At an Atlantic Council event earlier this month, a colleague expressed his opinion that the Pentagon’s buying power will drop by half in the next five years. I was uncertain about that, so I decided to run some numbers. My findings were pretty grim. The essay "A Series of One-Third Problems: Why Better Buying Power Isn't Enough," is now up on The Defense Industrialist. Here's an excerpt:
So, unless our politics change fundamentally, here’s a rough planning assumption. Roughly $15,680 billion in GDP today × that 18% tax yield × the 16% of the budget that goes to defense today = a $451 billion annual budget, in today’s terms. Sure, that will grow over time, as GDP increases, but one should not bank on increases in the tax rate or the Pentagon’s share of federal spending. There’s neither consensus nor strong precedent for the former, and voters seem to like Social Security and Medicare a lot more than the latter.
Compared to the $700 billion that they're been spending lately, reductions towards that level are a tall order.