On the domestic political-economic sources of American military spending

Abstract

This paper attempts to demonstrate the significant impact that domestic political-economic factors have in shaping the American defense budget. Evidence is provided which shows that while the military spending burden sustained by the United States is far and away greater than its allies, this may be a function less of free riding on the part of those allies, and more a function of the domestic political-economic needs of the American system. The mutual influence relationship between U.S. military spending and public opinion is then examined and evidence provided which suggests that public support of U.S. political leaders is significantly affected by the arms spending competition between the Soviet Union and the United States during periods when the American public focuses its attention on foreign affairs. Finally, a political business cycle model of American defense spending is examined for the period 1953-1986 and shown to be a useful explanatory device. In particular, it helps illuminate the importance of military spending as policy instrument for economic stabilization and a means of helping secure electoral support from the American public. The analyses in this paper also demonstrate the non-revolutionary character of the Reagan administration defense policies, policies that are very much in keeping with the post-World War II traditions of American administrations.