Avoiding a Strategy of Bluff: The Crisis of American Military Primacy

How Does Defense Spending Affect Economic Growth?

“…Brands and Edelman argue that, even if defense spending were to rise to 4.5 percent of U.S. GDP, for example, the United States would not compromise its economic performance. 60 Therefore, in this scenario, we set defense spending starting in FY 2022 at 4.5 percent of projected GDP. This number is far below the height of U.S. defense spending as a share of GDP during the Cold War (15 percent of GDP in 1952) and below spending at the height of deployments in Iraq and Afghanistan (5.7 percent of GDP in 2010).…”

“…cult to use the existing literature to answer the policy questions described earlier. There are two types of studies that we ideally would like to have: ( 1) studies that use the same data and methods to examine both tax and defense spending changes over time and (2) studies that look at simultaneous changes in tax policy and defense spending.…”

“…spending. 2 Those responsible for making decisions about grand strategy and levels of defense spending must consider a number of economic and security trade-offs, which the RAND Center for Analysis of U.S. Grand Strategy is considering in a series of reports. This first report in the series focuses on one dimension: possible trade-offs between defense spending and U.S. economic growth.…”