Friday, April 16, 2010

Balancing the National Security Budgetary Pie

How do we know when we've hit that "sweetspot" where we've adequately invested in our civilian foreign policy tools (e.g. diplomats and foreign assistance "carrots") versus how much we've spent on defense or homeland security. Unfortunately there's no complex quantitative model that can offer us a refined account of what that balance should look like - though considering the lack of trust we have in technocrats, that's just as well. Our best resource is looking at real world trends, and looking at simple investment metrics to give us a sense of whether or not 1) we need a course correction, and 2) whether or not we've achieved a course correction. This post deals with the second challenge.

It's helpful to look at changes in funding from one year to the next for the Department of Defense, compared to State and Homeland Security. It gives you a much stronger sense of how real world events impact the distribution of resources across our national security system, and how much political reality insulates budgets from real world requirements. By looking at whether one account gets a bigger bump in a given fiscal year, we can evaluate whether reality has kept up with rhetoric.

2009 was the first year where the increase to the State and International Affairs Budget was greater than greater than what DOD experienced, an important driver of which was the Obama Administration's supplemental request. Unfortunately the FY11 budget won't be accurate until we know how much money will appear in supplemental requests. But at first blush it appears the Obama Administration has taken seriously its own pledge to strengthen the civilian instruments of national power. What remains unclear is whether this will be sustainable in the face of the current economic crisis.

At a Congressman's fundraiser last month a donor asked, "how are we able to find money for Haiti on such short notice, when we still don't have funding for emergency communications systems back in the district?" A valid question, and one that will have to be answered by Congress as it handles the State Department and Foreign Operations bill this year.

In the graph above, if a data point is at "0" on the vertical axis, there was no budget change from the previous year. If it's at $20 billion, then the given department experienced a $20 billion bump up from the previous year. I highlight major events driving fluctuations in spending. For instance, the 2007 bump in DOD spending was largely driven by the "surge" in Iraq. The 1991 dip in DOD spending is driven by the U.S. government catching on to the fact the Cold War had ended.

Typically discussions of Defense versus State Department budgeting become difficult to parse because of the differences in scale. An Abrams tank or F-35 is simply much more expensive than a foreign service officer, rendering direct comparisons of DOD and State Department budgets slightly absurd. Visual representations of absolute spending levels or shares of the budget pie become insensitive to changing priorities, and fail to capture what's really going on.

By controlling for the base budget of previous years we begin to see how seriously different Administrations and Congress regard spending on State or the DOD. Since Secretary Gates announced that a "dramatic increase in spending on the civilian instruments of national security" was required in his 2007 Kansas State University speech, he has continued to advocate for a strong State Department and other civilian institutions to take on roles that the DOD hasn't built institutional competency in - reconstruction, conflict resolution, institution building, etc.

If we follow the money, we know we're not there yet.

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