CAMBRIDGE, Mass. - January 21 - Since 1998 the Pentagon has spent more than $6.5 trillion. More than $2 trillion of this sum was above the levels set in 1998. But only half of the $2 trillion in added funds was for recent wars and military operations. Among other things, the surge in spending has allowed the Defense Department to re-inflate its workforce to Cold War levels. And almost all the expansion is contractor labor.

These are among the findings of two 18 January reports on the dynamics of recent defense spending from the Project on Defense Alternatives, a small think tank with offices in the Washington area and Cambridge, Massachusetts.

According to the reports, the boost in spending after 1998 is unmatched over a nearly 60-year period, edging out both the Reagan and the Kennedy-Johnson spending hikes. And the Obama administration, in a move likely to confound critics and supporters alike, plans to spend more on the Pentagon than any administration since 1948.

"The recent wars are only half the story," says author Carl Conetta, "And their high price tag raises as many questions as it answers." The report finds the recent wars to have cost $792,000 per deployed person per year, while the Vietnam war cost only $256,000 per person per year in today's dollars.

Part of the reason for the relatively higher cost of current wars is that the United States today relies on an expensive professional military, rather than a conscript one. The cost-structure of today's military is not well-suited to protracted, labor-intensive wars, concludes the report. Related to this, the proportion of private contractors used in today's wars is five times higher than during the Vietnam war. Also adding to costs, DoD equipment purchases in the decade before the wars focused too heavily on the legacy systems favored by the services and on long-range strike weapons. So a new round of buying was needed to support counter-insurgency operations.

The reports find that DoD has been generally lax in setting priorities among contending acquisition programs. But the most serious problem cited in the studies was the adoption of ambitious new roles, missions, and strategies for a reduced military after the Cold War ended. A variety of reform and transformation efforts were supposed to make it possible for a smaller military to do more. But these efforts fell short of their promise. So costs rose with ambitions.

Since the mid-1990s, the Pentagon has turned increasingly to private contractors to help fill the gap between ambitious strategies and the available number of military personnel. The report finds that the Pentagon's contractor workforce has probably grown by 40% since 1989, while the numbers of military personnel and civilian DoD employees have declined by more than 30%.

To avoid today's exceptionally high budgets the reports suggest that national authorities would have to be more realistic in setting military missions and goals, more judicious in decisions about going to war, more forceful in pushing for Pentagon reform, and stricter in setting and enforcing budget priorities. There is a deeper political problem, warns Conetta: "At present, civilian leaders are politically disinclined to push the Pentagon hard or enact tighter budget constraints, and this stance undercuts reform." In reviewing the economic landscape, however, the reports do conclude that fiscal realities may soon prompt a change in attitudes.

Download the Reports:

An Undisciplined Defense: Understanding the $2 Trillion Surge in US Defense Spending. 75 pages including Executive Summary and 21 charts and tables.  
The President's Dilemma: Debt, Deficits, and Defense Spending. 11 tables and charts.