INTERVIEWER: -- continued military spending at near-Cold War levels.

MR. BORDSAGE: Why do we spend so much in the military? Well, it's clearly not a global threat. The Soviet Union has literally broken up, there are no countries out there that are competitives -- competitors. With our allies, we spend about more than 80 percent of the world's military budget. So it's not an external threat that drives this budget. It's not an expanded mission. We've defined a very bloated mission with this two-war strategy, essentially saying we're going to be able to move troops instantly around the world, but we could do that at a much lower level of defense spending.

So if it's not the threat, and it's not the mission, it is inevitably a kind of mobilization by a military industrial complex and a very large, entrenched bureaucracy that mobilized with extraordinary efficiency against the threat of peace, and that is the primary reason we're spending at almost Cold War levels -- really more, in real dollars, inflation-adjusted dollars, than we did under Richard Nixon, when the Soviet Union was supposed to be on the march.

INTERVIEWER: Is the current level of military spending consistent with our potential threats?

MR. BORDSAGE: No. There's no threat out there that justifies this spending. As I -- the Russians have -- the Soviet Union has literally disintegrated. Its military now is rusting, its soldiers are unpaid, the Pentagon worries mostly that it may be too weak, not that it may be too strong. The Chinese military is a backward force, and when it tried to invade Vietnam it had to communicate by banging on drums. And while they're engaged in a build-up, it has been vastly exaggerated. They have no ability to move force outside their own country.

The rogue nations, the ones the Pentagon points to as supposed threats -- Iran, Iraq, Cuba, North Korea -- collectively spend about $15 billion on their military each year. We spend over $250 billion. None of them have a weap -- except perhaps Cuba -- have a weapon that can even reach our shores. So there is no threat that justifies this military spending if your concern is the defense of the United States.

Now, some say, "Well, we don't really have to defend just the United States, we have to defend our allies. And so we have to be able to fight two wars at once on opposite ends of the world, without allies, and be able to move forces there immediately to do that." Yet even if you accept that mission, which is extraordinarily doubtful and inflated, even if you accept it you could sustain a military budget and that mission, and still save 50 to 75 billion dollars a year off this military budget.

INTERVIEWER: There are some polls that indicate that most current policy makers feel that current U.S. strategy, the two-war strategy, is appropriate. How do you react to that?

MR. BORDSAGE: The two-war strategy was really put together when the Soviet Union turned to detente under George Bush. And the argument initially was, "Well, we've got to focus on Europe and the Soviet threat, the remaining Soviet threat, and Asia." Then the Soviet Union literally collapsed and it became Russia and fifteen republican -- republics, and so the focus turned to the Persian Gulf and Asia, and the two wars stayed the same and the capacity stayed the same. Ironically, what the Defense Department has built is not simply what was required under that strategy, but more aircraft carrier task forces than the strategy itself called for, more planes, et cetera, so that in some ways the strategy in some ways is a put on. It is a -- in a sense, it's the way the United States justifies maintaining a global presence and maintaining the ability to do what the American people in every poll suggest they don't want us to do, which is to police the globe.

And most people don't know this, but we are literally the only country that can move forces over long distances in large numbers in the current world. None of the other industrialized countries have that capacity. We're the only country that claims the ability to fight on distant shores. Now, there is not a domestic consensus for that. The public does not support it. And if they knew the details of the policy, they'd be outraged. We spend, on the force structure that is designated for the defense of South Korea from North Korea, its brother country to the north, we spend more in that mission than we spend each year policing our own streets. I don't think most Americans would support that.

I think they would support it even less when they learn that the South Koreans have 10 times the population and 15 times the economy and -- but it spent about 10 times as much on their military as the North Koreans. The South Koreans could, if they chose to, defend themselves against a decrepit and nearing-collapse North Korean military. But, instead, we are justifying this very large presence with a North Korean threat that we spend a lot of energy trying to make into a bigger thing than it is.

INTERVIEWER: There's a draft CBO report right now that suggests our military is underfunded by roughly 50 billion a year. Doesn't that suggest that we need to at least, at a minimum, maintain our current level and possibly spend more?

MR. BORDSAGE: Well, this is the numbers game that's sort of the brilliant thing that the Pentagon and all bureaucracies can do, which is if you set the number of missions, you know, the mission at an expanded level, and then you define the weapons in very traditional, high-tech Cold War terms -- weapons that were originally designed for the Soviet threat and actually were far greater than anything the Soviet Union had -- now get applied to backward countries like North Korea, et cetera, and you sustain the way we do procurement, et cetera, then you could argue that, compared to what we're planning to build, we have a military budget which is underfunded. But in terms of any sensible concept of national defense, we are spending far too much on the military, not far too little.

INTERVIEWER: What about the asymmetrical threats -- biological, chemical weapons, terrorism. Isn't there some validity in maintaining the current level of spending for those -- for that reason?

MR. BORDSAGE: No. Not at all. The -- a lot of the defense budget now, when they search for a threat, they point to Iraq, that has a chemical weapons capacity perhaps, or the spread of nuclear or biological weapons to rogue nations -- supposedly rogue nations like Iran and what-have-you, and they use that then to justify a very large military budget.

But the reality is that any military response to those threats would require far less spending than we now do, and the real response to them has to be, as we see in crisis after crisis, political diplomatic, in terms of creating an international consensus against the use and the building of such weapons. And so that the crises become more an excuse for building the military budget than the military budget being a response to the threat or the crisis. And I think that's the reality of that.

INTERVIEWER: In this Pew Center survey, where they survey policy makers, they came to the conclusion that policy makers and the public are comfortable with the current level of military spending. How do you --

MR. BORDSAGE: Well, I think the public is generally acquiescent. That is, it generally assumes that Washington is doing a sensible job on military spending, and it is only rarely that it gets alarmed one way or the other. In the late 1970s a very conservative, military- dominated campaign about the Russian "window of vulnerability" generated public alarm, and you started to see a significant increase in people thinking we ought to spend more on our military. At the end of the Cold War, when the Soviet Union fell apart, there was a large increase in people thinking we ought to spend less on our military. But generally, outside of occasions like that, the public is generally passive. They assume -- they don't have the expertise of this thing, and they assume that Washington, between the Congress and the president, will do a good job.

They want a strong military, but they don't want to police the world. They want to spend enough to have the number one force in the world, but they don't want to waste money on weapons that don't work or that are gold-plated boondoggles for military contractors. So they have a kind of common-sense view and they tend to be passive. But what the polls show is that more people today think we're spending too much than too little, but that the plurality basically thinks it's about right.

With elites, I think it's a little different. Elites tend to see the military as a symbol of American power in the world, and while they supported significant cuts at the end of -- when the Soviet Union fell apart [coughing in background] they now are interested in extending America's presence, and there's much more elite support for policing the world than there is popular support for that mission. And so they see hot spots all over the place, from Bosnia to South Korea to Indonesia to, you know, different places in the world where they're interested in maintaining American presence. And so there's an increasing elite sense that if we don't have any kind of a domestic -- or any kind of a civilian foreign policy, we're not spending money on aid, we're not spending money on diplomatic initiatives -- in fact, we're cutting all those back -- that we'd better maintain a strong military.

INTERVIEWER: What are some of the trade-offs between defense and non-military spending that many Americans might not think of correctly.

MR. BORDSAGE: Well, of course, we can afford this military budget. That is, it's only about 4 percent of our gross domestic product, probably a little less than that now, and we could sustain this level if we choose to. But, at the same time, we are in a budget context in which all of the pressure is for austerity, for cutbacks, and we've been cutting back domestic investments over the last decade. And we're also now seeing there's more pressure on spending on Medicare, we've been cutting Medicare, spending on Social Security, et cetera, and so you have a budget which is under great constraints where, presumably, you want to look at places where you could save money, to be able to redirect it. When you look for places you can save money, the Pentagon is the first and primary place, where we're just spending far too much than we need to. And there, the trade-offs are quite extraordinary.

The Pentagon has more than 50 percent of our discretionary budget. So that it spends more than all of the rest of the government combined, other than Medicare and Social Security, which are entitlement programs, and the disproportion is remarkable. For example, we had a program this last Congress, there was an attempt to put a billion dollars a year aside to help rebuild schools in cities where the schools are literally falling apart around the kids, and the kids are -- health is endangered, and you have schools that are not opening on time, et cetera. Now, there's pretty much of a national consensus that we ought to have decent schools for kids and that it's important for kids, particularly poor children, to get a decent education and a chance to get out of poverty.

And yet, in the kind -- in this last budget, we cut the billion dollars a year for rebuilding schools, even though we spent far more that -- the Congress did -- on weapons that the Pentagon said it did not want. And so the level of waste on the Pentagon side of this divide is quite extraordinary. And the cost, then, on the domestic side, in a period of domestic austerity and budgetary constraints, are very high.

INTERVIEWER: When you look at the programs that are -- or the other budgets that are up against the Pentagon budget, I mean, what do you think the reason is that the Pentagon budget is overlooked so often? And these other, you know, weaker programs are targeted.

MR. BORDSAGE: Well, I don't think it's overlooked. You know, President Eisenhower, the Republican president, the general who won World War -- helped win World War II for us, warned about what would happen if we allowed a military industrial complex to build up in this society. And after 40 years of a Cold War, spending hundreds of billions of dollars a year, we have in fact built that complex. And so you have an extraordinarily sophisticated lobby, corporate lobby, and you have the largest bureaucracy at the federal level with enormous inertia, lobbying to sustain these military budgets, and in every congressional district legislators hear from employees and business people who want their Pentagon contracts saved.

On the Republican side of the aisle, the conser -- the supposed conservatives, Pentagon spending is the pork that conservatives can love. And so they are happy to vote, you know, for boats that the Pentagon doesn't ask for, for bases that they don't want to build, for a range of services for their districts through the Pentagon budget, which they can defend as national security. Whereas, they are heartless and ruthless about any spending on the domestic side.

And for liberals, increasingly I think you will see in the Congress that, faced with a conservative majority when the only public spending that can public employee may be military spending, that more and more of them are saying, "Okay, we'll support that simply to help people go to work and sustain jobs in my own district." And so the momentum behind this lobby is very high.

On the other side, the people who might benefit from new investments, whether it's rebuilding schools in the cities or investments in research and development, investments in environmental clean-up, really don't know who they are. And they don't know that they would get the benefits, and so none of the organized interests get involved in the fight to get this Pentagon budget down and to transfer the money over, and so the Pentagon lobby really doesn't have anything that competes with it.

And people tend not to understand the scale of this lobby. For example, in the last election round, the leading Pentagon contractors spent far more on lobbying, far more on political contributions to candidates, far more on PAC money -- political action committee money in the elections, than the tobacco lobby, which is supposed to be one of the most powerful in the country. And so there's an enormous force that goes into sustaining these budgets.

INTERVIEWER: Talking about, you know, military-related jobs and how -- what their trade-off or counterpart would be in the other parts of the discretionary budget, I mean, people will say, you know, along with that argument, that it's only 4 percent of the GNP and it also employs a lot of people. Is there any evidence that redirecting money would actually create more jobs if it were spent for non-military purposes?

MR. BORDSAGE: Well, of course, it depends a little bit on how you spend the money, whether you would create more jobs on the defense side or on the civilian side. There are a lot of studies that show in the first instance, if you spend the money on teachers you will create more teaching jobs than if you spend the money on building a B-2. Although that's a little misleading. Because the money that you spend on the B-2 then research through the society and may, in the second or third round, have the same kinds of effects.

The real difference is long-term. If you are building weapons and you're not making the investments in education, in training, in schools and infrastructure that makes the economy go, and research and development then, over time, your economy gets less and less and less and less efficient. And what you have now is an increasing consensus among economists that we have been starving the public investments that are vital to a private economy, to making the economy work well. And by -- as we continue to starve those investments then, over time, the jobs that are lost because we are wasting money or spending too much money on weapons that we do not need and, in many cases, weapons the Pentagon hasn't even asked for, becomes more and more apparent.

And I think what you see now, over the last decade since the Cold War ended and the Soviet Union fell apart, was that there was an enormous historic opportunity to change priorities and to put significant resources into rebuilding this society, which had not happened over the forty years of the Cold War. And that opportunity was lost.

And now, if we sustain this course -- and the projections are we will sustain military spending at about this level -- and the only procurement in government that's designed to go up is military procurement -- that is, the only purchasing that's supposed to go up is the purchasing of military weapons, I think over the next decade you will see more and more our economy paying the price for having schools that are not top-notch, for having sewer systems that don't work, for having roads and bridges that are inefficient, for not doing the research and development that keeps us ahead of the tur -- curve economically.

INTERVIEWER: What about shifting from defense to infrastructure and other things here? Does that help us compete globally at all? I mean --

MR. BORDSAGE: There's no question that public investment in this economy is vital to our economic position in the world. Here's a simple example. We lose hundreds of billions of dollars each year because of inefficient roads, potholes, overburden, traffic jams, goods cannot move efficiently, et cetera.

Now, when you're sustaining a high-wage economy it is very important -- any economist will tell you that that economy would be more efficient, that it would be at the cutting-edge of technology, that it have the most -- the best-educated workers, to be able to -- excuse me -- to be able to sustain those wages in a global economic condition. And so, to the extent we're not making those investments in school and research and in training and education of our workers, in the infrastructure, roads, bridges, sewer systems, et cetera, we are adding a burden and we're adding a sense of weight on wages in America, driving them down in order to compete globally.

INTERVIEWER: Would cutting defense spending to a level below 200 billion in your opinion jeopardize U.S. security?

MR. BORDSAGE: Well, the only conceivable way it could jeopardize U.S. security would be if our leadership was totally and criminally incompetent. That is, at $200 billion a year we would still be spending four times as much as any other country, and those countries are our allies. With our allies, we would still be spending, you know, over 80 percent of the global military budget. So that it would require true incompetence; in a sense, a self-destructive urge, to have that kind of -- that level of military spending be in any way dangerous to our security.

Really, what we ought to be doing is we ought to be moving this military budget, over a few years, down to about $150 billion a year, and then we should start to have a debate about defense spending. At that point, you'd have to start to make trade-offs about what missions you're going to fulfill abroad and to what extent we really do want to police the world, et cetera. But you could get down to $150 billion and not even begin the debate on military spending.

INTERVIEWER: Some out there argue that we need to maintain this level in order to preserve America's leadership role in the world, and you're saying that you can go down to 150 and then start that debate, but they won't even think about that.

MR. BORDSAGE: Well, you know, the people who think that the defense budget maintains our leadership role in the world really don't understand the nature of power in this world and the nature of American power in the world. America's market is the biggest single market in the world. America's companies are on the cutting edge of technology and trade across the world. We are the world's largest exporter. We are also the world's largest debtor. It's inconceivable that we would not be, you know, a major leader in this world, just economically.

Our economic prowess -- we could have no guns, like the Japanese essentially, an army that could only police our borders, and we would still be a powerful leader in this world. So the military may get us into trouble, it may fulfill things that Americans are proud of in terms of peacekeeping, et cetera, but this level of military spending has nothing to do with the core strength of America that makes it a leader in the world.

And that says nothing about our democratic institutions, which are widely respected around the world, our culture, which is the -- increasingly the global culture, our language which is becoming the global language. I mean, it's preposterous to think that the F-22 jet fighter is more important to America's role in the world than the fact that almost every child across the world is learning English as a second language.

INTERVIEWER: Some of the leadership that they polled in this (inaudible) survey would say that, you know, in the interests of preserving stability in the world that we should maintain our current level of spending. Just so that we don't have a chaotic situation.

MR. BORDSAGE: Well, the one thing we know about the world is that you can't maintain the stability. Particularly in a world that is ruled by market forces that have been deregulated the way this one is. This world is and will be unstable. You could spend five times as much on our military and it will be unstable. So the notion that somehow military spending is a defense against incivility is really a wrongheaded idea about the world and about the role of the military.

What's more dangerous about excessive military spending is what an old conservative Senator once says -- said, "Which is the more ways you have to go someplace and do something, the more likely it is you'll go there and do it." And when you spend a lot of money on the military, when you spend a lot of money on building the ability to take forces and send them across the world, then it is -- it is much more likely that you will take those forces and send them across the world. And the much more dangerous question for America is whether we will get ourselves into situations without a domestic consensus, without popular support, where our soldiers are at risk in some corner of the world which most Americans cannot identify, for purposes that most Americans cannot understand. And that will be driven much more by the inertia of using a huge military force. But the idea that somehow large-scale military spending ensures stability in the world is a suggestion that the military will be like police, patrolling the block in your neighborhood, in your local neighborhood, and that's inconceivable.

INTERVIEWER: As far as in the world community helping to maintain order, I mean, how much can we really count on allies to put in their fair share (inaudible)? Shouldn't we, you know, have the biggest gun on the block (inaudible)?

MR. BORDSAGE: Well, Americans want to keep the strongest military in the world, and we of course have it, by far. One of the problems with that is that, of course, it then allows other countries to be free riders. And we're seeing that, increasingly, and we're -- our allies really don't maintain a fair share of the burden. And there's, of course, differences of opinion about what the burden ought to be. But, you know, when we -- there's an argument about expanding NATO to include Hungary and the Czech Republic and Poland, and it's going to cost tens of billions of dollars to do that. The United States government has been saying that the United States will only play a small portion of that, but every European ally in NATO has said they will pay nothing for this to happen. In fact, the British have said that since we're adding countries to NATO they ought to be able to reduce their military spending because now more countries can share the burden. And there is this, I think, quite generalized phenomenon where countries are happy to allow Americans to carry a lot of the weight.

In South Korea, there's no question that the South Koreans could defend themselves against a smaller, less-advanced country to their north. Particularly in conventional weapons. We were there originally to -- in some ways, to counter the Chinese and the Soviet Union in that kind of -- in the Cold War face-off. Now the Chinese are allies of the South Koreas, or at least not part of this process, and the Russians are not a factor, and yet we're still there, helping to defend South Korea against North Korea, and the South Koreans are quite explicit about it. This saves them billions of dollars a year in the military and they're quite happy for us to continue to do that.

INTERVIEWER 2: Hang on, you guys.

INTERVIEWER: Okay, in just the two polls that I looked at, the Pew Poll and also the poll -- the PIPA (phonetic) Poll, it showed that the policy makers, you know, differ considerably from the polling when it comes to military spending. Why do you think there is that difference?

MR. BORDSAGE: Well, policy makers tend to have a much more expansive view about what they want to do with the military than the public does. Most Americans want to have the strongest military in the world and they want the American soldiers to be the best armed in the world, and they want them to defend this country. And they are very cautious about defending that commitment to other countries. Whereas, increasingly, our policy makers see us as playing the role of a global policeman, as policing internal civil wars in Bosnia, say, or sustaining a force in Iraq or around Iraq, in, you know, indefinitely, sustaining troops on the border of of North Korea on the other side of the globe, providing American forces to counter China, the emerging force of China and Asia. And these are all missions, and many more, that policy makers have on their agenda that makes them want to have a much bigger military and to spend a lot more money than perhaps the public would prefer. Certainly, they have a much bigger sense of what the military ought to be doing than the public will support.

INTERVIEWER: Okay. Do you have anything you want to add?

INTERVIEWER: Hold the roll.

MR. BORDSAGE: Hold the phone.

INTERVIEWER: Go ahead.

MR. BORDSAGE: The public, in some ways, resists the priority argument, the argument that money can be transferred -- money that's being wasted on the military could be spent on education and other things that people want and need. The reason they resist it is that they believe that a significant portion of their tax dollars -- 35 to 50 cents of every dollar -- is wasted. So they believe you could spend more money on education and you could spend more money on Medicare and you could spend more money on infrastructure, you could spend more money on research development, and you don't have to take on the defense budget, all you have to do is get rid of waste. And so, in that sense they have a logical position. The irony of the position --

(End of Side A.)

MR. BORDSAGE: From the beginning? Yeah. In many ways, the public resists an argument about priorities. That is, that we ought to cut defense spending so that we can invest in education or infrastructure or what-have-you. And the reason is that they believe that about 35 to 50 percent -- 35 to 50 cents out of every dollar of their tax money is wasted. And so they believe that you can spend more money on education or on research or on the environment or on roads and bridges without cutting defense, just by cutting waste. And so they have a logical position.

The irony of the position, if you will, is that the largest source, by far, of waste, fraud and abuse at the federal level is the Pentagon. And in -- whether it's General Accounting Office studies or Congressional Budget Office's studies or independent assessments, study after study shows that while domestic agencies may waste millions of dollars, the Pentagon is squandering billions. You know, we have a Pentagon that pays out billions of dollars where it doesn't know what it's paying for. And last year, for example, defense contractors returned, voluntarily, some $4 billion worth of excess payments. Now, we don't know the amount they did not return. But the Pentagon literally has been unable to track what it's paying for. And they admit this. The Pentagon sustains --

INTERVIEWER: You just the Pentagon sustains --

MR. BORDSAGE: The Pentagon sustains a level of -- I got to start over again.

The Pentagon stockpiles inventory of weapons and ammunition, et cetera, that, by its own admissions, it does not need. And billions of dollars are wasted every year simply housing or warehousing weapons and materiel that will never be used. The Pentagon is building weapons that the Congress has appropriated money for that the Pentagon itself says it doesn't want. And billions every year are wasted that way.

And that doesn't even get into the kind of criminal fraud where you have almost every major defense contractor has been, in the past decade, has pled guilty to or pled nolo contendere -- that they would not contend -- an indictment for fraud or for defrauding the government, by overbilling or pretending to do things that they weren't doing, et cetera.

So this is -- in a sense, it's understandable. This is the largest bureaucracy, by far, at the federal level. It employs more people than the entire rest of the government combined, it does two-thirds of all the government procurement, purchase of goods and services. It is, by definition in a sense inevitably the largest source of waste, fraud and abuse. But when you add on top of that secrecy, a closed system of contracting, cost-plus contractors that reward contractors for building up their costs, because they get their profit paid on top of it, and then only a small handful of contractors that exist to build these weapons, you have built in a system that is designed to encourage waste and to build fraud, build in fraud, et cetera, and so, you know, when the public thinks about its tax dollars and the choices that are being made with its tax dollars, in some sense they're right. A significant portion of their money is wasted.

But the first place to look for that waste is the largest bureaucracy of all, and that's the Pentagon.

INTERVIEWER: Sounds great. Can you guys think of anything else? Any other questions? Did we cover the waterfront there?

MR. BORDSAGE: I guess.

(Technical discussion.)

(End of proceedings as recorded.)