Guns vs. Butter: US Defense Spending Approaching WWII Levels

COVID economy or not, US defense expenditures are on the rise in 2020 and approaching inflation-adjusted levels equivalent to the WWII period. In 2020, US spending on defense will be equivalent to approximately 3.8 percent of GDP, which while an increase from 2018 is actually 0.1 percentage points less than the average over the last two decades and an arguably moderate economic burden, at least in pre-COVID times.

• US defense spending is also considerably greater than any other country in the world. According to SIPRI, in 2019, the United States spent $732 billion on national defense, which was more than the next 10 countries combined. 

US defense spending demonstrates that the United States has strong potential to boost military spending even amid severe economic crisis. The interesting question is whether this trend is sustainable or portends a peak and decline to the potential detriment of the defense industry. This year the answer may hinge on a single figure - 3, as in November 3, 2020, the date of the US general election.

• For fiscal year 2020, the Trump Administration requested Congressional approval for a $750 billion national defense budget that prioritizes modernization to compete with China and Russia. Cyber security, space forces, and nuclear weapons were all top ranked priorities, a reflection of Trump's foreign policy approach and, potentially, still greater military spending if elected to a second term.
• Although Biden's military spending plans so far are not clear, political observers consider defense budget cuts feasible under a Biden administration.