Decade          Percent of GNP 

      1960s                10.7 
      1970s                 5.9 
      1980s                 5.8 
      1990s                 4.1 
    2000-2009   (projected) 3.4 

    America’s defense budget is staggeringly high. Depending 
    on how one estimates the spending of countries such as 
    China and  Russia, U.S. defense spending almost equals 
    that of the rest of the world combined. In 2002, prior to 
    additional U.S. budget increases as well as the added 
    costs of the war in Iraq, American defense spending 
    equaled that of all the rest of the North Atlantic Treaty 
    Organization (NATO), Russia, China, and Japan, combined. 
    That said, judging whether U.S. defense spending is high 
    or low depends on the measure. Compared with other 
    countries, it is obviously enormous ... Relative to the 
    size of the American economy, by contrast, it remains 
    modest by modern historical standards at about 4 percent 
    of GDP (half of typical Cold War levels, though nearly 
    twice the current average of most of its major allies). 
    Compared with Cold War norms, it is high in inflation-
    adjusted or constant dollars, though not astronomically 
    so.

    Although Defense is spending more dollars, it has not 
    greatly expanded  in numbers of personnel. "Still, one 
    might ask why an active duty military of the same size as 
    the Clinton administration’s has grown in cost by more 
    $100 billion a year during the Bush presidency". The 
    answer is surprising. Examining the 2005 budget request 
    O'Hanlon found that "even adding up all these pieces, 
    less than 20 percent of the $100 billion real-dollar 
    growth in the annual Pentagon budget is due to the direct 
    effects of the war on terror." Twenty seven percent of 
    the requested increases were for higher salaries for 
    military personnel, reflecting the need to retain 
    personnel who might be lost to the service. Much of the 
    rest was required to "to restore funding for hardware to 
    historic norms after a 'procurement holiday' in the 
    1990s". Most of the pressure comes from "the main combat 
    systems of the military services, which are generally 
    wearing out. Living off the fruits of the Reagan military 
    buildup, the Clinton administration spent an average of 
    $50 billion a year on equipment, only about 15 percent of 
    the defense budget in contrast to a historical norm of 
    about 25 percent. This 'procurement holiday' must end, 
    and is ending."