In a complex and changing global landscape, the United States faces a range of critical challenges to its security and leadership role in the world. At the same time, America’s unsustainable national debt is a dangerous threat to the country’s global standing and economic strength. Defense is the largest component of discretionary spending and accounts for about 13 percent of all federal outlays. In 2023, the United States spent $916 billion on defense — more than the next 9 countries combined. Over the next decade, spending on defense is projected to continue to rise, reaching $1.1 trillion by 2034.
Policy Options
A strong national defense is crucial to the country’s security; however, it should be possible to reform defense spending while meeting national security priorities. The Coalition for Fiscal and National Security proposed three categories of reform that Congress and the Department of Defense should focus on: eliminating unnecessary or outdated weapons systems, close and realign military facilities, and reassess personnel needs and deployment strategies.
Specific solutions range from simply reducing funding across defense programs to pairing reductions with new national security strategies. Policymakers could also adopt a piecemeal approach by eliminating particular defense programs that are found to be outdated or unnecessary.
Decrease the Number of Full-time Active-Duty Forces
The Congressional Budget Office (CBO) has estimated that reducing the number of full-time active-duty forces over the next 10 years would save $995 billion through that period. CBO outlined three alternatives that would reduce forces by between 18 and 21 percent and bring the United States’ military into better alignment with the latest National Security Strategy. Adjusted for inflation, the Department of Defense (DoD) budget would be 9 percent smaller in 2032 than it was in 2022.
Close Military Installations Overseas
In 2021, the United States had approximately 750 military bases across 80 foreign countries and territories at a cost of $55 billion annually, according to a report by the Quincy Institute for Responsible Statecraft. That is about three times more military bases than all other countries combined. In addition to savings from closing the bases, proponents argue that the policy would help deter future military action because closing overseas bases would increase the costs of intervening, complicate logistics, and lower expectations for intervention from nearby allies.
Reduce Service Contracting
The DoD obligated $205 billion in service contracts during fiscal year 2022, which represented 49 percent of all department contracts. The cost of service contracting has grown significantly over the past few decades, and contractor employees can cost two to three times more than federal employees doing the same work. The Center for International Policy estimated that reducing DoD spending on service contractors by 15 percent would save $263 billion over 10 years.
Eliminate Improper Payments
The Government Accountability Office (GAO) estimated that in fiscal year 2020, the Department of Defense paid roughly $11 billion in improper payments, which is 1.7 percent of all payments the department made that year. By comparison, the federal government spent $13 billion on veterans’ education, training, and rehabilitation the same year. Improving DoD financial management could help eliminate waste and find efficiencies. For example, after taking steps to implement some of GAO’s recommendations, the Navy identified a warehouse of unused aircraft parts, and was able to fill $20 million in open orders using those parts.
Smaller Policy Options to Reduce Defense Spending
CBO has also identified several other options available to policymakers that would cut defense spending on a smaller scale from 2023 to 2032. Of those smaller options, the most significant savings would come from deferring the development of the B-21 bomber, which would reduce defense spending by $34 billion. Others include retiring the F-22 fighter aircraft (saving $27 billion) and decreasing the size of the Nuclear Triad by reducing systems modernization and new purchases (saving up to $18 billion).
Additional Defense Resources:
- Congressional Budget Office, Illustrative Options for National Defense Under a Smaller Defense Budget
- Government Accountability Office, Opportunities Exist to Improve DOD’s Management of Defense Spending
- CATO Institute, CATO Handbook for Policymakers: The Military Budget
