Taming the military-transfer complex

Dwight Eisenhower sounded the alarm about the military-industrial complex. What he did not anticipate was the military-transfer complex.

The military-transfer complex emerged in the Great Society Programs launched by Lyndon Johnson at the height of the Vietnam War.  Politicians decided that we could have both guns and butter.  Much of this military-transfer complex was financed with debt.

The “Great Moderation” of the 1990s brought this deficit spending and debt accumulation to an end.  With the end of the Cold War, the U.S. experienced a peace dividend.  Reductions in military spending were accompanied by reforms in welfare and other transfer programs that allowed the U.S. to balance the budget and stabilize debt.   

Over the past two decades, however, the U.S. engaged in military conflicts accompanied by a sharp increase in military spending.  The quid pro quo for increased defense spending was a matching increase in non-military expenditures; spending on health, welfare, and other transfer programs increased apace with increased defense spending.  This Faustian bargain was in fact incorporated in formal budget agreements.  The unprecedented growth in spending for the military-transfer complex required massive deficits and unsustainable growth in debt.

The U.S. has reached the end of the line with the military-transfer complex.  The U.S. can no longer write a bank check for military conflicts in Europe, the Middle East, and elsewhere.  The end of Pax Americana means that other countries must begin to bear the burden of defense spending, including their commitments as members of NATO.

If Donald Trump is successful in bringing peace to Ukraine and the Middle East, this could bring a new peace dividend, like that during the Great Moderation of the 1990s.  The quid pro quo for reduced military spending could be reforms reducing expenditures for transfer programs.  A new “Great Moderation” in fiscal policy would eliminate deficit spending and restore sustainable fiscal policies.  Reducing debt as a share of Gross Domestic Product would also help restore the dollar as a reserve currency.

However, if Congress is successful in taming the military-transfer complex, there is nothing to prevent future administrations from abandoning these prudent fiscal policies.  Statutory fiscal rules are too easily circumvented and suspended.  We must solve what economists refer to as the time inconsistency problem.

There is one way that citizens could tame the military-transfer complex and restore peace and prosperity in the long term.  A constitutional amendment mandating a balanced budget is difficult for politicians to ignore; if they violate a constitutional amendment mandating a balanced budget, they face the wrath of citizens at the polls.  Constitutional balanced budget rules, such as the Swiss debt brake, have proven effective in eliminating deficits and stabilizing debt in the long term.

Over the years, Congress has proposed a number of fiscal responsibility amendments to the Constitution, but none of these proposed amendments has received the two-thirds vote in Congress required to submit the proposed amendment to the states for ratification.  It is left to citizens to enact a fiscal responsibility amendment using an Article V amendment convention.

In 1979, two thirds of the states had submitted applications for an Article V convention to incorporate a fiscal responsibility amendment in the Constitution.  But Congress failed to fulfill its administrative duty under the Constitution to count these applications and call the convention.  Citizens are now left with one recourse: they can petition the Supreme Court to issue a declaratory judgement compelling Congress to count state applications and fulfill its duty to call a convention for proposing amendments.  With effective fiscal rules in the Constitution, citizens could bind Congress to tame the military-transfer complex and launch a new era of peace and prosperity.

Barry W. Poulson is professor emeritus at the University of Colorado, Boulder Colorado, and on the Board of the Prosperity for US Foundation.  William Owens is a former vice chairman of the Joint Chiefs of Staff.  He is on the Board of the Prosperity for US Foundation.

Image via Pixabay.

*This article was originally published on https://www.americanthinker.com/blog/2025/04/taming_the_military_transfer_complex.html