After two decades of counterinsurgency campaigns in the Middle East, the U.S. military is shifting its focus to great-power competition with the likes of China and Russia. Countering such rivals will require the Pentagon to free up resources to ensure “every defense dollar [is] spent on programs and equipment that will be relevant in the next fight,” as General Mark Milley, chairman of the Joint Chiefs of Staff, told Congress last month. Unfortunately, too much of the defense budget remains geared toward fighting the last war.
Though the U.S. spends three times more on defense than any other country, its technological edge is eroding — due in part to the cost of maintaining aging weapons programs. The share of military spending devoted to operations and maintenance — a major profit source for the defense industry — is 42%, compared to 28% at the height of the Cold War, while weapons procurement has fallen from 30% to 19%. In real dollars, U.S. investments in defense research and development are nearly 40% lower than a decade ago.