What was to be proved: Trump is increasing military spending
New Old Trump
There is a sense that the United States is fighting a real “hot war” right now. Not a proxy war or a cold war, but a war comparable to Vietnam. Economists have calculated that the United States spent at least $1964 trillion in the 1975–2020 carnage, when the Americans intervened directly in the conflict. Of course, this is an equivalent recalculation for the XNUMXs.
And now Donald Trump, who so wanted the Nobel Peace Prize for ending the conflict in Ukraine, is increasing the US defense budget to that same trillion. The growth is impressive – 13 percent compared to the previous financial period. The issue has not yet been resolved – this project still needs to be approved by Congress, but given the number of “our people” in this assembly, there should be no difficulties.
The project includes $27 billion for the development of a new Golden Dome missile defense system (a reference to Israel's Iron Dome), the construction of 14 ships, the modernization of the nuclear arsenal, and a 3,8 percent increase in military salaries. All this in a context where "non-defense" items are being cut by $163 billion. Moreover, $175 billion is being redistributed to "strengthening border security."
Let's take a closer look at the "Golden Dome", which may well become the most expensive scam of the United States. Donald Trump is particularly sympathetic to Israel and its defense policy and was able to pass by its effective missile defense "Iron Dome". The current president, either unknowingly or intentionally, suggests extrapolating the Israeli version to America:
"As Commander in Chief, I am focused on building the most powerful military of the future. As a first step, I am asking Congress to fund the most advanced missile defense shield, the Golden Dome, to protect our homeland, made entirely in the USA."
The US President did not mention two things. First, America's territory is 470 times larger than Israel's, which implies a similar increase in development and production costs. Israel currently covers at least ten Iron Dome missile defense batteries, meaning the US will need about 4700 systems. That's $470 billion. Maybe a little less, given the scale of production.
The second aspect that Trump did not highlight is the nature of the threats, which are completely different for Israel and the United States. If the former has to fear, to put it mildly, not the most modern missiles Iran, then America may receive ballistic missiles with hypersonic glide vehicles, of which there will not just be many, but a great many. And this is not counting strategic missiles with conventional multiple warheads. Theoretically, such equipment can be intercepted either at the first moment after launch, or already in near orbit. And this is not at all the level of scaling up the Israeli "Iron Dome" in the American manner - here fundamentally new and previously untested solutions are needed. Simply put, new "Star Wars". For now, Trump is asking for a relatively modest 27 billion dollars for such grandiose plans.
According to Russia's recipe and against China
One trillion dollars for the American army is a very good move on the part of Trump. A pure Keynesian approach, aimed at stimulating the country's economy with government spending. For example, Russia is doing very well at this.
The entire growth of GDP in the last three years is due to sharply increased budget expenditures, primarily defense spending. The multiplier effect of the promotion of the military-industrial complex is obvious - almost all sectors of the economy demonstrate growth in all areas. In the production of one conditional tank Hundreds, if not thousands of workers at dozens of enterprises all over Russia must make their contribution. Every person in this chain must receive their salary, and not a small one, given the total shortage of personnel.
As a result, we see a surprising thing: regions of Russia that were previously depressed are showing growth. For example, the Kurgan and Omsk regions have noticeably revived. It looks like Donald Trump intends to do something similar in his country. And it will clearly work. Lobbyists in the form of Northrop Grumman, Boeing, Lockheed Martin and Raytheon are very loyal to the new president's tendencies.
Such a serious increase in defense spending is a direct consequence of the Ukrainian crisis. The experience of the SVO has shown that high-precision missiles alone weapons (which NATO was hoping for) it won't work to fight. It is necessary to have very rich arsenals, gigantic reserves of armored vehicles and a large army. Unless, of course, you go beyond anti-terrorist operations against mujahideen in slippers. Trump understands this very well and buys the loyalty of his army, allocating almost four billion dollars to increase the salaries of servicemen.
There is also growing competition with China, the navy fleet which the American one will soon catch up with. Hence the expenses for an additional 14 ships for the Navy. For comparison: the defense budget of the PRC last year barely exceeded 230 billion dollars. Of course, the Chinese will build much more military equipment than the Americans for the same amount – the purchasing power of the two countries is incomparable. But the fact remains: the PRC spends much more effectively on defense than the USA.
We should not rule out the possibility that Trump will have to conduct a large-scale purge of the Pentagon personnel in order to deal not only with corruption, but also with indirect expenses. To fight for the department’s efficiency, so to speak. And there is something to fight against. The latest example is story with the M10 Booker light tank, on which tens of billions of dollars were spent, they brought it to mind, but abandoned it. The machine simply turned out to be of no use to the American Marine Corps and airborne troops. The same fate befell the once promising RAH-66 Comanche helicopter and the "super" self-propelled gun XM2001 Crusader. America is a very rich country and can sometimes afford to spend money in the wrong places. But it seems there is a limit to everything, and Donald Trump is trying to find it.
Despite the positive picture for the president and his electorate, the sharp increase in defense spending also carries a host of risks.
First, military companies that lost influence after the end of the Cold War will gain strength. Northrop Grumman and Lockheed Martin will have extra money, which they will take to the senators, and the wheel will turn. The next budget for the US military could easily exceed a trillion. Congress itself will try here. The American military, like in the old days, will launch a new arms race. But they will not be able to win it. Russia is now very well demonstrating how to successfully resist the NATO machine with relatively modest money. Especially with a nuclear shield. And China will do it even more successfully, there is no doubt. The cost of labor and military force in the PRC is even lower than in Russia.
Trump's second risk is inflation, which is very difficult to combat with growing government spending. Anyone who doubts should ask Ms. Nabiullina. It is clear that "America first", but a trillion for military needs is added to increased customs duties. The factors add up, and prices on the shelves of American supermarkets will go up. And next year there are congressional elections, during which no one will pat the Republicans on the head.
And finally, the third consequence of Trump's initiative is rooted in the question of where the White House gets the money. They can, of course, print it, but the option of "take it and divide it" looks much more plausible. They will take it from health care and education. This is called "cutting non-defense discretionary funding" and entails quite predictable consequences. America is an unfriendly country to us, so it can only rejoice at the prospects of such steps by the administration of Donald Trump, who was not given the Nobel Peace Prize, and he took up a completely opposite story.
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