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Rebuttal of the IISS’s and Alan Simpson’s false claims and statistics

The London-based International Institute for Strategic Studies (IISS) falsely claims, and has produced a graph purporting to show, that the US spent $739 billion on its military in Fiscal Year (FY) 2011 and outspent the 10 next countries combined. China supposedly spent only $89 billion in FY2011.

Supporters of deep defense cuts, such as Sen. Rand Paul (RINO-KY) and former Senator Alan Simpson (RINO-WY), have used this graph and this false statistic to argue for further defense cuts, claiming, falsely, that the US has a $740 billion military budget and outspends the next 17 countries combined (Simpson).

These claims are blatant lies. America has never had a $739 billion military budget. Not in FY2011. Not ever.

In FY2011, the total military budget – counting the base defense budget, spending on outside-DOD defense-related programs, and spending on the Iraqi and Afghan wars – amounted to a total of $688 billion – a large sum to be sure, but significantly less than $739 billion. In FY2012, total US military spending declined to $645 billion (per the FY2012 NDAA) and is poised to shrink further, and deeply so if sequestration kicks in.

As for China, it’s real military budget was far more than $89 billion in FY2011, and is even far larger than that today. No one knows how big it is exactly – because unlike the US, China is extremely opaque about its military spending, hiding large portions of it outside its military budget – so we have to rely on unofficial estimates. The DOD estimated that in FY2011, China’s military budget was at around $160 billion, while SIPRI estimated it to be $143 billion. In fact, in FY2007, the DOD estimated the People’s Liberation Army’s budget to be up to $140 bn.

In 2012, the DOD estimates that Beijing’s military budget is between $160 billion and $250 billion, and that’s before PPP differences are accounted for. As Bill Gertz writes:

“The official figure for Chinese defense spending is considered by the Pentagon and other non-government specialists to be far lower than actual spending, which has been estimated to be at least $160 billion and as high as $250 billion a year. (…)

Last year, China announced a 12.7 percent increase in defense spending to about $91.5 billion. The boost “continues more than two decades of sustained annual increases in China’s announced military budget,” the Pentagon said in August.

The Pentagon’s annual report on the Chinese military stated that China actually spent more than $160 billion in 2010, noting that Chinese military secrecy makes estimates difficult.”

But even the PDA’s Carl Conetta, a supporter of deep defense cuts, estimates China’s military budget, with PPP differences, to be $240 billion. This is a stark contrast to Beijing’s official figure of $100 bn for 2012.

So according to the DOD, the SIPRI, and the PDA, China’s military budget as of 2011 was far higher than $89 bn and is even higher this year. In fact, the DOD says China spent $160 billion on its military as early as 2010, and even more than that in 2011 and this year.

How did the IISS arrive at such woefully understated figures for China (and Russia) as $89 billion?

By blindly accepting these countries’ official figures, which are not credible. Both of them leave most of their military spending off their official defense budgets. Both leave weapon purchases off budget, for example. China also leaves most personnel and operational costs off the PLA’s budget, and many other military expenditures, along with off-the-books sources of income, such as those from PLA farms. has more on that subject here. AirPowerAustralia correctly writes that:

“The oft quoted comparisons between the United States and PRC defence budgets produce a misleading picture of the relative scale of investments, especially in terms of equipment recapitalisation. Chinese aggregate defence budgets as cited reflect primarily capital equipment acquisition and support costs, while many infrastructure and personnel costs are born by regional governments. United States budgets tend to carry a significant fraction of operational costs which have been unusually high over the last decade due to the ongoing global conflict with Islamo-fascist insurgent movements.”

All of which means that China’s annual military budget is much higher than what Beijing admits to and what the IISS claims, and then has to be multiplied by a factor of at least 2 or 3 to account for PPP differences. Therefore, if China’s military budget for FY2012 was $250 billion (the DOD’s high-end estimate), and if we assume that in China one dollar can buy 3 times more than in the US, China already outspends the US in military expenditures by $750 billion to $645 billion, i.e. by more than $100 billion, if PPP differences are accounted for.

But even if PPP differences are not accounted for, the next 10 top spenders combined (China, Russia, the UK, France, Japan, Saudi Arabia, India, Germany, Brazil, and Italy) outspend the US in military expenditures. Their respective military budgets this year are as follows: $250 bn, $71.9 bn, $62.7 bn, $62.5 bn, $59.3, $48.2 bn, $46.8 bn, $46.7 bn, $35.4 bn, $34.5 bn (and that’s AFTER the deep cuts made in the British, German, and Italian defense budgets in recent years). The figure for China ($250 bn) is from the DOD (as cited here) and the figures for the other 9 countries come from SIPRI’s 2012 Yearbook for military spending, as cited by Wikipedia.

Together, these countries’ military budgets add up to $718 bn, far more than America’s military budget for FY2012 ($645 bn) or FY2011 ($688 bn).

In fact, the top 8 after-USA military spenders collectively outspend the US at $648.1 bn to America’s $645 bn.

So the IISS, Rand Paul, and Alan Simpson are reporting false information and are using it to make their case for cutting the defense budget.

Indeed, the Washington Free Beacon reported in April that:

“The Chinese government announced prior to last month’s National People’s Congress that PRC defense spending would increase another 11.2 per cent in 2012 to 670 billion yuan (U.S. $106 billion).

This is a “minuscule” fraction of the nation’s economy, some diplomats and intelligence officers said.

“If you believe these official defense spending numbers, then you accept that the PRC are spending only about 1.4 per cent of their GNP on defense, which is just not at all realistic,” one diplomat said.”

Of course not; China’s real FY2012 military budget, according to the DOD, is between $160 billion and $250 billion.

Alan Simpson also falsely claims that:

“If you can’t get in there and start getting stuff out of there when you have a defense budget of $740 billion bucks — and the defense budget of every major country on earth, 17 of them, including Russia and China, is $540 billion combined. Who is joshing who? That’s madness, madness.”

Simpson’s argument is misleading. Firstly, as stated above, America’s total military budget has NEVER been $740 billion or anything close to it; the FY2012 military budget was $645 billion, almost $100 billion less than what Simpson claims. Secondly, as proven above, the US doesn’t outspend the next 17 countries combined, or even the next 10 countries combined – not even close. What is “madness” is vastly exaggerating the size of America’s defense budget while understating those of America’s potential adversaries (Russia and China).

Thirdly, the claim that “you can’t take stuff out of there [the military budget]” is also a blatant lie. A lot of “stuff” has already been taken out of the defense budget during the last 4 years. In 2009 and 2010, the DOD killed over 50 crucial weapon programs, including the F-22, the C-17, the Airborne Laser, the EP-X aircraft, the Zumwalt class DDG, the CGX cruiser, the Multiple Kill Vehicle, the Kinetic Energy Interceptor, and the AC-X gunship. In 2011, Secretary Gates announced $178 bn in efficiencies and cuts, which included cuts to bureaucracies, troop layoffs, and weapon program closures. And earlier this year, complying with the Budget Control Act, Secretary Panetta announced another $487 bn in cuts, including weapon program closures, cuts to cruiser, fighter, attack jet, airlifter, and other platform fleets, and the layoff of 80,000 troops. Any claim that the DOD has not “taken stuff out of its budget”, or has so far been exempt from scrutiny and budget cuts, or has not yet had to make tough choices, is a blatant lie. Alan Simpson’s supposition (“if we can’t take stuff out of there”) is, in the best case, a straw man argument against a claim that no one is making.

No one is claiming that there isn’t any waste in the defense budget, or that the military cannot afford to trim its heavy ground formations. But there’s a limit to how much you can cut safely, and it isn’t much. Deep defense cuts are exactly that – deep, destructive defense cuts. That includes the proposals made by Simpson and his colleague Erskine Bowles in their deficit reduction plan of 2010.

Simpson falsely claims that the defense budget is “a big piggybank”, and Donna Cassatta of the Associated Press claims the same. That is also a blatant lie. The defense budget is not big, and it’s not a piggybank.

The FY2012 military udget, $645 bn, amounted to just 4.22% of America’s GDP ($15.29 trillion) and less than 17% of the total federal budget. The base defense budget, $531 bn, constituted just 3.47% of America’s GDP and less than 14% of the total federal budget. It’s not big at all, and it’s not a big “piggybank” or a big potential source of savings.

Treating the defense budget as a mere “piggybank” for deficit reduction is destructive, harmful to national security, unacceptable, and out of line with the Constitution, which makes defense the #1 Constitutional duty of the federal government. The Constitution says that one of the reasons why it was adopted and why the federal government was created in the first place is to provide for the common defense. Treating the defense budget as a mere “piggybank” is shameful, and Simpson should be ashamed of himself.

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