I conjecture that Americans were no less safe from foreign threats in 1965 and 1970 than they are now. How much did national security cost back then? In 2005 dollars that adjust for changed price levels, “national defense consumption expenditures and gross investment” ran at about a $60 billion annual rate in 1965. In 1970, it was running about $88 billion per year. This includes all military spending on paying military and support personnel, equipment, airplanes, bombs, wars, bases, etc. Suppose I am wrong. Suppose that Americans were not spending enough to feel safe. How much “under” might they be? Suppose that defense spending had to have been twice as large to make them feel safe. (Being off by a factor of 2 is intuitively generous, is it not?) Then, if you are a defense hawk who believes that military spending was too low to make Americans happy, I grant you figures of $120 to $176 billion.
Now, come ahead to 2012, also in 2005 dollars. This series is running at a rate of $808 billion (down from a high of $844 billion in mid-2011). I am saying that if Americans are no less safe now than then, military spending can be cut from $808 billion to $60-$88 billion without loss of security. That’s a cut of about 90 percent or more. If you are a defense hawk, then the cut is to $120-$176 billion, which is a cut of 78 to 85 percent. This doesn’t take into account population growth, which has risen by 50% since 1970. But counteracting that is the fact that the Soviet Union is gone, and I’ve allowed a factor of 100 percent for defense hawks. I conclude that defense spending could be cut by a minimum of 80 percent without compromising American safety. And if this were done, terrorist threats would actually decline because American provocations in foreign lands would be curtailed. …
This [current] level of spending is totally irrational and unnecessary for safety. A look back to 1950, 1960 and 1970 reveals that. The collective purchase, deployment and use of excessive armaments is like any purchase of a good in that its utility is psychological. Pardon me, then, for saying that the psychology of the American public that keeps electing hawks and big military spenders to Congress is warped, sick and pathological. It is paranoid, overly fearful, overly aggressive, and stupid in its hatreds and prejudices.
This spending is also tremendously wasteful and harmful to economic progress. It is no accident that while this spending has been sharply rising, the median family income in the U.S. has been stagnant. Taxes are extracted to finance military spending that has no payback. Those taxes throttle private investment in projects that improve labor productivity, wages and productivity. The pool of savings that could go to free market activities is diverted into military waste. This is a heavy burden on the American economy.