Tighten Your Budget Belts!

I have written before on what is projected to happen in the next decade or so, assuming the law we know as sequestration is left to stand as currently written. The net effect, if you can’t remember, is an estimated $1.2 trillion reduction in Department of Defense spending.

The United States is coming out of a period where DOD spending has been at an unprecedented high (in terms of total expenditures).  The wars in Iraq and Afghanistan have been long and expensive. The war on terror—wherever that terror resides and whatever its plans and incursions—has its associated price tag.

The crazy thing about the war on terror is that we can’t say what will happen tomorrow. It is an expensive war by any terms. Today we seem to be in pretty good condition. A US drone strike recently killed a top member of the Taliban in Pakistan. Our intelligence on the terrorists has been good enough to keep them at bay. For now.

The wars in Iraq and Afghanistan are winding down. That means the expenses of those wars will continue to rachet downward.  We can always hope for peace as we prepare to deal with our enemies who would love to hurt us as badly and frequently as possible.

Veterans and active duty personnel can expect to see Tricare cuts. They can also expect to pay a greater percentage of their healthcare costs. Here are some statistics to work over:

  • Overall funding for overseas contingency operations has declined by just over 50 percent since 2008 as the war in Iraq has wound down.
  • Funding for Iraq and Afghanistan was as high as $187 billion in fiscal year 2008, which represented 30 percent of SIPRI’s measure of U.S. military spending for that year.
  • Projected war funding for 2014 is projected to be $79 billion,  but is likely to decline thereafter with the winding down of the war in Afghanistan.

A Defense spending statistic that has always drawn a lot of attention is U.S. national defense spending as a percent of gross domestic product (GDP). That figure has ranged from a high of 15 percent in 1952 (during the Korean War) to a low of 3.7 percent in 2000 (the period preceding the terrorist attacks of the following year). Government specialists are saying that DOD spending for 2014 will be in the 5% of GDP range.

An obvious reason to spend military dollars is to develop military power. Military power depends on multiple factors, including the military budgets of our allies. Spending by NATO, Japan, South Korea, Israel, and Saudi Arabia, when coupled with that of the United States, accounted for a formidable 75 percent of global military spending in 2010. US and its allies military spending declined from 2005 to 2010; it is projected to fall further, to 60 percent of world-wide spending by 2015.

The number of personnel employed by the Department of Defense has declined since the 1960s. The new budget cuts and force-reduction strategies mean fewer and fewer military personnel will be employed full time by the DOD.  The sad truth of the matter is keeping people on the payroll, and all that comes with (travel, training, benefits, etc.), is a huge commitment to put on the taxpayers.

Military personnel costs have risen rapidly in the last decade in part due to rising U.S. health-care costs, and in part to the advanced medical treatment in the battlefield arena. The cost of military pay and allowances and military health care has risen almost 90 percent since 2001, while the active-duty personnel count has risen by less than 3 percent.

These are times to live within your means, to be frugal. Be patient and be frugal.


Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright ® 2014 United Military Mortgage LLC d/b/a Low VA Rates™. All Rights Reserved. We are not affiliated with any government agencies, including the VA, FHA, or the HUD. All our approved lenders are authorized VA, FHA and or Fannie Mae or Freddie Mac approved. Click on these links to access our Privacy Policy and our Licensing Information. Consumer NMLS Access - NMLS #1109426