Politics, Military Spending, and the National Welfare

This paper has two major parts. First, the work of a Review Committee appointed by the House Permanent Select Committee on Intelligence (HPSCI) to evaluate the CIA's estimates of Soviet military spending is evaluated. The Review Committee's criticisms are presented in detail and, in general, they expressed “… serious reservations about certain methodologies and reporting styles …” which resulted in CIA estimates of Soviet military spending that were too high. The Review Committee's criticisms, while in the right direction, were deemed to be too lenient.In the second part of the paper, it was argued that the CIA's exaggerated estimates of Soviet military spending led to excessive military spending by the United States. An attempt was made to show that over the 1979–1988 decade, we spend between $500 and $800 billion dollars more than was warranted. Moreover, in 1988, budgeted military expenditures were about $80 billion higher than was warranted and stockpiles of materiel were similarly excessive. Under these circumstances, and in light of the ending of the cold war, the case for sharp cuts in military expenditures should have been overwhelming.