US Defense Spending Since 1965

Defense has declined by over 50 percent since the peak during the Vietnam war.

At the peak of the Vietnam war defense spending, including military, veterans, State Department, and foreign aid spending, hit 10 percent of GDP. But then it began a decline, down to 5.5 percent GDP in 1979.

In the Reagan administration defense spending was substantially increased, up to 6.8 percent GDP per year by 1986.

Starting in the late 1980s, even before the end of the Soviet Union, defense spending began a 15 year decline, down to 3.45 percent of GDP in 2001. That ended with the terrorist attack on 9/11 in 2001.

In the War on Terror, defense spending rose to 4.5 percent GDP with the invasion of Iraq, and then rose to 5.7 percent GDP with the anti-insurgent “surge” in Iraq. With the withdrawal from Iraq, defense spending has declined to 4.4 percent GDP.

A Century of Defense Spending

There were two major peaks of defense spending in the 20th century: World War I and World War II.

At the start of the 20th century, defense spending averaged about one percent of GDP. Then it spiked to 22 percent at the end of World War I. Defense spending in the 1920s ran at about 1 to 2 percent of GDP and in the 1930s, 2 to 3 percent of GDP.

In World War II defense spending peaked at 41 percent of GDP, and then declined to about 10 percent during the height of the Cold War. Thereafter it declined to 3 to 5 percent of GDP, with surges during the 1980s and the 2000s.