By Katerina Canyon, Executive Director, Peace Economy Project
The recent Bloomberg article from Bloomberg Intelligence highlights the constraints on the U.S. Fiscal 2025 Defense Budget, projecting a nominal rise to $850 billion, a 0.9% increase which effectively translates to a 1.5% reduction in real terms due to inflation. This constrained budget underscores a critical need to prioritize readiness and personnel over modernization efforts, postponing investments in advanced technologies such as fifth- and sixth-generation fighters.
The Fiscal Responsibility Act and Its Implications
The Fiscal Responsibility Act of 2023, which sets limits on discretionary spending, plays a pivotal role in shaping the defense budget. While maintaining fiscal discipline is essential, the act’s constraints pose significant challenges for long-term defense modernization. The Pentagon’s decision to defer funding for next-generation programs like the Navy’s F/A-XX and the Air Force’s Next Generation Air Dominance (NGAD) highlights the trade-offs between immediate readiness and future capabilities.
A Shrinking Share of GDP
While the defense budget is inarguably large, its share of the U.S. GDP continues to decline, now down to 3% from 11.4% in 1953. Bloomberg argues that this trend is exacerbated by rising mandatory spending on Social Security, Medicare, and Medicaid, which consume a significant portion of federal revenues. With discretionary spending under pressure, the ability to increase defense funding without expanding the deficit is severely limited.
Prioritizing Social Spending for a Sustainable Future
At the Peace Economy Project, we advocate for a strategic reallocation of funds from military expenditures to social programs that directly benefit communities. The current budgetary constraints offer an opportunity to rethink our spending priorities and invest in areas that promote long-term security and well-being.
Healthcare and Education: Redirecting a portion of the defense budget to healthcare and education can have a profound impact on national security by building a healthier, more educated workforce capable of driving economic growth and innovation.
Infrastructure and Social Services: Investing in infrastructure and social services can enhance the quality of life for all citizens, creating a more resilient society. Improved infrastructure supports economic activity, while robust social services provide a safety net that strengthens community cohesion.
The Case for Peace Economics
Our recent initiatives, such as the “Move the Money” campaign and the “From Arms to Renewables” webinar series, emphasize the benefits of reallocating defense funds to sustainable and socially beneficial projects. These initiatives not only address immediate social needs but also lay the groundwork for a more peaceful and economically just future.
Educational Outreach: By educating the public on the advantages of peace economics, we aim to build widespread support for policy changes that prioritize social spending over military expenditures.
Youth Advocacy: Training the next generation of advocates is crucial for sustaining momentum in the push for economic justice. Our fellowship programs empower young people to take an active role in shaping policy and advocating for change.
The constraints on the U.S. Fiscal 2025 Defense Budget present a unique opportunity to reassess our national spending priorities. By strategically reallocating funds from military to social programs, we can create a more secure and prosperous future for all Americans. It is time to embrace peace economics and invest in the long-term well-being of our nation.
Katerina Canyon
Executive Director, Peace Economy Project
