The Biden administration recently proposed a $753 billion national security budget that includes $715 billion for the Defense Department. Some policymakers, such as Senate Minority Leader Mitch McConnell, have argued that the United States needs to spend even more to effectively compete with China. However, focusing only on the top-line defense budget number misses the ways that other federal spending promotes national security. With domestic challenges ranging from the ongoing pandemic to long-delayed infrastructure investments, now is a good time to consider spending that provides both domestic and national security benefits. Infrastructure spending offers one such example.
Some commentators emphasize near-term defense spending by pointing to China’s current behavior or claiming that China may invade Taiwan in the coming years. However, China’s military power is a security concern the United States will need to manage indefinitely. As a result, U.S. budget choices should look beyond immediate defense spending to investments that prepare the country for a sustained challenge.
The Biden administration, acknowledging this reality, has argued that its infrastructure plan will help the United States compete with China in the coming years. The administration’s arguments have focused on economic competitiveness, domestic production of critical technologies, and investments in research and development that may later have military applications. Infrastructure spending prepares the United States for the long-term challenge posed by China in two additional ways that have not yet been highlighted.
Most directly, infrastructure spending improves the resilience of U.S. military installations. These installations share critical infrastructure with their surrounding communities. Damage to a local electrical grid, for example, has the potential to shut down operations at military installations, as the Department of Defense is acutely aware. Infrastructure spending on ports, roads and railways can also better enable military deployments. Nearly all units’ equipment and supplies go through seaports, many of which rely on U.S. government funds and have known infrastructure gaps. Infrastructure investments can therefore ensure military readiness and limit potential points of failure in wartime operations.
Infrastructure investments also have a less direct but important effect: This type of spending promotes economic growth. The size of the U.S. economy is what enables this country to spend as much as it does on defense. Investments that promote economic growth therefore also affect the level of defense spending the United States can afford in the future.
The Biden administration’s plan includes investments in core infrastructure such as highways, bridges and ports as well as a broader range of public investments, such as in hospitals and schools. The existing economics literature suggests that all such investments promote long-run growth more than defense spending. Investments in R&D and human capital — other elements of the Biden plan — are also associated with greater productivity and therefore long-term growth.
The Biden administration proposes to finance the spending bill through a series of increases in corporate taxes. Some policymakers have expressed concern that such tax increases may harm growth by reducing incentives for corporate investment. However, changes to similar tax provisions through the Tax Cuts and Jobs Act of 2017 had no discernable impact on business investment. This suggests that, taken together, the proposed infrastructure investments and tax increases should increase growth.
On net, infrastructure investments may have several security benefits. Such investments directly improve the resilience of military installations and infrastructure used for military deployments. Less directly, infrastructure investments promote economic growth, which enables future defense spending.
A rising China presents a sustained challenge for the United States that cannot be met by focusing narrowly on defense spending alone. To have the wherewithal to protect U.S. security against this challenge indefinitely, the country has to make a broader set of investments that support U.S. military power and promote continued economic growth. Therefore, the country should look beyond the annual defense budget to the broader set of ways to promote national security over the long term.
Miranda Priebe is a senior political scientist and the director of the Center for Analysis of U.S. Grand Strategy at the think tank Rand, where Bryan Rooney is an associate political scientist and Grant Johnson is an associate economist.
