The Economy of War: Why the Military-Industrial Complex Wins Every Election

In her acceptance speech on the final night of the Democratic National Convention in Chicago, Kamala Harris promised new investments in the care economy, support for workers rights, reproductive rights and much more. Not wanting the Republicans to attack her for being “weak on defense,” she also vowed to boisterous applause that the United States will continue to have “the strongest, most lethal fighting force in the world.” 

In a topsy-turvy presidential campaign — where there are stark differences between the two candidates on many domestic issues, and there is the likelihood that Donald Trump will try to overturn the results if the vote doesn’t go his way — one thing is certain: America’s warfare state will roll on. 

The U.S. military straddles the Earth with around 750 foreign military bases in at least 80 countries. Spy satellites circle the globe 24 hours a day. More than 1,700 nuclear warheads can be launched within minutes by land, air and sea. Eleven aircraft carrier strike groups patrol the high seas and can project the threat of conventional U.S. firepower in any corner of the world. 

All this lethal force comes at a very high price, especially for the taxpayers who have to foot the bill. The annual military budget hit $820 billion in 2023 — not counting supplemental spending on wars in Ukraine and Gaza – and will likely top $1 trillion in the next administration. Throw in the interest being paid on past debts incurred through military spending plus the budgets of other U.S. national security agencies like the National Intelligence Program ($71.7 billion in 2023) and the Military Intelligence Program ($27.9 billion in 2023), which together fund the CIA, and the annual tab soars even higher. 

Altogether, War Resisters League estimates that 45% of Americans’ income taxes go to pay for current and past military spending. For a worker who is being taxed at a 22% annual rate on $50,000 in annual taxable income, $4,950 of their $11,000 in income taxes will go to military-related expenses. 

This in turn is how the United States is able to account for 40% of the world’s annual military spending and have a military budget that, according to the Peterson Foundation, is larger than the next nine countries combined: China, Russia, India, Saudi Arabia, the United Kingdom, Germany, France, Ukraine and Japan. 

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In the summer of 2021, President Biden and congressional Democrats pushed Build Back Better, a sweeping piece of domestic legislation that would have invested in universal preschool, expanded child care and elder care, provided a $300 per month child tax credit for $39 million families, a tax credit for 17 million low-wage workers, investments in affordable housing and climate action, and much more. If passed, it would have done more to ease the burdens of poor, working-class and middle-class families than any government initiative in decades. 

For its critics, the $3.5 trillion price tag was deemed an extravagant waste of money, and the bill eventually died in Congress. Left unsaid was that funding the Pentagon was going to cost roughly $9 trillion over the next decade. But only domestic spending gets described in hefty ten-year increments. 

According to tables provided by the National Priorities Project, by reducing military spending 20% in a given year, we could hire 500,000 nurses ($64 billion) and 500,000 elementary school teachers ($51 billion) and create four million childcare slots ($51 billion). These kinds of savings, if you prefer, could also pay for millions of public college scholarships, millions of units of public housing and so on.  

Given these alternative choices, why do we seem to be locked into the well-trodden path we’re on? 

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For members of the U.S. foreign policy establishment, being able to wield such god-like powers anywhere in the world is intoxicating even if their illusions of omnipotence (see Vietnam, Iraq, Afghanistan, etc.) often end in disaster. 

For the generals, more war means more combat commands, more chances for promotion, more medals and ribbons as well as the chance to field test their latest weapons and military tactics. 

For military contractors, it means more business and more profits. 

For elected officials, there are more campaign donations to hoover up from weapons makers. 

And for the media, war is great for clicks and ratings. 

If there’s one thing that transcends the red-blue divide in this country, it’s the presence of the military-industrial complex. It’s an inefficient way to do it, but military spending spurs technological innovation. It’s also an important source of jobs — and an expanding tax base — for local economies, especially in poorer rural areas. Weapons makers source the parts for a complex piece of military machinery from as many states and congressional districts as possible, even if it leads to huge cost overruns that are covered by cost-plus contracts. 

In Woodstock, New York, the town synonymous with peace, love, music and ‘60s-era idealism, the largest local employer is Ametek Rotron, an aerospace and military contractor that makes fans essential to the functioning of F-16 fighter jets and predator drones. Calls by local peace activists for the company to switch production to entirely civilian use have been rebuffed for years. 

A couple hundred miles north of Woodstock, 20 F-35 Lightning II fighter jets are stationed at the Vermont Air National Guard’s base at the Burlington Airport. The deployment has the support of the state’s political leaders including Sen. Bernie Sanders, a frequent critic of bloated military budgets. According to the Vermont Department of Economic Development, the F-35 is responsible for 1,610 direct and indirect jobs, $222 million in economic activity, and is helping grow the state’s aviation and aerospace industry. 

By spreading its largesse far and wide, the Pentagon was able to sustain support for the $1.2 trillion weapons program even when the F-35 endured years of production delays and cost overruns that were subsidized by U.S. taxpayers. The plane is now widely  used by the Air Force, Navy and Marines. Its maker, Lockheed Martin, also exports the F-35 to U.S. allies including Israel where, according to breakingdefense.com, it is the backbone of the Israeli Air Force. If you see photos of whole city blocks flattened in Gaza or Beirut, there’s a good chance it was done by an F-35 dropping 2,000-pound bombs. In June Israel inked a deal to purchase 25 more F-35s with $3 billion from the Pentagon’s Foreign Military Financing program, a pot of money used to promote weapons sales to U.S. allies. 

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In 1853, Commodore Matthew Perry sailed a squadron of U.S. Navy ships into Tokyo Bay demanding that Japan open trade relations with the United States, or else. The Japanese, who had sealed off their society from outside influence for centuries, quickly agreed. 

While modern-day “gunboat diplomacy” is rarely so explicit, the U.S. ability to project military power around the world underpins its global economic power — its ability to access natural resources, to penetrate and control new markets and bend pliant governments to its will. All that firepower can also be used to make an example of countries that don’t fall in line (See Iraq 2003). As New York Times columnist Thomas Friedman once wrote, “The hidden hand of the market will never work without a hidden fist — McDonalds can’t flourish without McDonnell Douglas, the builder of the F-15. And the hidden fist that keeps the world safe for Silicon Valley’s technologies is called the U.S. Army, Air Force, Navy and Marines.”

American leaders like to depict the United States as maintaining order in an unruly world. But the distinction between the “global cop” walking the beat and a mafia boss providing “protection” to weaker countries is sometimes hard to see.  

Russia’s invasion of Ukraine has revived the U.S.-led North Atlantic Treaty Organization in Europe. The Europeans’ military spending is up, a boon for weapons makers. Two previously neutral nations, Finland and Sweden, have joined the alliance. They will have to retool their militaries to be NATO-compatible, which will require purchasing a lot of U.S.-made weapons systems. The war has also been a bonanza for U.S. energy companies, who have been exporting record amounts of liquified natural gas to Europe at premium prices since Russia lost access to those markets. 

Ukraine itself is awash in tens of billions of dollars in U.S. weapons paid for with U.S. funds. Yet the government is trying to fund its basic operations by selling off state-owned assets at fire-sale prices. And new land laws are speeding the consolidation of that country’s rich agricultural lands into the hands of foreign interests. Someday the trench warfare between Russia and Ukraine will end. When it does, a coalition of investors that includes BlackRock and JPMorgan is organizing a Ukraine Development Fund to guide that country’s reconstruction. 

In the Middle East, the United States has bankrolled a country, Israel, that doubles as a giant land-based aircraft carrier that can militarily dominate the region. The United States has also sold tens of billions of dollars of weapons over the decades to Arab allies like Saudi Arabia and the United Arab Emirates. It no longer imports large quantities of oil from the Middle East, but by guaranteeing a steady flow out of the region, the United States gains leverage over allies who rely on that oil.

China is the world’s second most powerful country and is widely seen as a rising power that could displace the United States as the global hegemon in the 21st century. In the past century, it has only invaded one country — Vietnam in a brief 1979 border skirmish. Yet in recent decades China has still been able to expand its economy by leaps and bounds: It has increased foreign trade and soft-power initiatives like the trillion-dollar Belt & Road Initiative, an infrastructure development project that spans across Asia, the Middle East and into Europe. 

Is peaceful co-existence between the United States and China possible? We may never find out. For the past decade, the United States has increasingly surrounded China with military bases in neighboring countries. The bipartisan consensus in Washington is that we should settle in for a prolonged Cold War II — with the military spending on China to match. 

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U.S. global supremacy helps its banks and corporations extract more profits from the rest of the world, especially the Global South. The greatest benefits are reaped by the 1% in the form of higher executive compensation, quarterly stock dividends and stock buybacks for large investors. Ordinary Americans with pension plans, 401K retirement plans, mutual fund investments, etc., also receive a trickle-down benefit from higher corporate profits. Ditto for American workers whose jobs are fueled by American exports, especially if they have a union to help them win a larger share of the pie. 

The cost of living in a warfare state hellbent on perpetual global domination comes with high costs, though. Above all, there is the human toll on those in the direct path of our violence as well as on the soldiers we send off to do our dirty work, who come home haunted by what they saw and did. There is also the enormous opportunity cost of all the wealth that is diverted into military spending. It could be spent on meeting human needs. Or on rebates to working-class taxpayers who have been buffeted by inflation in recent years and could use some extra cash in their pockets. 

With our leaders focused on maintaining global dominance, they neglect what should be priorities — like our crumbling infrastructure and the need for transformative action on climate change. The idea, for example, that the United States and China should team up in leading the world in reversing climate change, the greatest danger of the 21st century, is treated as an afterthought.  

Speaking at Harvard in 1990 at the end of the Cold War, President George Bush Sr.’s Budget Director Richard Darmon dismissed environmentalism, stating, “America did not fight and win the wars of the 20th century to make the world safe for green vegetables.”  

The view from the top hasn’t changed much since then. Basically, we’re on our own. 

Any progress will require mobilizing  public opinion in a way that compels the militarists who run this country to alter their priorities. A big city like New York, with 12 congressional districts, a liberal voting base and a highly diversified economy that is less dependent on military spending than most of the country could help lead the way.  

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