The Cost of Cruz's Plan to Boost Defense Budget to 4% of GDP

Rebuilding the military has been a key part of Ted Cruz’s agenda from day one of his campaign, but he only recently joined fellow candidates Marco Rubio andJohn Kasich in making it clear to voters how much he would spend on defense.

Citing concerns about the size and state of the military, including the number of active-duty soldiers, the number of combat squadrons and aircraft, the size of the Navy, and the service life of elements of the nuclear triad, Cruz has vowed to boost defense spending to “at least 4.1 percent of GDP over the first two years” in office. In subsequent years he would use 4 percent as a general guide. This would lead to a substantial increase in the Pentagon’s budget. The chart below shows the Congressional Budget Office’s (CBO) latest project of defense spending, which will be at 3.1 percent of GDP in 2017, and the increased level if Cruz’s plan is implemented and maintained for the next eight years.

Under the CBO’s budget outlook, defense spending will reach $592 billion in FY 2017. From FY 2017 through 2024, the military budget will total $5.06 trillion, an average of 2.9 percent of GDP.

It would require an additional $199 billion in outlays to reach 4.1 percent of GDP in Cruz’s first year. CBO forecasts that the economy will grow by an average of 4.1 percent annually over the next eight years.  Compared to the CBO baseline, Cruz’s plan would see defense spending rise by a total of $904 billion over four years ($226 billion per year), and $2.1 trillion over eight years ($263 billion per year).

With the additional funding, Cruz’s goals are to:

• have a total active-duty force of at least 1.4 million Soldiers, Sailors, Airmen and Marines;
• rebuild to at least 6,000 total airplanes, with a minimum of 1,500 tactical fighter aircraft;
• increase the number of unmanned aircraft and pilots;
• add two carrier strike groups (for a total of 12);
• prioritize funding for construction of 12 new ballistic missile submarines;
• modernize the Long Range Strike Bomber;
• upgrade Minuteman missiles;
• expand missile defense, including adding a site on the East Coast; and
• boost cybersecurity.

Cruz intends to pay for his plan by:

• “Controlling government spending”: He has advocated a “Five for Freedom” plan to eliminate departments and agencies, with a goal to save $500 billion over ten years. While some of the details remain to be worked out, NTUF was able to verify $26 billion in cuts over five years;
• “Significantly accelerating economic growth through sweeping tax and regulatory reform”: Enhancing economic growth would increase tax receipts, but if defense spending is to be set as  a percentage of the size of the economy, outlays could be even higher than those calculated based on CBO’s recent forecast of GDP; and
• “Selling Federal assets and properties”: The federal government maintains vast holdings of property and assets including un-extracted minerals and resources on federal lands. In 2009, CBO compiled various budget options for the sale or lease of assets (each of which would require a change of law) that could generate tens of billions of dollars over the next ten years. Sale of property could be trickier. In Congressional testimony in 2011, CBO noted that there are “numerous legal, practical, and political obstacles” to the sale of excess federal property.

Cruz’s plan relies heavily on a robust, expanding economy as a way to finance a large increase in defense spending. Even if his “Five for Freedom” meets its goal of cutting $500 billion from the budget over ten years, and let’s say the sale of assets listed by CBO generate a total of $100 billion over ten years, that still leaves $1.5 trillion in new spending (over eight years) that is not directly offset. And like the perpetual effort to fight "waste, fraud, and abuse" in the budget, selling of property could be easier said and done.

On February 25th, the Government Accountability Office reported – yet again – that it was unable to audit the Department of Defense due to “serious financial management problems.” In addition to specifying corresponding savings, any calls to expand the military should include proposals to reform the military as well, including acquisition reform and reviewing the efficacy of defense platforms.