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October 1990, Vol. 113, No. 10
Defense spending in the 1990'sthe effect of deeper cuts
Norman C. Saunders
In recent years, the United States has placed a strong emphasis on military preparedness and development of future weapons systems. Real defense spending climbed from $159.2 billion in 1977 to $265.2 billion in 1987, increasing the Defense Department's share of real gross national product (GNP) from 5.4 percent to almost 7 percent. The rise in defense spending as a proportion of overall Federal purchases of goods and services was even more striking, jumping from 68.7 percent in 1977 to 78.1 percent in 1987.
Combined with the continuing pressure to ease the Federal budget deficit, the thaw in East-West relations and the startling political changes in Eastern Europe have led to widespread discussion of defense cuts. This article offers two new scenarios for defense spending based on the moderate-growth version of the Outlook 2000 economic projections, issued by the Bureau of Labor Statistics last fall.1
The first scenario envisions an annual reduction of 4 percent in real defense outlays from 1989 to 2000. The second scenario assumes that defense spending will remain constant (in 1982 dollars). Five alternatives to the first scenario-low-defense-are set forth, and three to the second scenario-high defense.
This excerpt is from an article published in the October 1990 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 "Outlook 2000," Monthly Labor Review, November 1989, pp. 3-74. This series of five articles on the BLS projections to 2000 outlines the shape of the economy and detailed labor supply and demand.
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