Shortly after the Gulf War in 1991, "The Peace Dividend" became a buzz-phrase that came up frequently during the annual budget battle inside the beltway, and it lasted for several consecutive years as I recall. Then, in the mid/late '90s, "The Peace Dividend" joined forces with an economic-boom-driven surge in tax receipts to create a budget surplus. What a bonanza, we all thought. Well, almost all of us, anyway . . .
A tiny minority of iconoclasts had one eyebrow raised, and one skeptical eye focused on the precipitous decline in national security's share of the spending mix. Their nagging questions: Was it wise to invest "The Peace Dividend" in everything except enhancing future peace prospects? Would objectors be audible in the midst of the mardi-gras-style celebration of Surplus-mania and "fiscal discipline"? Answers: No, and No.
Fast forward five years. Today I started charting a few things, to get a better grip on the historical interplay between GDP growth, tax receipts, and spending patterns—but I ended up going in a completely different direction. The chart below shows what caused my detour; for me, it was deja-vu, because it reminded me of one undeniable point: Our 1990's decision to reduce national security spending, i.e., our decision not to invest "The Peace Dividend" in enhancing future peace prospects, was a huge factor in the creation of the falsely-revered surplus. (Falsely-revered because it made only a small dent in our ho-hum debt burden.)
Would the Pentagon, Foggy Bottom, and Langley have used a reinvested Peace Dividend to successfully counter the asymmetric threats which subsequently destroyed embassies in Kenya and Tanzania, killed seventeen servicemen on the USS Cole, or murdered thousands on 9-11-01? Maybe, maybe not; I'd like to think so, because I'm an optimist. But we'll never know.
What we do know is this: "The Peace Dividend" was not invested in the enhancement of future peace prospects; instead, it was invested in creating a political gold mine: "The Surplus"—which, in my opinion, would be more aptly named "The National Security Disinvestment."
I certainly hope we don't forget this lesson; if we do, we'll just have to relearn it the hard way sometime down the road.
[See also my closely-related article: Clinton's Military.]