Here’s why we may be underspending on defense

Robert Samuelson

Robert J. Samuelson writes a twice-weekly column on economics.

WASHINGTON — I’ve written several columns this year on military spending, contending — against conventional wisdom — that we don’t spend more than the next eight countries combined, including China and Russia. That startling claim is often made, and if it’s untrue, we’ve been deluding ourselves for years.

Rather than overspending on defense, we may be underspending. Our reputed military superiority may be exaggerated or a statistical fiction. Our true budget deficits may be larger than reported because they don’t include the money that, arguably, we should be spending on defense.

But am I right?

The only way to find out is to estimate our and their defense budgets, using an unconventional methodology called “purchasing power parity,” or PPP. To do that, Congress should create a task force of experts that would examine Russia’s and China’s defense spending and compare it with our own.

PPP is at the heart of the military-spending debate. Here’s a simple, hypothetical example to illustrate the problem.

Assume that it costs $100,000 annually for the United States to maintain one American soldier, while it costs China 175,000 renminbi, or RMB, to maintain an equivalent soldier. At current exchange rates — seven RMB to the dollar — China’s cost per soldier is $25,000. This means that China could afford two soldiers ($50,000), twice the American level, while still having total defense spending of only half the U.S. level.

Now, I have plucked these numbers from thin air. I have also made the differences quite large to show how the interplay of low costs in domestic currency and the conversion of that currency into ordinary dollars can produce counterintuitive results. In my example, China has twice as many soldiers for half the total costs.

It’s not that they’re getting less defense; it’s that they’re getting more defense for their buck. In my example, if China’s spending were converted to the same base as U.S. spending, its defense budget would be twice the American level, or $200,000.

(Note: Although my numbers are artificial, Todd Harrison of the Center for Strategic and International Studies notes that the average annual cost of one U.S. service member is about $125,000.)

The United States is a high-cost producer of defense; many other countries are low-cost producers. We rely on a volunteer military. Wages and fringe benefits must be high enough to attract and retain people in uniform. By contrast, other countries rely on military drafts. Producers of war equipment (planes, tanks, ships) face similar cost gaps.

Just how large are these gaps? I doubt anyone really knows. But we might find out if we looked more energetically.

Trying to convert conventional dollars into PPP dollars is not a simple technical exercise. As Harrison has pointed out, many countries don’t disclose their full defense budgets. In addition, the conversion into PPP dollars requires locating other goods and services that are comparable to defense purchases — and then changing defense spending to reflect the similarities.

We need a distinguished and bipartisan technical panel — defense experts, economists, statisticians — to work through these problems and reach a conclusion that is understandable by Congress and the public. It would be nice to be proved wrong, but the odds of that seem — to me — long.

Distributed by The Washington Post Writers Group.


The Daily News-Miner encourages residents to make themselves heard through the Opinion pages. Readers' letters and columns also appear online at Contact the editor with questions at or call 459-7574.

Community Perspective

Send Community Perspective submissions by mail (P.O. Box 70710, Fairbanks AK 99707) or via email ( Submissions must be 500 to 750 words. Columns are welcome on a wide range of issues and should be well-written and well-researched with attribution of sources. Include a full name, email address, daytime telephone number and headshot photograph suitable for publication (email jpg or tiff files at 150 dpi.) You may also schedule a photo to be taken at the News-Miner office. The News-Miner reserves the right to edit submissions or to reject those of poor quality or taste without consulting the writer.

Letters to the editor

Send letters to the editor by mail (P.O. Box 70710, Fairbanks AK 99707), by fax (907-452-7917) or via email ( Writers are limited to one letter every two weeks (14 days.) All letters must contain no more than 350 words and include a full name (no abbreviation), daytime and evening phone numbers and physical address. (If no phone, then provide a mailing address or email address.) The Daily News-Miner reserves the right to edit or reject letters without consulting the writer.

The Daily News-Miner encourages residents to make themselves heard through the Opinion pages. Readers' letters and columns also appear online at Contact the editor with questions at or call 459-7574.

If you're interested in submitting a Letter to the Editor, click here.

Submit your news & photos

Let us know what you're seeing and hearing around the community.