U.S. Defense Spending versus Health Care Spending

I’ve recently been asking folks “Where are the antiwar protesters now that we need them?” (i.e., now that our economy has collapsed and we can’t really afford to rebuild the U.S., much less Iraq and Afghanistan). One of my neighbors from Cambridge said that she for one was still against the war(s). She cited the cost and said that if we weren’t meddling overseas we would easily be able to fund health care for all U.S. residents. I asked her how that could be true given the enormous and growing percentage of the U.S. GDP consumed by health care. She said “military spending is much higher than health care spending.” My memory was that health care is consuming about 18 percent of GDP and the military between 4 and 5 percent. Even cutting military spending to zero would only just barely pay for universal insurance into the present system and a couple of years of inflation, or so I thought.

The picture turns out to be a little more complex. http://en.wikipedia.org/wiki/Military_budget_of_the_United_States says that budgeted military spending is in fact 4.7 percent of GDP. However, our adventures in Iraq and Afghanistan, as well as some veterans benefits, are paid for separately. We are actually spending closer to 7 percent of GDP on our military.

It might be interesting to compare these numbers to productive investment in the U.S. Total research and development spending, for example, is about 2.7 percent of GDP (source). In other words, the non-budgeted costs of running the military are comparable to the total amount that we’re investing in the R&D that is supposed to maintain our competitive edge over China and other low-wage countries (without such an edge, as far as I can tell from freshman econ, there is no reason that an American worker should earn more than a Chinese worker, a salary that would not result in a very comfortable lifestyle here).