Military Spending 101


Defense spending is always one of the largest spending categories in the Federal budget. According to, defense spending will account for 21-22% in spending in fiscal year 2015. That percentage is topped only by health care costs (27%) and pensions (26%). Granted, we have been in prolonged conflicts in the Middle East, but that cannot possibly account for 22% of federal spending. So where does all the money go?

The non-partisan Center for Strategic and Budgetary Assessment compiled a fiscal 2015 defense budget analysis that provides insight based on 2015 budget requests (actual spending will vary, but not by a large amount).

While total defense-related spending is expected to be $846.1 billion, only $560.4 billion of that is in the actual Department of Defense budget. Of that $560.4 billion, $501.8 billion is base spending (peacetime needs). That includes both discretionary spending authorized by Congressional appropriations and mandatory spending authorized directly through other laws. The other $58.6 billion is known as Overseas Contingency Operations (OCO) — where the actual wartime activities are funded.

Just under $53.39 billion of that $58.6 billion is slated for operations in Afghanistan (down from $84.5 billion enacted in fiscal 2014). Among the subcategories in Afghanistan are the direct costs for our forces there ($11 billion), CENTCOM operations outside Afghanistan ($18 billion) and equipment procurement ($9.25 billion). Some of the more surprising larger categories include $4.1 billion for the Afghan Security Forces Fund and $1.66 billion for coalition support.

The remaining $5.19 billion in non-Afghanistan OCO funding is mostly slated for the Counterterrorism Partnerships Fund ($4 billion). Another $0.925 billion is intended for the European Reassurance Initiative, and $0.26 billion for continuing Iraq-related expenses.

Having accounted for the $560.4 billion in the DoD budget, where does the rest of the spending go? It is split into four categories:

  • Atomic Energy – $19.3 billion falls into this category, with $17.8 billion of that under the Department of Energy (DOE). DOE funding is split between weapons ($8.3 billion), defense-related environmental cleanups ($5.3 billion), non-proliferation programs ($1.6 billion), nuclear reactors under naval authority ($1.4 billion) and workplace compensation for illness ($1.2 billion).
  • Veteran Affairs – The Department of Veterans Affairs accounts for $160.8 billion with another $0.4 veteran-related spending in other agencies. This is one of the fastest-growing defense budget categories.
  • Other Agencies – The Department of Justice consumed $5.0 billion in defense-related spending. $1.6 billion is slotted to Homeland Security with $1.7 billion split across other government agencies.
  • Obligations and Taxes – $76.6 billion goes to the Treasury to cover retirees (retirement trust and health care fund), and another $20.3 billion goes to tax exemptions for military personnel and veterans benefits.

With all of these splits in the budget and competing interests, how can defense spending be significantly reduced? The Defense Department knows that spending needs to be reduced in certain areas, but Congress remains a powerful force against it. Bases need to be closed and consolidated to reduce the overall force and civilian support, but that can be devastating to local communities — many of which are built around the base and provide the vast majority of the economy.

Politicians will fight fiercely to retain bases and programs (planes, ships, and other infrastructure) that are manufactured in their districts. No politician wants to be the one who was in office when a base closed in his or her district. As a result, it is nearly impossible to get spending cuts implemented, even when the Defense Department agrees on where to cut.

How does this change? Eventually politicians have to be held responsible, and Americans have to accept that the defense budget needs to be streamlined — even if it means plant/base closings and job losses in their own backyards.

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