DEFENSE SPENDING

Defense spending has become an issue in the twentieth century economy of the United States because of the vastly increased inputs of wealth into modern warfare. The constantly evolving military technology also enhances the impact of war and defense preparedness on the national economy. The "spinoffs" of defense-related research and development technology into civilian use is another important aspect of defense spending. To avoid the large costs of war most nations seek to deter aggression, at the first level, by allocating resources for an ongoing minimum military capability, so that the costs to a potential aggressor of starting a war will far exceed any likely gains of aggression. The financial policies that a government uses to conduct war are collectively known as "war finances," a branch of "defense economics." The prime concern of defense spending is to determine what proportion of economic wealth a society must devote to war preparations and what is left over for the civilian sector of the economy. In the nuclear age economists concerned with defense spending have also had to plan for the allocation of resources for the different types of military confrontation that a country may face. Modern defense spending involves planning and weapons-development that pose extremely complex and problematic defense scenarios. For example, planners of defense procurement in the United States must decide how the government should spend its defense dollars. Should it invest on the "Strategic Defense Initiative" (SDI, or "Star wars") anti-missile defense system that was first proposed during Ronald Reagan's presidency? Should it concentrate on conventional warfare, or should it spend its money on counter-terrorism? The answers to these questions will shape the future of defense spending. It will establish the nature of the relationship between the government, the defense industry, and the research apparatus of major universities. It is a relationship that President Dwight Eisenhower (1939–1945) once identified as the emerging "military-industrial complex."

See also: Military-Industrial Complex