Defense spending

WEAPONS, VIRUSES, AND THE NEW DEFENSE REALITY IN SOUTHEAST ASIA

The economies of Southeast Asia are in for a hard hit. No country in the region, save for Singapore, has sufficient capital for a large-scale stimulus program to bolster the region’s limited social safety nets. Every government is bracing for economic recessions and large budget deficits. Malaysia expects its economic growth in 2020 to contract by 5.9 percent, Thailand by 5.3 percent, Singapore by 4 percent, Indonesia by 2.5 percent and the Philippines by 1 percent. Only Vietnam is expected see positive, albeit slower growth, at 4.9 percent.

The pandemic and the looming global economic recession will negatively impact travel and tourism, which so many Southeast Asian economies depend on. China is coping with its own slowdown, a 6.8 percent contraction in first quarter GDP, with some estimates of 20 percent unemployment and massive decreases in exports. China will almost certainly buy less from Southeast Asia, invest less, and dispatch fewer tourists. A U.S. recession will have a similar impact.

Southeast Asian states will be coping with unemployment, food insecurity, and a decline in foreign investment and exports. The global economic downturn, coupled with a surge in anti-immigrant sentiment, will also have a major impact on the region’s migrant workers, whose remittances are so critical to their home states’ economies. That, in turn, will drive down domestic consumption. All of these developments will have knock-on effects on other sectors of the economy, including the banking, real estate, and service industries.

Defense spending

Military spending hits highest level in a decade: Study


Global military expenditures saw the biggest uptick in a decade in 2019, researchers say, marking the first year two Asian countries were among the top three spenders.

The world's nations spent a combined $1.9 trillion (1.78 trillion euros) on their militaries in 2019, according to a report released by the Stockholm International Peace Research Institute (SIPRI) on Monday.

Compared with 2018, that represented annual growth of 3.6 percent, the largest spending surge since 2010.

"This is the highest level of spending since the 2008 global financial crisis and probably represents a peak in expenditure," Nan Tian, a researcher at SIPRI, told the AFP news agency.

Defense spending

Defense budget cuts following the pandemic will be hard to swallow

Congress has appropriated more than $2.25 trillion to counter the impact of COVID-19 on American families and the economy. It is likely to spend even more once legislators return from their recess in early May. This unprecedented level of expenditure is resulting in a massive deficit and national debt levels that are likely to exceed 120 percent of the nation’s gross domestic product, especially as GDP growth itself is no longer a foregone conclusion. In turn, there will be renewed pressure on the defense budget, which already is forecast to have no real growth in fiscal year 2021.

Interest on the national debt, which at some point will begin to rise again, will create a massive burden on annual federal budgets. The demand for increases in domestic spending will be difficult to ignore in the aftermath of the pandemic. For these reasons, it is not beyond the realm of probability that defense budgets beginning in fiscal year 2022 will not even grow in nominal terms. 

Defense spending

Pentagon budget request increases R&D funding, cuts legacy planes

 U.S. President Donald Trump’s defense budget request for fiscal 2021 includes major investments in research and development portfolios as well as “crucial” technologies as part of what the Pentagon is branding an “irreversible implementation” of the National Defense Strategy.

However, the budget also features overall cuts to the Army and Navy top lines, as well as the divestment of legacy platforms from the Air Force.

The president is requesting $705 billion for the Defense Department, including $69 billion in overseas contingency operations, or OCO, wartime funds. Total national security spending, including for the National Nuclear Security Administration and other outside agencies, is $740 billion, as set by a congressional budget agreement last year.

Defense spending

Why Does the U.S. Spend So Much on Defense?


To put U.S. military spending in context, it is useful to compare what it spends to that of others. In fiscal 2018, the Defense Department’s budget of $649 billion — not even counting the contingency fund — was larger than the combined spending of the next seven largest militaries: $609 billion (China, Saudi Arabia, India, France, Russia, UK, Germany).

As large as the DOD budget is, the total amount spent by the United States on national security is actually much higher. The largest chunk outside DOD is spent by the Department of Veterans Affairs, which cares for former troops injured in past conflicts and funds the pensions of military retirees. The VA spent $201 billion in 2019, topping $200 million for the first time but not the last; the 2020 request was $220.2 billion. Adding the VA’s budget brings total national-security spending to $887 billion.

America’s nuclear weapons and naval reactors are maintained not by the Pentagon by the Department of Energy’s National Nuclear Security Administration, which also works to counter proliferation and nuclear terrorism. Adding NNSA’s $15.2 billion makes the total $902.2 billion.

It would be remiss not to include the intelligence community, or IC, though this can be a little complicated. The Director of National Intelligence makes public the combined unclassified budgets of the 17 agencies that make up the community. In 2019, that was $81.7 billion.

Defense spending

Germany announces biggest defence spending rise since end of Cold War

Germany is to increase defense spending by more than €5bn (£4.4bn) this year, Angela Merkel’s government informed Nato on Friday.

It is the biggest rise in the German military budget since the end of the Cold War, but will still leave the country far short of meeting Nato’s target of spending 2 per cent of GDP on defence.

The increase comes after months of US pressure for Germany and other European members to contribute more towards the cost of the alliance, and will be seen as a victory for Donald Trump.

But it remains to be seen whether Mr Trump will be satisfied with military spending that still only equates to 1.35 per cent of Germany’s GDP.

The rise also comes amid growing concern among Germany’s allies over equipment shortages and breakdowns that led the country’s own military watchdog to warn last year that it could not meet its Nato commitments.

Defense spending

Boondoggle, Inc.: Making Sense of the $1.25 Trillion National Security State Budget

In its latest budget request, the Trump administration is asking for a near-record $750 billion for the Pentagon and related defense activities, an astonishing figure by any measure. If passed by Congress, it will, in fact, be one of the largest military budgets in American history, topping peak levels reached during the Korean and Vietnam Wars. And keep one thing in mind: that $750 billion represents only part of the actual annual cost of our national security state.

There are at least 10 separate pots of money dedicated to fighting wars, preparing for yet more wars, and dealing with the consequences of wars already fought. So the next time a president, a general, a secretary of defense, or a hawkish member of Congressinsists that the U.S. military is woefully underfunded, think twice. A careful look at U.S. defense expenditures offers a healthy corrective to such wildly inaccurate claims.

Now, let’s take a brief dollar-by-dollar tour of the U.S. national security state of 2019, tallying the sums up as we go, and see just where we finally land (or perhaps the word should be “soar”), financially speaking.

Defense spending

Russia drops out of world’s top-5 military spenders, first time since 2006 — SIPRI

The Stockholm International Peace Research Institute (SIPRI) ranked Russia sixth in the 2018 annual update of the SIPRI Military Expenditure Database published on Monday.

This means that for the first time since 2018, Russia was out of the top five of countries with the biggest defense budget.

"Russian military spending was $61.4 billion in 2018, which accounted for 88 per cent of East European military spending," the Swedish think tank said.

According to SIPRI data, Russia’s major military modernization program, which started in 2010, led to significant annual increases in military spending (between 4.9% and 16%) through 2015.

Starting from 2016, Russia’s military budget has trended downwards. However, due to a one-off government debt repayment of almost $11.8 billion to Russian arms manufacturers in 2016, spending rose by 7.2%; without this payment, Russian military spending would have fallen by 11% The payment also explains a large part of the sharp 19% drop in 2017: excluding the repayment, spending would have decreased by 2.8 per cent. Russia’s spending fell again in 2018 (by 3.5%), but it is still 27% higher than in 2009.

Defense spending

Here is all the firepower the Pentagon is asking for in its $718 billion budget

When lawmakers return to Capitol Hill next week, they will begin considering the Pentagon’s colossal budget request. The Defense Department is asking Congress for $718 billion in its fiscal 2020 budget, an increase of $33 billion or about 5% over what Congress enacted for fiscal 2019.

The budget is composed of a $544.5 billion base budget, $9.2 billion for emergency border funding and $164 billion for overseas contingency operations funding, aka the war budget.

The Navy and Marine Corps request $205.6 billion, up $9.9 billion from fiscal 2019; the Air Force calls for $204.8 billion, up $11.8 billion from the last request, and the Army asks for $191.4 billion, up $12.5 billion from fiscal 2019.

Congress has until Oct. 1 to approve the budget or negotiate a new funding deal with the White House.

Defense spending

German defense industry decries Berlin’s new budget plan as too low

Newly released budget figures risk putting Germany on a path to miss NATO-wide spending expectations and even undershoot its own, lower target, warn defense industry advocates.

The assessment by the BDSV industry association comes after details emerged this week about the government’s newest spending blueprint. While a bump of €2 billion (U.S. $2.3 billion) is in the offing for 2020 — to €45 billion, or 1.37 percent of gross domestic product — defense spending is slated to drop in the ensuing years, down to 1.25 percent of GDP in 2023.

BDSV chief Hans Christoph Atzpodien called the projections “disappointing,” especially in light of equipment problems plaguing the armed forces. He also warned that Germany could lose its standing on the world stage. The budget would have “negative effects … on Germany’s role in the European Union’s defense-cooperation policy and in NATO,” Atzpodien wrote in a statement.

The military budget as a percentage of GDP is a key yardstick for NATO members. All allies have pledged to boost defense spending toward 2 percent by 2024, mostly in reaction to a resurgent Russia. Germany was never on track to reach that level, which would translate into tens of billions of dollars extra within just a few years.

Defense spending

Shanahan: Charging allies to house US troops, plus 50 percent surcharge, isn’t happening

 Acting Defense Secretary Patrick Shanahan said Thursday that the Trump administration is not looking to impose a new structure on allied nations that would charge those countries the cost of housing U.S. troops inside their borders, plus an extra 50 percent surcharge.

Asked by Sen. Dan Sullivan, R-Alaska, about whether the plan, first reported as under consideration by Bloomberg, would risk “driving our allies away from us,” Shanahan insisted that the reporting was “erroneous.”

“Senator, we won’t do cost-plus 50 percent,” Shanahan said, in what was his most energized comment of the hearing up to that point. He then outlined his view on getting allies to contribute more to defense.

“We’re not going to run a business, and we’re not going to run a charity. The important part is that people pay their fair share — and payment comes in lots of different forms. It can be contributions, like in Afghanistan,” Shanahan said. “But at the end of the day, people need to carry their fair share, and not everyone can contribute, but it is not about cost-plus 50 percent.”

Defense spending

In preparation for Trump’s ‘America First’ Doctrine, Japan unleashes $243bn defense spending plan

Japan is set to abandon its pacifist past and begin a long and dangerous road to militarization and potential confrontation with its neighbors, according to recently published defense spending documents.

Following the end of World War II, the United States military occupied Japan and imposed on the country a unique constitution which on the face of it, renounced war for good. Article 9 of the Constitution disallows Japan from maintaining a military force and outlaws the use of force in settling international disputes.

Much in the same way that Japan is party to an international convention which disallows whaling all the while it stillcontinues to take part in the globally banned activity (and will now reportedly be rapidly accelerating its whaling activities), Japan has never really adhered to the principles of its so-called Peace Constitution.

For example, Japan is one of the world’s largest spenders on national defense with one of the world’s best-equippedmilitaries, known as the Self Defence Forces (SDF), which are intended to empower the force to defend Japan in the instance of an attack. The nation also plays host to the US military and its bases, empowering the United States to attack many defenseless nations. In fact, the population of Okinawa, burdened with the task of hosting these military bases (despite vehement and endless amounts of protesting) reportedly feels guilty for their land’s complicity in the US-led invasions of Iraq and Afghanistan as Okinawa has played an integral role through the deployment of troops and naval craft.

Defense spending

Trump signs bill named for Sen. John McCain, doesn’t mention him

President Donald Trump on Monday signed a $716 billion defense policy bill named for John McCain but included no mention in his remarks of the Republican senator, who is battling brain cancer at home in Arizona.

Trump and McCain are engaged in a long-running feud that dates to Trump’s 2016 presidential run. At campaign rallies, Trump regularly castigates McCain — without outright naming him — for casting a dramatic thumbs-down vote that doomed Trump’s effort last year to repeal the Affordable Care Act, which was enacted by President Barack Obama.

Trump said there was “no better place than right here at Fort Drum” to celebrate passage of the defense bill, which will boost military pay by 2.6 percent, giving service members their largest increase in nine years.

Defense spending

Senate sends $717B defense bill to Trump

The Senate on Wednesday easily cleared and sent to President Donald Trump a compromise $717 billion defense policy bill aimed at building up the military and blunting Chinese foreign investment and telecommunications technology.

The final vote on the fiscal 2019 National Defense Authorization Act was 87-10. The president is expected to sign it.

Next, the Senate turns to legislation to fund the Defense Department, which will likely be packaged with an annual Labor-HHS-Education spending bill to attract bipartisan support.

The final defense policy bill is the product of brisk talks between leaders of the House and Senate Armed Services committees, who are finishing their work in historic fashion. If the NDAA is signed soon, as expected, it would be the first time in more than two decades a defense policy bill has become law before the Oct. 1 start of the new fiscal year.

Defense spending

House easily approves defense bill with new nukes, cuts to Pentagon bureaucracy

The House overwhelmingly passed a $717 billion defense policy bill on Thursday, despite concerns from some lawmakers over provisions that would endorse a new class of tactical nuclear weapons and seek cuts to a slew of Pentagon support agencies.

Advocates of the National Defense Authorization Act said the legislation would build on promises by President Donald Trump and defense hawks on Capitol Hill to build up U.S. military might.

"The best way to summarize this bill is that it takes the next steps," Armed Services Chairman Mac Thornberry (R-Texas) said on the House floor. "The next steps to rebuilding our military and reforming the Pentagon, the next steps towards strengthening our country's national security."

The Senate Armed Services Committee, meanwhile, approved it version of the annual policy bill in closed session Wednesday. But Senate leaders have not yet said when they plan to consider the legislation.

Defense spending

Here's what the $1.3 trillion defense-friendly spending bill looks like for the military

The military's massive funding hike just got a little bit closer to reality.

Congressional leaders unveiled a colossal government spending bill Wednesday night after striking an agreement on some major points of contention. In order to avoid the third government shutdown this year, lawmakers will now rush to pass the 2,200-page legislation by Friday's midnight deadline.

The $1.3 trillion omnibus offers the most significant increase in defense funding in the past 15 years, including a pay hike for personnel.

House Speaker Paul Ryan and other Republicans have touted the bill as a win for the U.S. military. Appearing on "Fox & Friends" Thursday morning, Ryan called the spending plan the "Trump-Jim Mattis budget," referring to the secretary of Defense.

"Obama shortchanged our military, this fixes us," Ryan said. "This is the Trump-Jim Mattis budget for the military. That's probably the biggest victory here is what we are doing for our soldiers, sailors, our airmen, our marines, and veterans."

Defense spending

What we know about China’s increased defense spending in 2018

China’s defense budget will rise 8.1 percent to 1.1 trillion yuan (U.S. $173.4 billion) this year as the country prepares to launch its second aircraft carrier, integrate stealth fighters into its air force, and field an array of advanced missiles able to attack air and sea targets at vast distances.

The figure released in a report Monday to the ceremonial National People’s Congress is an increase in the growth rate from last year, when Finance Ministry officials said the budget was rising 7 percent to 1 trillion yuan.

Years of double-digit percentage growth have given China the world’s second-largest defense budget after the United States, which is in a class of its own with a proposed budget of $716 billion for next year.

“We will stick to the Chinese path in strengthening our armed forces, advance all aspects of military training and war preparedness,” Premier Li Keqiang said as he read a report to nearly 3,000 delegates at the Great Hall of the People.

The armed forces will “firmly and resolutely safeguard national sovereignty, security and development interests,” Li said.

Defense spending

The military’s ‘readiness’ scam worked again

For at least the next two years, the American public should be spared the U.S. Defense Department's wailing about "readiness." After seven years of teeth-gnashing and garment-rending, the military is finally getting what it wants: more money than ever. The Donald Trump administration's defense budget request for fiscal year 2019 came out less than a week after Congress cut an overall deal on spending levels for 2018 and 2019. Unlike the domestic spending part of the administration's budget request, the defense numbers aren't dead on arrival. In fact, the military can count on getting every cent.The congressional deal set new levels, agreeing to $700 billion for national defense in 2018 and $716 billion in 2019. That's nearly $165 billion more than the military had anticipated prior to this year. The United States is back to defense spending, in constant dollars, that is higher than the peak spending levels under Ronald Reagan. Only in 2011, at the height of the wars in Iraq and Afghanistan, was defense spending higher.

Defense spending

Here’s where defense companies are funneling newfound tax dollars

If you listened to the annual earnings calls of the major, public defense companies (wait, does everyone not do that?) then you might have noticed a common theme.
They’re all going to have more cash. And a lot of them have similar plans for how to spend it.
One of the advantages of the tax reform law was to trim the corporate tax rate from 35 percent to 21 percent, which, in the words of Lockheed Martin’s CEO Marillyn Hewson, “reduces the combined U.S. corporate tax rate from the highest in the industrialized world, in line with the tax rates used in the most advanced economies.”
In the short term, most companies experienced a little bit of hurt by way of a one-time non-cash increase to income tax expense; it showed in earnings, with some falling short of guidance. But the advantages will certainly kick in starting next year.
So then what do companies have in mind? The idea behind the corporate tax cuts, if you ask the Trump administration, was jobs. And longer term, that conceivably will happen among the defense companies. But first, the money is going to other things. And generally speaking, the biggest recipient of cash infusion happens to be pension plans.

Defense spending

France proposes big defense budget hike

France unveiled Thursday a draft of its 2019-2025 military budget plan, setting €295 billion (U.S. $361 billion) on spending, which included better barracks, larger orders of Army armored vehicles, and studies on next-generation nuclear submarines and airborne nuclear missiles.

That spending plan compares to €190 billion in the present 2014-2018 budget law. The Armed Forces Ministry sees the budget law as a “renewal,” as the government seeks to “regenerate” the services. A first phase consists of €198 billion in the present five-year government term, with defense spending rising €1.7 billion each year to hit €44 billion in 2023. That compares to the 2018 budget of €34.2 billion.

That expenditure is covered by the government spending cap, which seeks to rein in the French deficit to 3 percent of gross domestic product, as requested by the European Commission. France has pledged to spend 2 percent of GDP on defense by 2025, a target set by NATO for member states.