment—developing, purchasing and maintaining weapons—goes much further in lower-income countries.
Instead, purchasing power parity gives us a better picture of actual spending. This adjustment in part helps us account for the significant difference in the cost of labor—whether in weapons manufacturing or in military personnel pay—in the United States, Russia and China.
Here's what that picture looks like using the more accurate purchasing power comparison: the SIPRI-reported 2017 Chinese defense budget of $228 billion actually equates to $467 billion, according to Heritage research. If you adjust that 2017 number to reflect four years of consistent and significant growth of the Chinese defense budget, as has been reported, that puts China’s defense budget at about $604 billion in 2021.
Using the SIPRI market exchange rate data, Russia spends roughly the same amount on defense as the United Kingdom or France (about $55-60 billion USD each). Yet as two Russia experts, Michael Kofman and Richard Connolly, wrote, “One need not be a Russian military analyst to have a general appreciation for the fact that the Russian armed forces, including conventional and nuclear components, are vastly larger in size, greater in fielded capability, and in a higher state of readiness than those of France or the United Kingdom.” They concluded that actual Russian expenditures likely top $200 billion in adjusted dollars and are sustainable in the long term.
Simply put: China’s approximate $604 billion defense budget and Russia’s more than $200 billion defense expenditures, put together, total more than $800 billion — well higher than our defense budget of $741 billion.
Of course, neither of those comparisons account for tens of billions in additional off-the-books or hidden spending in China or Russia. But when you combine the estimates for China and Russia using purchasing power parity, even without adding in the hidden spending, that's already greater than our budget. Myth busted.
Lastly, these comparisons don’t account for the different responsibilities of each military. The U.S. military has extensive commitments around the globe to protect our interests, including interests that align with our allies and partners. By contrast, the Chinese and Russians focus almost all of their defense spending and military forces on limited regional objectives in close geographic proximity.
The United States needs to increase its defense spending to keep up with China and Russia in competition—and we need to innovate and outthink our adversaries, too. This competition will require a whole-of-government national security approach with a strong military at its core. We can’t spend our way out of our national security problems, but we can certainly spend too little to give ourselves a chance. The fact is, maintaining deterrence is about both how much money we spend and how well we spend that money—measured against the spending of our adversaries. What’s clear is that we’re lacking – and President Biden’s insufficient budget topline this year will only put China and Russia further ahead. We have to rectify this before it’s too late for us to catch up.
This commentary originally appeared on RealClearDefense.com.