Budget Breaker? The Financial Cost of US Military Alliances

Abstract

How do alliance commitments affect US military spending? This question is at the heart of debates about the value of alliances and the future of US grand strategy. One perspective, which we call the budget hawk view, asserts that alliances are exorbitantly expensive, as they require military investments to deter third-party adversaries and reassure allies, encourage free riding, and facilitate reckless allied behavior. A competing view, which we label the bargain hunter perspective, claims that US alliance commitments are relatively cheap and might even reduce military spending. Allies provide key military capabilities, reassurance and extended deterrence are cheaper than they might initially seem, and alliances reduce the need for costly military interventions by promoting peace. Despite the importance of this debate, few studies have attempted to determine how alliance commitments affect US military spending. We use over-time variation in the number of US alliance commitments to estimate their financial toll. A statistical model of US defense expenditures from 1947 to 2019 shows that one new alliance commitment has a large positive association with defense budget levels in subsequent years. Military alliances benefit the United States in many ways but, consistent with the budget hawk view, they are expensive.