books common sense by thomas payne. huckleberry finn by mark twain. their eyes were watching god. free to choose. watch our 10 part series books that shaped america. on c-span, c-span now our free mobile video app, or c-span our. next, a conversation on defense spending with researchers. the panel discussed budgeting, the cost of military reform and personnel pensions.

ive to a brookings discussion on defense spending. you are watching live coverage here on c-span. >> how do we decide how much the u.s. should spend? i know about the federal budget but i am more confident -- comfortable talking about things like social security, the opportunity tax incentive, state local tax deductions and the defense budget.

i called my colle >> how do we decide how much the u.s. should spend? i know about the federal budget but i am more comfortable talking about things like social security, the opportunity tax incentive, state local tax deductions and the defense budget. i called my colleague at brookings and put the question to him. how much should the u.s. spend on defense? he said i just finished a 20,000 word answer to that question. so here we are. you can read all 20,000 words on our website but he has promised he will not try to read them all here. i want to start with a question i can't answer, how much does the u.s. spend on defense? can we get they wind up? answer is we spend a lot. there are a lot of ways to measure this but let's start with a few things. this is a pie chart that shows how we spent the federal budget on the fiscal year. we spent about $900 billion on disk -- defense. 12% of all federal spending. you can see here that the biggest slice of the budget is mandatory spending for

entitlements, benefits like social security and medicare, and that is the growing part of the federal budget. but the defense slice is big. particularly compared to the nondiscretionary budget, which is funding the things we talked about but the federal government does, national parks, state and local governments. even though it is only 12% of the budget, it is pretty big. the department of defense buys more goods, services and software than all other government agencies combined. it employs about 2.2 million people. that is more than all of the other executive branch agencies combined. the workforce is about 1.5 million. and one third of all civilian federal employees are employed by the department of defense. some people's tally says we spend more on defense than -- or as much on defense as the next

10 countries combined, china, russia, india, saudi arabia, germany. but that may understate how much the chinese spend on defense. i don't have a table to tell us about that. another thing to do with the defense budget is to do historical funding for defense in real terms, inflation-adjusted terms. it shows what cbo projects we will spend based on the department of defense budget. that green line is what congress does. there's so much for the space budget and then if we have a war in afghanistan or ukraine, they put that on top. it often does get built-in. the point here is you can see that defense is expected to rise in real terms over the next

decade. travis sharp was one of our speakers today and says that trend of rising defense spending presents one area where washington policy papers of both parties keep finding ways to agree. you look -- when you listen to the congressional debate, should we spend more on nondefense discretionary, or how much more should we spend on defense in real terms? another way to measure the defense budget is looking at the share of gdp. how much effort to be put into the defense budget, the chart looks a little different. this is defense spending -- it was high during the vietnam war for obvious reasons. it has gone up and down more entities that about 3% gdp. we keep telling our allies we had to spend at least 2% of gdp. he's going to talk about this

more in detail. let me explain about the order of the program today. mike is going to give a 15 minute presentation of his paper on this. he is a man of many titles, but most relevant is the chair of defense and strategy and director of the center on security strategy and technology in our foreign policy program. he has been at brookings for nearly 30 years. he has a phd from princeton in public and international affairs. i will be joined on the panel with two other experts on defense spending, a senior fellow at the american enterprise institute who has had a variety of roles in the pentagon and defense spending. she has a degree from georgetown . also travis sharp, the senior fellow at the center for

budgetary -- he also has a phd from princeton. without i will turn the podium over to mike and i will be back after his presentation. >> thank you, david. good morning. it is nice to have you there. i will try to spend 15 minutes making the defense budget accessible to those of you who don't think about it all the time. to quote the famous book from the whiz kids of the 1960's who wrote a book with this title, david has already captured the yen and yang about how to think about this. the military budget is almost $900 billion and it does not count homeland security. it is a lot of money and more

than the cold war average, even after adjusting for inflation. it is more than the peak from the cold war if you can believe that. his last chart showed it is only a little more than 3% of gdp. as mckenzie and i observed saying a moment ago, the pie chart of federal spending, 12% of the federal budget is a lot but it is less than it used to be. in the early years after world war ii, even after when we downside -- downsized and we were in the cold war, we were spending about half the federal budget on the military. it is entitlements that jump out , probably a lot of you when you see that chart as the big enchilada. i come at this as a perspective of how to be a cheap hawk in the 20 20's. those of you who've been around will remember newt gingrich, after republicans had taken

congress, he wanted a downsized government. someone asked him, how does that square with you being part of the legacy of the reagan revolution and the royal apostle of president reagan had only left office a few years before? gingrich said i'm am a hawk but a cheap hawk. i'm not of the same political persuasion of him but i am philosophically in the same boat. i want to talk about how to be a cheap hawk. i'm trying to spend enough to make sure that based on my analyses, we are in a robust position in a troubled time in global politics with a lot of challenges around the world. and yet trying to minimize the burden on the taxpayer and viewing the overall size of the deficit and the debt as long-term national security challenges. the defense department cannot solve that problem and i'm concerned about our politics.

i always come back to the so-called discretionary accounts, only one third of the federal budget together, defense and domestic. and try to put pressure on those to reduce spending while we leave entitlements alone and leave the revenue issue alone. that won't work. but at a time of fiscal distress in a challenge to our long-term economic foundation, it is better to be a cheap hawk then to bless every pentagon request. that is the philosophy i'm coming from. when you think about how to build a strategy, i think it is part of why david wanted to have this event. if you are a generalist, thinking about our role in the world and our military posture, how do you understand the basic conceptual drivers of an $850 billion a year national defense program and a military that is not huge by historical standards or current international

standards, 1.3 million active duty. about 2.1 million total employees you count civilians as he said. even when you add in the reservists, guards women, we are up to about 3 million. that is small compared to the cold war average and even china today. it is not even that big compared to india or north korea. so to have an establishment that is fairly small in size but being asked to do a lot. let me briefly speak to the question of what it is being asked to do. you think about building a military strategy, you have to consider who might fight against you, who might fight with you, how many of these wars you have to be ready for and what does the war look like. what is an adequate margin of insurance or safety in terms of your confidence level that you could win that war.

with the ultimate goal being that we want to deter the war. want to convince our would-be adversaries to stop dust it is not worth the fight against us. so there's a phrase when talking about caring for war, we want to be strong enough that if we wind up in conflict, our troops live in the enemy dies. when she says it it sounds better. maybe you will hear it in a few minutes. at the core point for me is you want to have enough military capability and credibility to fight. that we will prevent the wars from happening in the first place. we are at a point in our defense strategy where china and russia have become our top concerns. heaven for bid we actually fight them, we have to go back to the old line that the purpose of military forces in the future must largely be to prevent war from happening. ideally that would always be true, but especially when you're dealing with a nuclear armed

superpower. when you think about these general principles for dispense -- defense planning, against whom you fight, who would fight with you, how many wars at a time and what does the war look like, what margin of insurance or advantage do you seek so that the enemy will hopefully not want to fight you in the first place? what i would say to those of you who think we spend too much on the military, i would cement that we already have a fairly modest and minimal set of standards for how to define the answers to those questions. it is a natural defense strategy of 2018 and it continues with secretary austin at 122. for the cold war and after, we hypothetically envisioned being able to fight two at a time. the goal was to make sure if we get involved in a war someplace, there is a window of opportunity or a weakening of deterrence

elsewhere we want to prevent opportunistic aggressors from susan on the fact that you are already engaged in one place and attacking you at the same time. that is a nice standard to have. it gives an extra margin of insurance and an extra margin in case you are wrong about how many are required to win a conflict. we are always wrong about that because military planning is an imperfect enterprise. in the first post it -- first bush administration, they thought beating saddam hussein might take five to 10 times as much pain, suffering and american casualties as it did. luckily, we exaggerated or overemphasized or overinflated our best prognostications of what the war would look like. the second bush administration made the opposite problem. i'm not trying to convey a political point about objectives, it is more a point about military planning. if you get it even within 25 to

50% of the ballpark of what you think you need to win a war and it turns out to be validated, that is about as accurate as you are going to be. the capability gives you an extra margin of error. that was nice when we could do it, with the -- when iraq and north korea were our chief concerns. it is harder to see even the taliban, isis, i -- al qaeda we do not have complete success even against more limited capabilities. but today we plan on being able to defeat either russia or china, not both at the same time. if we do wind up fighting russia or china, we don't assume that north korea will try to attack at the same moment. we want to have limited deterrence against them on the peninsula. similarly was iran. there was a planning framework for our military.

we'll have a little debate in a few minutes about how to sustain that strategy. we have a fairly modest set of criteria. for what it superpower needs to have. we have seen a period of two decades of conflict in which the united states did fight two wars at the same time. not a very good job when we had to do both simultaneously against lesser photos than we are talking about today. that is the framework. it's i will give you a little background on the defense budget, i will pick up where david left off and remind you in historical perspective of where we are today. we are below the peak of the iraq and afghanistan conflicts in the size of the u.s. defense budget once you adjust for

inflation. what we are well above the cold war peaks. colors don't buy dollars on the battlefield. they biking abilities. it's there were a million built up in the trump years. that is a buildup we had after 9/11 or during the vietnam conflict, or the reagan buildup of the 1980's. the cold war numbers range between 500 billion dollars a year and 750 billion a year. next slide, please. to give a sense of the international perspective, david mentioned that pending on how you count it, we spent more than the next 6, 8, 10 countries combined. it is worth knowing as a matter of input who is putting resources into the military. there is good news if you put

our defense budget in global perspective. this is hard to read. i will tell you the united states a couple of years ago was spending about 38% of the world's total of all expenditures on armed forces. our nato allies added in another 17%. so all of nato combined is 56% of world military spending. it is good news and bad news. it is good news in that we are spending a lot on allies, the military. many are not spending as much as we think they should and they all represent obligations. have to have a strong enough american military to defend all that. it is not just that the defense budgets add to our own but the territorial production becomes our burden as well. as if it were american soil. that is what the mutual defense path means. after some sense of resource

allocation, we are going to continue this. all of our other allies around the world, another 12% of military spending. the u.s. led coalition, nato allies, nation allies, other major security partners in the middle east represents about 60% of all military spending. that should give us some confidence that we are in a strong position. but should not give us any kind of overconfidence for the very reason that most of the conflicts we might find would be near the adversary's own soil. and dollars don't fight dollars. don't have to have a defense to dust defense budget near us -- defense budget near us to win. just ask the taliban. i want you to see these inputs but not think they are conclusive analyses or predictions of outcomes in

hypothetical conflicts. a couple of more and i'm going to make some general points. this is giving a sense, we were talking on the sidelines that the $240 billion estimate of china's know terry budget is highly debated and uncertainty -- uncertain by plus or -50%. it could be well into the $300 billion range. there is a study saying it could be even higher than that. but it is somewhere between one third and one half of american military spending, easily the second-biggest budget on earth, doubling every seven to 10 years, and probably will keep doubling every seven to 10 years. it is less than 2% of china's gdp, but they become substantial enough and that is still a lot of money. and the war we worry about winning against china is near this. i don't think they could come close to that.

if i could bring down the defense budget and the budget request, if you are curious about which military services spend the most, at this point it is the air force. all the air force budget includes a lot of the intelligence budget. out of $850 billion in total u.s. national defense budgeting, $100 billion is the intelligence budget within the defense department, hidden in plain sight. because it is now public and unclassified. every other detail about the intelligence budget is classified. about $100 billion of that is about defense spending. much of it is to put up satellites and maintain technical capability. the navy budget includes the marine corps. the department of the air force includes the space force, which is tiny but still expensive given the satellites.

the army used to be our biggest budget service when it was bigger and very active in iraq and afghanistan. it has now become the smallest of the big three departments and a lot of activities have been shared across the defense space and represent almost $150 billion worth of spending. finally, if you are wondering, how do we spend, this is the breakdown on the -- title. we spent about three to $30 billion on operations and maintenance. the reason the 23 number is higher is that it included a lot of ukraine money. 3:30 is closer to what it was next year. there has been a valuation acquiring new weaponry. about $300 billion in investment for the future, 300 billion of

operations which include civilian salaries but also equipment repair, training, recruiting, many other things. finally, almost $200 billion is for the men and women of the all volunteer force. now i would like to -- enclosing of this part of the conversation, setting the stage for the conversation that will follow. i would like you to understand how i did my calculation to argue that you need small real growth. i think the agreement between speaker mccarthy and president biden, the default avoidance agreement that is in some degree of flux and jeopardy, as we try to bring congress back to town. that agreement is not quite enough for the military. one of them on stage may tell you it is not nearly enough, i

think it is about $10 billion to little. one calculus she was to take the force the pentagon believes we have for the future of 1.3 million active-duty military personnel along with the modernization agenda we believe is important for deterring china and russia and improving future capabilities. take that budget and projected out over a ten-year period. look at what kinds of expectations we should have about it growing faster than budgeted for. excitations we should have about weaponry costing more to build than we think. we should not be surprised by that because modernizing weaponry is the same as inventing new weaponry. why would you think you could set it to a schedule or the cost to? i'm not trying to be the defender of every program in the defense industry, but you should expect cost to grow in some cases for technology that you don't know how to build in the

program. the process invention is inevitably nonlinear and nonpreventable. a couple of more points i would make, thinking about why i'm a cheap hawk and why it is so hard even for a cheap hawk to find savings in the defense budget. check off two or three. one is that in a personnel account, it is not a good time to figure out whether we can save a lot of money on military housing or some benefits are too generous. we pay our volunteer force well but they're doing incredible work, they are being asked to do a lot and they don't make overtime and fewer people want to join. we have a crisis in recruiting in our all volunteer force. the next conversation is about whether we should seriously consider the draft. before we get to that point, we should protect robust military conversations.

we owe it to our men and women in uniform and we need to incentivize people to join the military and stay in it. military readiness has reflected the maintenance budget. it is a difficult and dangerous world. there's the potential for conflict already which means we can't skimp on maintenance, training, foreign presence abroad. i have a few specific ideas to save a few hundred million dollars, a couple billion. my old colleague who was comptroller -- he said finding the budget is hard to keep trying. it was not a true chilean -- churchill phrase but he was right. it is usually 100 -- a couple million here, a couple hundred million there. it is real money that is worth skipping down to pick up off the sidewalk, but it is not going to

solve a dilemma about unmet needs in at hundred $50 billion enterprise. i mentioned before, we want our troops not only to be well compensated but to have the best equipping in the world so that if we fight, they live and our enemy dies. mckenzie puts it better than i do, but we are out of time -- we are at a time where we must be successful in deterrence of russia and china rather than figuring out who is better after the fact once the smoke settles and the nuclear mushroom clouds dissipate. we don't want to get to that point. i would submit that for contingencies in the western pacific over taiwan for deterrence of our nato allies in eastern europe, we have to be at robust and look for in our current force where china and russia may perceive and achilles' heel. they can knock out our command-and-control, our forward bases.

knockout our combat units in a way that they have a window of opportunity to successfully complete aggression in our neighborhood before we can get ourselves after dust off the map. i recognize a few savings and a cute -- a few cuts insert weapons. but i also think there are a few specific vulnerabilities that i want to close to make sure china and russia don't see a pearl harbor opportunity, to knock this out of the ballpark for a month or two so they can complete in aggression and hoping we don't have the commitment to vote ourselves up and come back at them. that is the most likely way deterrence could fail. not that they cut outs logos, but they could not miss out on the flight long enough to do the phone business in their own neighborhoods before we could reverse the aggression. we don't want those achilles'

heel's and vulnerabilities. there are some areas where the pentagon has not yet proposed enough spending to redress those concerns. this is a broad picture overview, we are getting some of the details of the discussion and i'm looking forward to being joined by colleagues on stage. >> thanks. >> great job. >> i want to start by reading something that jane harman and eric aleman -- and eric wrote on the condition -- the commission on national strategy. they understand this is often shorthand for defense. while spending more on defense does not guarantee we will deter china and rollback russian aggression, spanning less will almost certainly fail. but it is also true that buying incrementally more of the same mix of weapons and technology

will not produce the force necessary to meet the challenges posed by an aggressive china and russia. more alone is not better, better is better. hard to argue with that. with that, mckenzie, do you think that we could meet what you think are the defense needs of the united states with the big picture budget that mike was talking about, over the next decade or not? >> thank you for taking me back to grad school this morning. we had to read the book, i'm not going to talk about the book. basically i spent two years of my life answering that question alongside this guy. the answer to your question and the answer to the bed is -- the answer to the oped's we have

more than money but we do not clean sheet anything. there is no set baseline, like for mandatory spending, with auto increases. there is no debate and discussion in congress. we just do that because we do that for what are primarily health care programs. the defense budget has no preestablished baseline. what are the president say, and it is sometimes based on strategy, sometimes more or less than other times. on the mandatory side, the blue you had, those are essentially health care programs for the most part. within our own defense budget it looks just like that. it is a microcosm of federal

spending that looks like a pac-man. you have automatic spending, spending on autopilot that does not change year-over-year substantially unless there is a total fundamental relight -- rewrite of our global strategy. there has been attempts at doing this although what we tend to do more often is chip away. if you could clean sheet of budget and building from scratch every year and have a whiteboard behind you there is enough money. that is not the world we live in. it strengthened slightly, particular the recruiting crisis we have several years different levels of severity by service. most of the defense budget is not available for strategic choices and changes.

it is probably less than 18%. within that 18% to 20% can you make a lot of changes and reductions? sure. there are consequences and benefits. i want to present the budget as it is, not as we wish it to be. we do not start with a whiteboard. we start with how they budgeted last year. >> is 1% real enough or not? >> the cbo has done great work, they have their long-term defense budget reports. depending on the account within defense operations and maintenance, research and development, those exceed inflation. when we have defense budget total growth you have under budgeted bills. you have to cover those spreads with the topline. when you asked me is 1% above and nation enough but the growth

for defense budget just to exist on autopilot is 2% to percent above inflation, you have to cut to exist. that was bob's work line. just to maintain the military as it is. no strategic thought. you have to cut every year to exist. is 1% enough? as long as you are diminishing your global objectives, your mission, your manpower, and your workload. >> where are you on this question? >> i think 1% real growth year is not enough. i think 1% to 3% is what will be necessary to afford the type of additional investments that might wind up being necessary. i will briefly sketch where that comes from. mike's paper has a series of spending reductions that are

worthy ideas, but the feasibility of implementing some of those will be difficult stop just a focus on the congressional side of things. each year the dod proposes divestments to weapon systems and each year congress limits some of those divestments. that means because of constraints on congress ability to implement reforms and also one dod ability to implement reforms the savings we would get out of the proposals would be less than we would hope for. to put that differently, the expected value of the savings is probably going to be less than what is theoretically possible. since we will save less through those types of proposals, in order to invest in those types of things mike outlined as being necessary, we will have to increase the topline. comments on the 1% of 3% benchmark i mentioned.

from 2016 to 23 the average growth in the defense budget has been 2.5% in real terms, including supplemental funds. i think a 1% to 3% target is a reasonable projection that reflects some of the agreements policymakers have been reaching. >> i am concerned that you guys are conceding defeat before you fought the battle. if i gave you that same spiel and i said we are stuck with social security the way it is and it will run out of money in 2033 so there is no way we will cut benefits on old people so we have to find a way to increase spending on social security, or if i said to you that health care runs faster and grows faster than everything else, we need to keep pumping more money into health care, this seems like a dangerous way to run the government budget.

assume everything that is screwed up will be screwed up forever and find a way to borrow money to pay for it. i understand what you are saying, mckenzie, that if we cut the defense budget below 1% they would have to make some ugly choices. i wonder, isn't that the point? how are we going to get an efficient defense budget for an efficient health care budget if we don't say you guys have to figure out how to do better with this amount of money. let's do it. mckenzie: i will fight the premise of that question which is that government is efficient. it is not. if the defense department were a private company they would be bankrupt, chapter 11, sued repeatedly, taken to court. david: that is not my question. my question is if you give them a budget constraint you might have to meet at.

you say they take 80% of the spending off the table, and i'm saying force them to take it not off the table. mckenzie: let me revisit one of the main points i am making which i hope answers your question. i talked about the limited fruitage of choices the decision-maker has within that budget. that is what is important to focus on. there are basically eight dials or stats you can move up or move down, you are the most senior person, you are whatever. you are the chairman of the committee. those range from more great power competition, less mid tier defense, iran and north korea, what do you want your military to specialize in more than other skill sets or service or capability. then you have readiness, total dollars spent, and how modern is it?