February 17, 2025 - 1:00pm
The first few weeks of the Trump administration have been so shocking that even seasoned observers of American politics are having a hard time keeping up. One of the latest proclamations from the President is that he may attempt to cut the American military budget in half. Defence company stocks in the United States declined significantly following the news.
Trump’s argument ties into a broader global strategy that the administration appears to be pursuing. In his latest comments, he said that he would sit down with the Russians and the Chinese and make the case that they should all be spending less of their economic output on their militaries. The argument appears to be roughly similar to the old debates about arms control, only applied to overall military expenditure rather than simply the proliferation of nuclear armaments.
As the President noted in his comments, the American military budget for the fiscal year of 2025 was capped at $895 billion. This is a significant chunk of fiscal space. Consider that the soaring American government budget deficit is around 6.4% of GDP. Military expenditure is around 3.3% of GDP, meaning that if the Pentagon manages to reduce this spending by half, the impact on the budget deficit would be significant.
The same cannot be said for other targets of cuts. While the attack by Elon Musk’s Department of Government Efficiency (DOGE) on USAID will have dramatic consequences both at home and abroad, the savings obtained by cutting the department are not enormous: the total USAID budget is around 0.33% of GDP.
It is well-known that the Pentagon is flabby, with contracts issued on projects of dubious merit. The most glaring of these is the F-35 programme. This so-called “next generation” aircraft has cost the US taxpayer $2 trillion — around 6.5% of annual GDP. Yet the aircraft is known to be extremely dysfunctional and is dubbed a “hangar queen”, alluding to the amount of time the aircraft spends being maintained and repaired. The Tesla boss has called the people who built the F-35 “idiots” and deemed the aircraft “the worst military value for money in history”.
Musk is no doubt eyeing up the potential for taking on Pentagon contracts himself. His company SpaceX now effectively does the job of launching satellites and rockets that Nasa used to carry out, before the agency started to fall apart under bureaucratic inertia. Musk and his team are starting to size up what American military contractors are actually producing and thinking that they can do it cheaper and better. Trump’s words are sending ripples through the defence-industrial complex across the West, striking fear into contractors who have long enjoyed effective monopolies on contracts for military procurement.
Over the weekend, Keir Starmer announced that he would be overriding Rachel Reeves to increase British military spending. The UK’s Prime Minister is known to exercise limited control over his own government, his approach to leadership likened to a driverless train by those who have worked with him. The British defence-industrial complex may have convinced Starmer to turn on the taps by telling him that it was necessary for national security. But given the timing, it looks more like a group of people getting one last grab at the government teat before hard questions start being asked about the cost and quality of the products they are delivering.
Trump’s first few weeks have shown that he and his allies are willing to engage in policy that can only be described as “revolutionary”. They are willing to go up against entrenched interests in both the government and the private sector. So far, they seem to be steamrolling their opponents. If the Trumpian revolution continues, it looks set to massively disrupt long-established interest groups across the world. The President’s latest comments suggest that the Western defence-industrial complex — which has failed to deliver so completely during the Ukraine war — is next on the chopping block.
Philip Pilkington is a macroeconomist and investment professional, and the author of The Reformation in Economics
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SubscribeOdd comment about Starmer being in a driverless train.
Quite the opposite. He is relishing what he is doing.
Hiding the Labour-Muslim-vote corruption. (Not reported on Unherd)
Preventing a national Pakistani rape-gang inquiry. (Silence from the shameful Unherd Feminists)
Defending the cv-lying Reeves while she crashes the economy. (Ignored by Unherd)
Imprisoning Facebook posters. (Ignored by Unherd)
Prioritising international law over British interests. (The Chagos scandal. All Starmer’s lawyer friends involved. The Starmer-Hermer-Sands team. All ignored by Unherd.)
He is fully in control.
Perhaps the author meant a runaway train? There are no brakes, the engine cannot be stopped, the sharp curve approaches.
Perhaps. But to me Starmer is in full control of his party. And this is the strange one, given a free pass by the media.
He doesn’t get a free pass on UnHerd though.
Is he really “taking on” the military-industrial complex, or the educated-progressive Marxian elite?
Are the congressmen advocating that parts of the F-35 be made in their districts Marxists? That’s a curiously broad brush.
“Marxian”?
Still early days, but he might turn out to be the first anti-MIC president since Kennedy. Apropos of that, do we know any more about the young chap who shot Trump’s ear?
Under JFK, military expenditures exploded, and not only for his entry into the Vietnam mess. Eisenhower kept costs down a bit by relying upon the nuclear threat. Military spending as a percentage of GDP was much higher than today. In the shadow of WWII and Korea, the public grasped the threat of the USSR. In any event, Trump’s statement needs to be taken along with him calling for an Iron Dome for the US. Billions have already been spent since Reagan proposed what opponents named “Star Wars”, which has led to current capacities. Better won’t be cheap.
We know what happened to JFK.
Is there a way to downvote articles?
Definitely not Dennis you always press the green up button to support.
All the best Tony
The UK has a benefits-industrial complex. There’s no more capacious mammary gland than long-term sickness disability benefit.
The growling Lord Dannatt may urge Starmer to increase defence spending, but to judge from Ukraine’s experience, the main components required are drones and mines. And of course, in the UK’s case, an humanitarian flotilla to ‘rescue’ migrants from the French Channel.
He won’t “take on” the Military Industrial Complex, he’ll merely transfer its contracts over to Musk & Co.
It’s amazing how Musks political convictions swung to Biden when he was in charge then pivoted 180 to Trump when it looked like he’d be getting the keys to the White House
Seriously? Musk became enemy number one in the Biden administration the day he bought twitter and relaxed the censorship rules. He suffered from as much lawfare as Trump. If Musk was only interested in enriching himself, he would have donated millions and stayed in the shadows. He has put a target on his back by being so public and active.
This is correct. A very important part of the Musk psychology is that he doesn’t like being picked on (as he was when he was young). He doesn’t seem to forget those who have done so.
Musk does not crave money. He’s got more than anyone. He craves the freedom not to be told what he can and cannot do, as well as admiration, though not necessarily acceptance.
Correct. He is the same creepy little kid that got the hell beaten out of him at school. His problem is that he still has the same personality defects that caused it to happen.
Really? Well, hopefully someone, somewhere is a halfway decent shot (speaking figuratively, of course).
I just read somewhere else that F35 cost $2 trillion more than budget not just $2T total. Wonder which it was.
There is so much potential for radical change. When I think of all that Trump is doing and proposing, it feels like I’ve won the lottery. It’s breathtaking. I hope SCOTUS clears the path.
It really puts in stark relief all the self-serving leaders who have gone before. If they had even done a fraction of what Trump is attempting, we would be much better off.
What he is attempting is to ensure that the US loses the forthcoming war with China. Not sure how that’s a good thing though.
In his latest comments, he said that he would sit down with the Russians and the Chinese and make the case that they should all be spending less of their economic output on their militaries. Yeah, because we can trust the Russians and the Chinese. They seem like decent chaps after all….
Because you can trust western governments? (Not One Inch)
What bunch of nonsense this article is, over 50% of the military budget is salaries and benefits, unless Trump intends to fire tens of thousands of military personnel and eliminate their benefits there will be no cuts. Another 25% of the budget is maintaining the military bases in the country and around the world, does he really plan on closing many of those bases and letting go thousands in personnel and contractors that support them. Musk knows nothing about building planes and weapons, he ban barely build a decent electric car that most people want to buy and space x is a joke, so what if they built a useless rocket to go into orbit. Musk is a farce, military equipment like fighter planes and advanced missiles are at a whole other level, may beyond the Musk cult. And are they really going to cut procurement needed to replace aging and depleting equipment, and risk falling behind China and other countries in r and d. That is the other 25% of the budget. These people are a farce and their supporters need to get a grip and stop living in their alternate universe. Prediction: the military budget will increase to a trillion $ in 4 years.
Space X is no joke. It’s an amazing achievement, as are Tesla and his other enterprises. But, respecting his comments on the F35, I suspect that he is more focused on the procurement processes and a stripped-down number of suppliers that have little threat of competition. I agree that rocket science is less demanding than fighter plane and anti-missile science. Your numbers on where the defense budget goes are compelling.
And will be stopped.